Chapter 13 - Income - How are Stipends Treated? And Authorized User Question

[financialresearch22]

I am looking into a possible chapter 13, but have a question about how stipends are treated.

More specifically: I am married, but would be looking to file by myself. I know I have to include my wife's income in the calculations, however she is currently working as a travel nurse with contracts so in addition to hourly taxable income receives non-taxable stipends (I know the non-taxable part doesn't matter for ch. 13 purposes, but possibly the stipend part does). The stipends are for housing as well as meals & incidentals and are based on the rates for the locations she works at based on the government's GSA published rates. She only gets these as non-taxable if she is "duplicating expenses" by maintaining a second residence in the area of the hospital, which she is doing. However, the actual expenses are less than the stipend received.

Do these stipends count as income? If so, is it the whole amount or would any be subtracted for actual expenses? I did a consultation with a bankruptcy lawyer who said the stipends would count as income, but I can't understand how all of it would if some of it is being used to duplicate expenses - it seems like at least some of it should be able to be subtracted. I've tried to researh the question but not coming up with much information, although I did see a couple of anecdotes where people talked about not counting stipends as income, but it was pretty old information and was just a couple people's experiences. On one hand I could see an argument that stipends, based on the GSA rates, are not income (almost conceptually like business expenses). I could also see an argument that you count it as income, but could only count the actual expenses as a deduction. Worst case, I could see an argument that you count it as income, but could only count the housing actual expenses as a deduction since the meals and incidentals costs would just be transferred from your primary residence to your temporary contract location. But I don't see how all of the stipend could be included as income without having any extra subtractions/deductions.

For reference, this is in Illinois in case that makes a difference. It should also be noted that the only reason she took these contracts was to try to help the financial situation, but it's proving to not be enough, and has uncertainty with future rates, gaps between contracts, etc. Is that just accounted for by taking an average of the last 6 months?

Thanks in advance.

[financialresearch22]

If I file for Chapter 13, but I am currently an authorized user on someone else's credit card, how is that handled? Should I ask to be removed beforehand or will it actually help in the long run to stay on?

I am assuming me filing would not impact the other person's credit since I don't have the obligation to pay that card where I am an authorized user, however would they or their credit card company be notified of my bankruptcy? I don't really want that information known, so if it would be, I would rather remove myself as an authorized user. However, if remaining as one would help me with rebuilding credit then that could be a reason to stay.

Just to add, I am not using this card where I am an authorized user. I was originally added to help build my credit.

[sarge12]

Both of your questions can be best answered by a BK attorney. Many have free initial consultations, and are experienced to how the BK laws are applied in your State. Some here might have the answer you seek, but some might also give errant advice based on their experience, in their State. When it comes to bankruptcy, and how these laws are applied, IMO, there is no substitute for a good knowlegeable lawyer.

[despritfreya]

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@financialresearch22 wrote: Do these stipends count as income? If so, is it the whole amount or would any be subtracted for actual expenses? I did a consultation with a bankruptcy lawyer who said the stipends would count as income, but I can't understand how all of it would if some of it is being used to duplicate expenses - it seems like at least some of it should be able to be subtracted

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The attny is correct that it is included as "income" per the definition of "Current Monthly Income":

11 USC 101(10A) defines “Current Monthly Income” as:

(A). . . the average monthly income from all sources that the debtor receives. . .without regard to whether such income is taxable income, derived during the 6-month period ending on—

(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and

(B)
(i) includes any amount paid by any entity other than the debtor. . . on a regular basis for the household expenses of the debtor or the debtor’s dependents. . . ;

Can it be removed under the Means Test?  To the extent that the non-filing spouses' income does not support the household, maybe.  This is a case-by-case analysis and needs to be discussed with a local attny.

Des.

[financialresearch22]

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@despritfreya wrote:

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@financialresearch22 wrote: Do these stipends count as income? If so, is it the whole amount or would any be subtracted for actual expenses? I did a consultation with a bankruptcy lawyer who said the stipends would count as income, but I can't understand how all of it would if some of it is being used to duplicate expenses - it seems like at least some of it should be able to be subtracted

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The attny is correct that it is included as "income" per the definition of "Current Monthly Income":

11 USC 101(10A) defines “Current Monthly Income” as:

(A). . . the average monthly income from all sources that the debtor receives. . .without regard to whether such income is taxable income, derived during the 6-month period ending on—

(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and

(B)
(i) includes any amount paid by any entity other than the debtor. . . on a regular basis for the household expenses of the debtor or the debtor’s dependents. . . ;

Can it be removed under the Means Test?  To the extent that the non-filing spouses' income does not support the household, maybe.  This is a case-by-case analysis and needs to be discussed with a local attny.

Des.

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Thanks for the response. I had read the same item you quoted, but what I am wondering about is if it's truly for a household expense if it's a second required residence for work travel. And even if it is, then it seems to me it should be able to at least partially be subtracted as an expense (similar to a business deduction)- but whether or not it actually can be subtracted/excluded I wasn't sure about. As you said it's likely a case-by-case basis. 

Before doing another consult with an attorney I was looking to see if anyone else had experience with this type of scenario, but if not I'll just set up another consult.

Thanks again.

[despritfreya]

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@financialresearch22 wrote: Thanks for the response. I had read the same item you quoted, but what I am wondering about is if it's truly for a household expense if it's a second required residence for work travel. And even if it is, then it seems to me it should be able to at least partially be subtracted as an expense (similar to a business deduction)- but whether or not it actually can be subtracted/excluded I wasn't sure about. As you said it's likely a case-by-case basis.  Before doing another consult with an attorney I was looking to see if anyone else had experience with this type of scenario, but if not I'll just set up another consult.

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I tend to doubt you will find the response you are looking for off the Internet.  There are just too many variables, not a lot of case law, and too many bankruptcy districts handling the situation in different ways.  I don't think you mentioned what State you are in.  Regardless, this article may help explain:

https://www.lawjur.com/the-marital-deduction-and-chapter-7/

Also take a look at the bottom of page 3 from this:

https://www.justice.gov/sites/default/files/ust/legacy/2015/03/03/ch7_line_by_line.pdf

Des.