Means Test Dilemma: Unborn Children

25 Jun Means Test Dilemma: Unborn Children

The “means test” hinges on the consumer debtor’s income and size of her household. Simply stated, the more people a household’s income must support, the more likely the debtor will be allowed to proceed in Chapter 7 and discharge debt. In particular the expenses allowed to sustain the household over a hypothetical future five-year repayment plan will be higher. But what if one of those household members is not yet born?

According to the United States Trustee (UST), a part of the Department of Justice, the child “counts” only if she is born prior to an action being brought to dismiss the case under the means test. In other words, for the means test a mother cannot assume that the pregnancy will end in a live birth with a child to care for during the following five years. Or at least this is the position the UST apparently took earlier this year — and which the Bankruptcy Court in Baton Rouge adopted.

The irony of course is the UST pursuing a position that denies an unborn child is a member of a household shortly before the President of the United States vetoed stem cell research legislation because he believes a human embryo of only a few cells is still a human life entitled to profound respect and protection. In a government as large as ours, there’s virtually always one agency or another doing something that sounds (or is) in opposition to the Executive’s announced position. Sometimes the agency is required by law to act as it does, sometimes there’s a lack of communication, or sometimes it is simply a matter of perception.

The Bankruptcy Code does not compel the UST to pursue a matter under the means test — the agency has “prosecutorial discretion” to pursue or not pursue a case. And on an issue as profound and politically sensitive as how to consider an unborn child, it is difficult to imagine the “abortion” spin would be ignored. So perhaps the UST feels obligated to pursue the logic of the law here.

The Baton Rouge court indicated it would seriously consider (and no doubt the UST would not oppose) evidence showing higher current additional pregnancy-related expenses as “special circumstances” allowing a case to continue in Chapter 7 instead of dismissal. However the court and UST did not believe the law allowed the debtor to claim the “standard” higher living expenses of a larger family, even while applying the means test to determine (in theory) whether a minimal amount of funding would be available for a hypothetical Chapter 13 plan.

So therein lies one of the core discrepancies in the “logic” of the BAPCPA means test. The UST and courts can (perhaps must) interpret the means test to be a mechanical, mathematical test which determines whether a person can afford to repay a small amount to creditors, based exclusively on today’s facts, without regard to whether there is a high probability of future increased expenses — like an additional mouth to feed.

Of course the UST could decline to pursue such cases and treat unborn children as members of a household. It could avoid emphasizing such disconnects between the theory and the reality of the law. (And avoid putting unnecessary added pressure on the backs of indebted and expectant mothers.)

But it is precisely these sorts of dilemmas — these sometimes perverse simplifications of the messy reality of life — which BAPCPA created. The UST and the courts simply travel a road Congress built.

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I have been a bankruptcy attorney since 1989. Our firm represents consumers filing bankruptcy almost exclusively, although I have represented bankruptcy trustees as well as creditors. For 2017-2019 I served on the American Bankruptcy Institute's Commission on Consumer Bankruptcy. Our Report recommended numerous changes to improve bankruptcy law to make it serve everyone in the process more effectively. If you live in Eastern Missouri, visit our website, send an e-mail or give us a call (314) 781-3400. Our website:
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