Do I have to include my spouse’s income for means testing if I file an individual bankruptcy while my spouse and I are living separate and apart under same roof?
Virginia law recognizes that a husband and wife may live separate and apart under the same roof in certain instances where the spouses have ceased all marital relations, do not hold themselves out to the world as husband and wife, no longer pursue joint activities, and no longer maintain joint finances, but instead live like unrelated roommates in the same dwelling. Not all circuit court judges are equally accepting of the concept of living separate and apart under the same roof.
A final decree of divorce in Virginia may be based on a couple living separate and apart for a year with at least one of the spouses intending for the separation to be permanent. Where the couple have no children and have entered into a separation agreement, a final divorce may be granted after the couple have lived separate and apart for six months. A husband and wife may decide to live separate and apart under the same roof for financial reasons, because it would be too costly to maintain separate households in their circumstances. In addition, divorce counsel may advise a spouse not to leave the marital residence unless and until the parties executed a separation agreement for various tactical reasons, including support issues, child custody issues, equitable distribution issues, and the avoidance of stronger evidence supporting a desertion or abandonment.
Although the couple may be living separate and apart for purposes of obtaining a no-fault divorce in Virginia, it is unclear whether this type of separation would be considered a sufficient separation for bankruptcy means-testing purposes. An individual who is married, and not filing jointly, may exclude the other spouse’s income from means testing by executing the following declaration of separate households:
“My spouse and I are legally separated under applicable non-bankruptcy law or my spouse and I are living apart other than for the purpose of evading the requirements of §707(b)(2)(A) of the Bankruptcy Code.”
Virginia does not really have a “legal separation” as some states do. Spouses may live separate and apart with a separation agreement, a contract in which they recognize their separation, or either spouse may file for a divorce from bed and board (a divorce a mensa et thoro), a non-final divorce in Virginia based on cruelty or desertion that does not dissolve the marital relationship or allow the parties to remarry.
You should consult with a Virginia bankruptcy or divorce lawyer to discuss your particular situation.