Monday, January 27, 2014

Non-Filing Spouse's Bonus May be "Current Monthly Income"

The Court in In re Barnes, 378 B.R. 774 (Bkrtcy.D.S.C. 2007) with regard to bonus income of non-filing spouses for the purposes of the calculation of "current monthly income" for the purposes of the determination of projected disposable income.  In this case, the court held that a non-debtor spouse's potential annual bonus is a part of projected disposable income.

The court noted that the income of a non-filing spouse is not included for purposes of determining a debtor's projected disposable income under 1325 (b) if the debtor does not "receive" this income pursuant to section 101 (10A)(A) or if it is not paid on a "regular basis" for the debtor's household expenses per section 101(10A)(B). The court further noted that Congress excluded that portion of the non-filing spouse's income devoted to her personal pursuits or expenses. In this case, the court found no evidence that the debtor "received" her bonus pursuant to section 101 (10A)(A).

But the court also held that if the non-filing spouse has enough monthly income to meet her separate expenses, the burden shifts to the debtor to demonstrate that the bonus is not paid on a regular basis for debtor's household expenses. The court further held that evidence is needed on how the non-filing spouse's income is used and whether it could effectively be used to pay for the debtor's household expenses and that the court needs to consider if it is paid on a regular basis.