Does the income of a live-in girlfriend of five years count towards household income?  I read that question in an online chat discussion recently.

Here is the answer provided by a bankruptcy attorney: “No, her income will not be used to determine your household income unless you are attempting a modification and want to use her income as a contributor.”

That answer is completely wrong. In fact, that answer could lead this person to commit perjury on his bankruptcy schedules and may result in a denial of his bankruptcy discharge.

Important Questions:

There are important questions that must be answered to determine if the girlfriend’s income needs to be listed.

  • Do you share bank accounts with the girlfriend?
  • Do you own property together, such as a home or vehicle?
  • Are there children from this relationship?
  • Are  you a cosigner of debts with the girlfriend?

The bankruptcy schedules request that you report the size of the household and all household income.  That answer is not dependent on whether or not you are married.

Does the girlfriend’s income make  a difference?

Does it make a difference if you list the girlfriend’s income?  If not, list it.  The best approach is to list all household income.

If it does make a difference (for example, if listing her income makes you ineligible for Chapter 7), then you need to carefully examine the details of the relationship.

The concept behind Household Income:

There is a reason the bankruptcy schedules ask you to report all household income instead of just income of a married couple.  Obviously, the bankruptcy laws want full disclosure of all regular income of the household.  And if you fail to report all regular income of the household you could be found guilty of committing perjury on the bankruptcy schedules and your discharge my be denied.

But what is household income? If you have a roommate and share an apartment, do you have to list the roommate’s income? Do you have to list the income of your children or your parents living in the home?

The answer is it depends.  You have to carefully examine the nature and extent of the relationship.

I would list the income of a live-in girlfriend of five years if you share bank accounts, children, property and debts.  I would not list the income of a girlfriend who is just spending the weekend together.

The duration of the relationship matters.  The nature of the relationship (romantic versus non-romantic) matters.  Sharing bank accounts and property and cosigning debts matters.  Each case is unique.

Shared expenses:

Assuming you do not share bank accounts or children or property together (which is an altogether different article about lack of commitment!), you probably do share expenses.  So, if you only pay half of the rent and the girlfriend pays the other half, make sure you do not take credit for paying all the rent on the monthly expense schedule. In other words, only list your share of the expenses that you actually pay.

Common Fraud Issue:

When reviewing bankruptcy cases I notice that the failure to disclose all household income is quite common and easily detected.  I commonly see cases filed that list “Contribution from Boyfriend/Girlfriend” and then I notice several children listed as living in the home. When you live with your boyfriend/girlfriend and have children of the relationship living in the home, it is simply wrong to list contribution income.  Rather, the entire gross income should be listed on Schedule I of the bankruptcy Schedules and six months of gross income on the Means Test.

It simply boggles the mind to understand why the US Trustee does not pick up on this common failure to report household income more frequently.  It is too easy to avoid the requirement of reporting household income just because parents with minor children living together are not married, and attorneys who prepare schedules in this manner put their clients at risk for serious charges of perjury and possible denial of discharge.


Image courtesy of Flickr and davidmesaaz