Same Sex Couples Not Required to Combine Income on “Means Test,” Wisconsin Court Rules

by Craig Andresen, Minneapolis, MN, Bankruptcy Attorney

February 27, 2009

A Wisconsin bankruptcy court has held that same sex couples who both file chapter 7 are not required to add their incomes together for purposes of the bankruptcy “means test.”  In this case, In re Roll, 2008 WL 5605001 (Bky.W.D.Wis. Nov. 10, 2008), the court observed that the Wisconsin Constitution prohibited same sex couples from marrying, and that the Federal Defense of Marriage Act commanded the courts of the United States to consider only opposite sex couples as being married.  The court therefore refused the U.S. Trustee’s demand that the same sex debtors’ incomes be combined on Form B22A.

In Roll, the adult female chapter 7 debtors lived in the same household with the niece of one of the debtors.  Both debtors filed separate bankruptcy petitions claiming a three person household.  Each debtor’s annual income was less than Wisconsin’s median income for a three person household; however, added together as a married couple, their incomes would have exceeded the median annual income for a three person household.

The court quoted approvingly from In re Ellringer, 370 B.R. 905 (Bky.D.Minn.2007), and held that the incomes of same sex couples, or even unmarried opposite sex couples, were not to be added for purposes of the means test, unless the other party’s income was used for the household expenses of the debtor or the debtor’s dependents.  In Roll, the U.S. Trustee had presented no evidence that this was the case.  As such, both debtors’ incomes were below the median, and no means test analysis was required.

The court also held that the U.S. Trustee’s section 707(b)(3) “totality of the circumstances” dismissal request could not be granted unless it were premised on something other than the “ability to pay” test.  “After finding that the debtor has no ability to pay pursuant to section 707(b)(2),” the court said, “it does not make sense to use an unspecified, court-crafted formula to conclude that the debtor does have an ability to pay.”  Accordingly, to succeed in a 707(b)(3) motion, the U.S. Trustee would have to present other evidence of bad faith, such as recent cash advances or false bankruptcy schedules.

The court concluded by giving the U.S. Trustee a twenty day deadline to develop the record regarding the debtors’ payment of one another’s household living expenses, or regarding bad faith, or the court would enter an order denying the motion for dismissal under sections 707(b)(2) and 707(b)(3).

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Craig W. Andresen is a consumer bankruptcy lawyer in Bloomington, Minnesota, with 22 years’ experience in consumer and small business bankruptcy cases. He is the Minnesota chair of the National Association of Consumer Bankruptcy Attorneys, and is a member of the Minnesota State Bar Association’s Bankruptcy Section. Mr. Andresen lectures often on the topic of consumer bankruptcy at local and national legal seminars.

Last modified: February 20, 2013