Debtors Living Apart to Combine Incomes for Chapter 13 Plan

Court case

Minnesota Bankruptcy Case: Statute Requires Debtors Living Apart to Combine Incomes for Chapter 13 Plan

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

Harman v Fink (In re Harman), 2010 WL 3447772 (B.A.P. 8th Cir. (Mo.) 9/3/10) (Kressel, C.J.)

Case Summary:

Statute Requires Debtors Living Apart to Combine Incomes for Chapter 13 Plan

The Eighth Circuit BAP affirms the bankruptcy court’s confirmation of the debtors’ 60- month Chapter 13 plan over their objection that it should be a 36-month plan because, considered separately, their incomes are below median. The debtor husband and wife live apart and, taken together, their incomes put them above the median, requiring them to file a 60-month plan. They argued that because they live separately, they should be allowed to file separate Form B22Cs (statement of current monthly income), putting them each below median income. After objections to several plans, they filed a 60-month plan, then objected to it. The bankruptcy court confirmed the plan, and they appealed. The BAP affirms, noting that the issue is not whether they can file separate B22C forms, but how the Code defines the applicable commitment period for a Chapter 13 plan. The Code is clear: if the current monthly income “of the debtor and the debtor’s spouse combined” is above median, they must file the longer duration plan. The Code does not distinguish between spouses who live together or apart, and its plain language requires that both incomes be considered together when determining the length of a plan.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.