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- Title
The Modern Family Debacle: Bankruptcy Judges Decide that Some Debtors’ Loved Ones Do Not Count as Household Members!
- Authors
Johnson, Creola
- Abstract
Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) with the express purpose of limiting the number of consumer debtors eligible to file a Chapter 7 case, which typically lasts only a few months and eliminates the debtor’s unsecured debts. Under BAPCPA, bankruptcy courts must determine the size of a consumer’s household to determine whether the consumer is eligible for Chapter 7. If the consumer is ineligible, they must instead file a Chapter 13 case and commit to a five-year debt repayment plan. Because Congress failed to define the term “household” in BAPCPA, courts have developed numerous approaches to determine household size that are often applied unfairly to debtors with non-traditional families. For example, after filing a Chapter 13 bankruptcy case, one debtor learned that her five children—two biological children and three stepchildren—counted as only 2.59 members of her household, even though all five children lived with her at least half the year and she cared for them the same. This decrease in household size significantly reduced the debtor’s allowed standardized expenses and thereby caused her projected disposable income to substantially increase. Financially distressed debtors in this position are then required to pay much more to unsecured creditors through a repayment plan and, as a result, suffer a financial penalty imposed by bankruptcy courts. The fractionalization of a debtor’s underage children is just one illustration of the modern family debacle some bankruptcy courts have created as they struggle to decide which of the debtor’s loved ones counts as household members under BAPCPA. In turn, this Article—in keeping with one of BAPCPA’s objectives of removing judicial discretion by way of objective standards—proposes that Congress amend BAPCPA to define the term “household” to create a presumption in favor of counting typical household occupants (e.g., under-age biological and stepchildren who are part-time residents) as full household members.
- Subjects
UNITED States. Bankruptcy Abuse Prevention &; Consumer Protection Act of 2005; BANKRUPTCY courts; DEBTOR &; creditor; JUDICIAL discretion; LOAN reimbursement
- Publication
California Law Review, 2023, Vol 111, p1027
- ISSN
0008-1221
- Publication type
Article
- DOI
10.15779/Z38Z60C33W