Definition of "Household" For Means Test

The new bankruptcy law says that you automatically can file for Chapter 7 bankruptcy without further means testing if your average monthly income over the prior six months is below Florida's median income. The applicable median income depends on your household size. Many people are unclear how to determine the size of your household, and particularly, how household size is related to family size. More than one blog reader has asked me questions about household definition. The new bankruptcy law does not make clear the definition of household for determining if a particular debtor is below the applicable median income.

I came across a helpful explanation which was posted on a listserve for bankruptcy lawyers. The post explained:

" A household consists of all people who occupy a housing unit regardless of relationship. A household may consist of a person living alone or multiple unrelated individuals or families living together. Households thus are subdivided into family and nonfamily households.

A housing unit is a house, an apartment, a mobile home or trailer, a group of rooms, or a single room occupied as a separate living quarters, or if vacant, intended for occupancy as separate living quarters. Separate living quarters are those in which the occupants live separately from any other individuals in the building and which have direct access from outside the building or through a common hall. For vacant units, the criteria of separateness and direct access are applied to the intended occupants whenever possible. "

I hope this posted definition helps you understand the size of your household for purposes of the means test under the new bankruptcy law.

posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida

Comments

[Fitzgerald Q. McAuliffe]

Good article. The test is generally "heads on beds" how many people actually reside in the debtor's household on a full time basis. That said, there is considerable uncertainty in this area of the law and not much guidance yet from the courts.

Moreover, just because you are "above median" for a household size of 1 does not mean that you are necessarily ineligible to file a Chapter 7 bankruptcy with no presumption of abuse--even, possibly, without counting your brothers. It is necessary to do a complete analysis of your situation. There are a variety of factors which can come into play to make above-median debtors eligible for Chapter 7. These include, but are not limited to, the following: allowable payments on secured debts, reasonable expenses for elderly or disabled family members (whether or not they reside with the debtor), expenses for dependents, unusual medical or household expenses, etc... Most bankruptcy attorneys (me included) offer a free consultation. I do not recommend that anyone (especially "above-median" debtors) attempt their own means test calculations using free online calculators. Such calculators are generally not tailored to your individual filing district and may not include the latest inflation adjustments, etc. There are a variety of complex considerations which must be taken into account.

Most attorneys (myself included) use specialized bankruptcy filing software which takes into account all of the most recent changes and adjustments to the means test. Please call my office if you would like to schedule a free consultation in order to conduct a tailored analysis of your situation.

[Diane]

I read you definition of household with interest. Can you give me the cite? Thank you. Diane Mancinelli, Esq. Tustin, CA

[Warren C. Warburton]

Do you have an opinion as to treatment of an unrelated individuals income, such as a boyfriend or significant other, when computing a debtor's CMI? Form 22A is not clear as to any requirement to include a boyfriend or significant other's income if he is a member of the household.