30 Nov What Is Household Size?
The Means Test is one of the biggest changes to Bankruptcy Law passed since Chapter 13 Budget Plans were first formalized in 1938. The means test is supposed to determine whether there is income available for creditors after certain allowable expenses are deducted. A cornerstone of the means test is household size. The number and relationship of people living together will determine the income and expenses of the household.
Note that there is no definition of the “family unit” or a definition of “household”. Generally speaking, a ‘family unit‘ is a primary social group; parents and children. But it can be much more. A ‘household’ includes the related family members and all the unrelated people, if any, such as lodgers, foster children, wards, or employees who share the housing unit.Generally speaking a larger household can benefit a consumer filing for bankruptcy. The more family or household members, then the greater the state median income for a family of that size. The greater the median income, the less likely a consumer will have that income.
Congress did not state that two unrelated roommates or a co-habitating couple should not be counted as part of the same household. So it is reasonable to determine that two persons living in the same home are a part of the same household. This is the “heads on beds” approach.
Case law is divided on this issue so you should consult a bankruptcy attorney for assistance.