Tanya Rene Johnson

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE:
TANYA RENE JOHNSON,
DEBTOR.
CASE NO. 10-07244-8-JRL
CHAPTER 13
ORDER
This matter came before the court on the debtor’s motion for confirmation of her chapter
13 plan. A hearing was held on June 8, 2011 in Raleigh, North Carolina.
Tanya Rene Johnson (“the debtor”) filed a voluntary petition for chapter 13 relief on
September 7, 2010. In completing Official Form 22C, the statement of current monthly income
and calculation of disposable income, the debtor listed her household size as seven. The debtor’s
ex-husband, William H. Zimmer (“Zimmer”), who is a codebtor on two of the debtor’s
unsecured obligations, objected to confirmation. Zimmer argues certain deductions taken on
Form 22C are greater than necessary because the household size of seven is inaccurate given the
debtor’s circumstances.
STIPULATED FACTS
The debtor and Zimmer have joint custody of their two sons (“the debtor’s sons”), ages
SO ORDERED.
SIGNED this 21 day of July, 2011.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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eight and nine, who reside with the debtor 204 days per year. Neither party is required to
provide child support payments to the other. The debtor and Zimmer share living expenses
incurred by their sons based on where the sons live when the expenses become necessary. The
debtor’s sons are on her present husband’s health insurance plan. If medical expenses are
incurred and not covered by insurance, the debtor and Zimmer divide the costs equally. The
debtor’s husband has two sons and a daughter from a prior marriage (“the debtor’s
stepchildren”), ages 10, 13, and 19 respectively, who reside at the debtor’s residence 180 days
per year. The debtor’s sons share one bedroom in the debtor’s home, the debtor’s stepsons share
a second bedroom, and the debtor’s stepdaughter occupies the third bedroom.
DISCUSSION
The issue before the court is what is the appropriate household size for purposes of
calculating the debtor’s disposable income. Three recent decisions from the court’s sister
districts in North Carolina, as well as the Eastern District of Virginia guide the court’s analysis.
In re Robinson, No. 10-34516-KRH, 2011 WL 864937, (Bankr. E.D. Va. Mar. 10, 2011); In re
Morrison, 443 B.R. 378 (Bankr. M.D.N.C. 2011); In re Herbert, 405 B.R. 165 (Bankr. W.D.N.C.
2008). These three opinions demonstrate an evolution of the “economic unit approach” to
determining household size, addressing the growing number of debtors with blended families
and joint custody obligations without ignoring the economic realities of a debtor’s living
situation.
Before turning to the economic unit approach, the court briefly addresses the two
alternative methods of calculation and their often cited criticisms. The “Heads on Beds”
approach employs the U.S. Census Bureau’s definition of household, which is “all the people
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who occupy a housing unit.” U.S. Census Bureau, Current Population Survey
(CPS)—Definitions and Explanations, http://www.census.gov/population/www/cps/cpsdef.html.
This definition is the broadest of the three approaches because it does not require the individuals
to be related by blood or marriage and does not account for the financial contributions and
dependency of the individuals involved. See In re Robinson, 2011 WL 864937, at *6; In re
Herbert, 405 B.R. at 168. In addition, the Census Bureau has a “radically different” purpose in
calculating household size—determining demographics and population size—as compared to the
means test and Official Form 22C. In re Jewell, 365 B.R. 796, 800 (Bankr. S.D. Ohio 2007).
Thus, while it appropriately captures households where a debtor supports individuals to whom he
or she is not related, it fails to consider whether individuals are dependent on one another.
The second approach is derived from the Internal Revenue Service definition of
“household,” which is all the individuals who could be or are included on the debtor’s tax return
as dependents. Courts have criticized this definition for being too narrow because a debtor could
easily support an individual without declaring that person as a dependent on his tax return, In re
Robinson, 2011 WL 864937, at *6, and for its lack of congruency with the purpose of the
Bankruptcy Code and means test, In re Morrison, 443 B.R. at 387-88. The Internal Revenue
Code is drafted with the purpose of collecting tax revenue, while the means test is designed to
calculate the debtor’s disposable income remaining after all reasonable and necessary expenses
are deducted from monthly income. In re Morrison, 443 B.R. at 388.
The court adopts the third approach, the “economic unit approach,” following the
decisions in Robinson, Morrison, and Herbert. The economic unit approach—coined as such by
Judge Waldrep—assesses the number of individuals in the household that act as a single
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economic unit by including those who are financially dependent on the debtor, those who
financially support the debtor, and those whose income and expenses are inter-mingled with the
debtor’s. Id. at 386. The court in Herbert adopted this approach for a debtor whose economic
unit included eleven individuals—himself, his girlfriend, the child they shared, and the
girlfriend’s eight children from a previous relationship. The debtor consistently supported these
individuals for several years, even attempting to adopt the eight children whose biological father
was incarcerated. In re Herbert, 405 B.R. at 166. In Morrison, the court found the debtor
operated in an economic unit of two. The debtor’s boyfriend owned their home and paid the
mortgage, while the debtor paid for food, utilities, and household goods for the two. In re
Morrison, 443 B.R. at 388. Even though the two filed separate tax returns, they shared a
significant amount of their income and expenses. Id.
Judge Huennekens of the Eastern District of Virginia took this analysis one step further
when presented with a debtor whose children resided with him four nights per week. The court
treated the children as fractional members of the household, each being four-sevenths of a
member, multiplied by four, which approximately equaled two full children. In re Robinson,
2011 WL 864937, at *8. Dividing children into fractions is not ideal; the method fails to capture
the nuances of familial support and bonds. In Robinson, the male debtor supported four
children, paid their expenses during their time with him as well as child support to their mothers
during their time apart from him. Id. Neither of the mothers contributed to the care of the
children during the days they spent with their father. Id. The male debtor was solely responsible
for the medical care of one son who required significant treatment. Id. The children resided
with him on scattered nights of the week, and although only deemed four-sevenths of a
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1The eldest stepdaughter is 19 and based on the stipulated facts submitted by the parties,
appears to be financially dependent.
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household member, each child appeared to have a full-time father. Putting the negative
connotations of “carving out fractional member[s]” of a household aside, as described in the
debtor’s brief, it is the best method the court can employ to “adapt to dynamic economic change
including various types of family structures regardless of size, shape, or composition.” Id.
Using fractions to account for dependents who reside with the debtor on a part-time basis
is useful in calculating variable costs such as food, utilities, and out-of-pocket health care
expenses. Robinson recognizes the shortcomings of this mathematical formula when addressing
fixed costs. For example, the debtor in Robinson as well as the debtor here, have to maintain
housing and vehicles to accommodate all the children in the likely event that all are together on
any day of the week. Citing Hamilton v. Lanning, 130 S. Ct. 2464 (2010), the court in Robinson
stated that bankruptcy courts still “retain the discretion to depart form the mechanical approach
contemplated by the language of 11 U.S.C. § 1325(b) when necessary.” Id. (citing Hamilton,
130 S. Ct. at 2470). Form 22C includes lines for these adjustments, such as Line 26 for housing,
Line 36 for health care, and Line 60 as a catchall for monthly expenses not included on the form.
Id. at *9. The trustee is free to object to additional expenses that are “contrived or inappropriate”
given a particular debtor’s circumstances. Id.
The parties have stipulated to the amount of time per year the children reside with the
debtor and her husband. Based on the amounts provided, the debtor’s sons—residing with her
204 days out of a possible 365—each constitute .56 members of the household. The debtor’s
stepchildren1—residing with her 180 days out of a possible 365—each constitute.49 members.
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Together, the children equal 2.59 members, which rounds up to three. Therefore, the debtor,
along with her husband and “three” children, constitute a household of five. If any particular
expenses exist that the debtor must meet given the family’s total size of seven, the debtor is free
to include those in an amended Form 22C and provide documentation of those costs.
Based on the foregoing, the motion for confirmation is DENIED with leave to amend the
debtor’s disposable income calculation and plan to reflect the household size discussed above.
END OF DOCUMENT
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