In a previous BLN post, I explored the topic of household size, which is important for anyone contemplating the filing of a Chapter 7 bankruptcy. You see, if a debtor’s income is below his state’s median income for his household size, he automatically qualifies to file a Chapter 7 bankruptcy. If a non-filing housemate makes too much money, it can affect the debtor’s ability to file under Chapter 7. Fortunately, the U.S. Trustee’s position on household size favors a debtor who lives with someone who’s income negatively impacts his means test result.
BUT, what if your housemate earns very little money (or he contributes very little to the shared expenses)? His inclusion in the means test may actually help you qualify.
Morgan King’s Bankruptcy Blog analyzes the case In re Ellringer, 370 B.R. 905 (Bkrtcy.D. Minn. 2007), wherein Judge Kressel from Minnesota applied a broad definition of “household” used by the U.S. Census Bureau. The U.S.C.B. includes in a household all of the people, related and unrelated, who occupy a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters.
The Ellringer Court further held that the Code only requires to be included in the median income and means tests only that portion of a non-filing household member’s income that is regularly contributed to the household expenses of the debtor or the debtor’s dependents. So, if your roommate earns $50,000 per year, but only contributes $500 per month to the shared expenses of the household, Ellringer allows you to add another member to the household, but only add $500 per month to the debtor’s income.
Latest posts by Chip Parker, Esq. (see all)
- Bankruptcy is an excellent retirement strategy - January 15, 2016
- Bankruptcy as an Asset Protection Tool – Part 2 - October 19, 2013
- Bankruptcy as an Asset Protection Tool – Part 1 - October 18, 2013
- The New Rules For Getting An FHA Mortgage After Bankruptcy - August 30, 2013
- 11th Circuit: Debtorâ€™s Tax Refund Exempt as Tenants by the Entireties Property - August 15, 2013
Last modified: October 22, 2012