My inlaws claimed bankruptcy and moved in with us at the beginning of 04/2008. They do not pay rent, food or utilities. My mother inlaw did not have a job in 2008 however she is receiving $400 dollars a month for a pension, medication costing $500 a month. My father inlaw gets $900 a month for a pension. My father inlaw further had a job for four months and made just over $3,400. Can we claim them both or separate as a dependent?

You can claim your parent as dependent (qualifying relative) if
1. You provided more than half of their support, and
2. the parent did not earn more than $3,500 in 2008.
3. It is not required that the parent live with you.
Read about Qualifying Relative: : Your U.S. Tax Return: Requirements for claiming a dependent

Unless the pension is Social Security, you will NOT be able to claim them because EACH of them made more than $3,500 for 2008.