Drafters of the official bankruptcy forms have excised “household size” from the B-22 where we calculate the part A IRS standard allowances. In its place is “applicable number of persons”, which the form indicates is the number of exemptions the debtor would currently be allowed on their tax return plus the number of other persons the debtor currently supports.
Did the courts reject “heads on beds” while I wasn’t looking? So uniformly that the form takes a position in the tussle between tax rules and census definitions to determine household size? The statute, 707(b)(6), still speaks of debtors whose income is less than the median state income for a “household” of that size. So why the change?
There has always been a mismatch between the statutory language and the experiences of real-life debtors and their living situations. The range of living arrangements, even when the household members are related, runs the gamut from the household member who is absolutely dependent on the debtor, to those to whom the debtor provides room and board but nothing else, to the roomer who perhaps only sleeps in the debtor’s home.
The “heads on beds” measure is objective and captures the real cost of keeping a roof over people’s heads: rent, heat, power, and water. It is not necessarily a good measure of food, clothing and health care, depending on the arrangements among those living under that particular roof.
I hope I can scrounge up the back story on this change.
As practitioners, if the form drafters’ approach is adopted by courts, I see a couple of ways to correct for any understatement of expenses this produces.
First, it suggests that money that a roommate or other non-tax dependent contributes is not money contributed for the debtor’s expenses, but for the expenses of the contributor. By taking that money out of the income equation, we get a more accurate result.
Second, we look at line 35, “continued contributions to the care of household or family members” to capture the cost of room, board and incidentals provided to others who live in the house but may not be dependents for tax purposes.
Living with BAPCPA over time does not seem to guarantee that things become easier. I’m back to my theme that the means test is, first and foremost, a platform for advocacy by bankruptcy lawyers for their clients.
More on means test:
- The disappearing deduction
- Mean and meaningless
- Getting business income correct
- Means test and exemption see saw
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