On June 20, 2007 the decision in In re Ellinger, ___ B.R. ___, 2007 WL 1976750 (Bkrtcy.D.Minn.)(Kressel, J.) was issued. One of the issues dealt with by the court was what constitutes a “household” as the term is used in section 707(b)(6). The court explained that the bankruptcy code does not define what constitutes a household. Based on section 101(39A)(A)’s definition of “median family income” which is calculated and reported by the Bureau of Census, the court found that the Census Bureau’s definition of “household” provides the most appropriate definition of household for use in the means test. The Census Bureau defines “household” as “all of the people, related and unrelated, who occupy a housing unit…. A housing unit is a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters.” The court further noted that Congress used the word “household” and not “family” and did not intend to limit household size to only household members related by blood, marriage or adoption.
The Court declined to adopt the U.S. Trustee’s argument to use the Internal Revenue Manuel’s (“IRM”) definition of “household”. The IRM does not define “household” but indicates that the number of persons allowed under the national standard expenses should generally be the same as the number of dependents on the taxpayer’s latest tax return. The Court noted that the IRM’s definition applies to the calculation of the number of persons allowed expenses after the debtor is already found to have above median income but that it is not used to decide the threshold question of whether a debtor has above median income for his household size.
The Court next addressed the issue of the extent that the non-debtor household member’s contributions must be included in the debtor’s CMI per section 101(10A). The Court held that the contribution must be included in the debtor’s CMI only to the extent that the contributions were used to support the debtor or the debtor’s dependents and that the remainder of the contributions are excluded. The court noted that this particular non-debtor household member was not a dependent of the debtor and that the statute does not require the inclusion of income from a third-party that is used to support a non-dependent. Section 707(b)(7)(A) though does require the inclusion of the debtor’s spouse for its calculation. Accordingly, the Court did not include the non-debtor’s entire contribution in the calculation of the debtor’s CMI. The portion of the contribution used to pay the non-debtor’s share of the household expenses was not included as it was not used to support the debtor or the debtor’s dependents.
The court also noted that the means test provides a snapshot of the debtor’s finances and is not meant to be continually updated as the debtor’s circumstances change. Therefore, the fact that the non-debtor moved out after the debtor filed her petition was irrelevant to the means test and the determination of the household size.
