Why Does Household Size Matter in a Personal Bankruptcy Case?
When an individual makes plans to file for Chapter 7 or Chapter 13 bankruptcy, or when a married couple files jointly, “household size” will matter. The specific details of your bankruptcy case will be determined in part by household size and household income. However, the US Bankruptcy Code does not define the term “household.” As such, the relevance of household size and household income can be confusing for debtors who are considering bankruptcy. What does household size and household income have to do with a bankruptcy filing? The size of your “household” for bankruptcy purposes is more important than you might think. Our West Palm Beach bankruptcy attorneys can explain in more detail.
Relevance of “Household” Size and Income
Your household size and income will be relevant whether you are planning to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy.
In a Chapter 7 bankruptcy case, your household size and income will determine whether you need to take and pass the means test, and whether you are ultimately eligible for a Chapter 7 bankruptcy filing.
If you are planning to file for Chapter 13 bankruptcy, your household size and income will also be critical. These details will play a key role in determining the length of your repayment plan, as well as your disposable income and thus the monthly amount you will need to pay as part of your repayment plan. In short, household size and income are key factors in the two most common types of personal bankruptcy filings.
How is Household Size Determined?
While it is clear that household size and income are essential details in individual bankruptcy filings, there is not a clear and definitive way to determine a debtor’s household size. In some circumstances, debtors are shocked and dismayed to learn that certain people with whom they share a residence are not considered part of their household, such as an aging parent. The following are three ways that a debtor’s household size can be determined by a bankruptcy court:
- Household size includes the debtor and all parties who reside in the same residence with the debtor;
- Household size only includes the debtor and parties who are dependents of the debtor financially; or
- Household size includes the debtor and all parties in the household who are part of the same “economic unit” as the debtor.
Households that include non-traditional families, such as step-children, are not always included in a debtor’s household size. Recognizing the significance of your household size in your bankruptcy case, it is important to discuss the details with a bankruptcy lawyer.
Contact Our West Palm Beach Bankruptcy Attorneys To Seek Help with Your Case
Are you considering a personal bankruptcy filing under Chapter 13 or Chapter 7? If so, for all of the reasons we discussed above, it is extremely important to work with one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Fulton, Kaplan & Eller on your case. Determining your household size, and ensuring that the bankruptcy court agrees, can have a significant effect on the financial outcome of your bankruptcy case. In addition, bankruptcy law for consumers has many more complexities, and you will want to have a bankruptcy lawyer on your side to ensure that you meet all requirements and to address any issues as they arise. Contact our firm today to get started on your bankruptcy case with one of our attorneys.
Sources:
law.cornell.edu/uscode/text/11
californialawreview.org/print/the-modern-family-debacle
