Michael J Hernandez

1N THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
In re
MICHAEL J. HERNANDEZ,
)
)
)
)
)
Case No. 	11-21090
Chapter 13
Debtor.
OPINION ON CONFIRMATION OF
DEBTOR'S AMENDED CHAPTER 13 PLAN DATED JANUARY 26.2011
On March 21, 2012, this matter came before the court for an evidentiary hearing
on confirmation ofthe Debtor's Amended Chapter 13 Plan dated January 26, 2011
("Amended Plan") and the Trustee's objection. The court reviewed the record, testimony
and evidence and determines that the Amended Plan shall be confirmed.
Findings of Fact
Debtor filed his chapter 13 bankruptcy case on October 5, 2011. On that same
date, he filed his original chapter 13 plan. The Trustee objected to confirmation of the
original plan and the court set the matter for an evidentiary hearing. 	Subsequently the
Debtor filed an Amended Plan. Again, the Trustee filed an objection. At the time that
the Debtor filed his bankruptcy petition and original plan he claimed a household size of
three which included himself and his two children. Debtor testified that his ex-spouse
has primary care of the children, subject to his visitation of weekends, alternating
holidays and summer vacation. Debtor and his ex-spouse agreed, pursuant to the parties'
Child Custody and Property Settlement Agreement, that each would claim both children
as tax deductions in alternating years.
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 1 of 6

Subsequent to filing for bankruptcy, Debtor remarried. His current spouse has
two children that live with Debtor and his spouse (their mother). Debtor filed the
Amended Plan and Amended Form 22C asserting a household size of five, which
includes himself, his spouse, her two children and one of his children. The effect of the
change in the Debtor's household size is that his Amended Chapter 13 Statement of
Current Monthly Income and Calculation of Commitment Period and Disposable Income
("Form 22C") reflects that based upon comparing the Debtor's current monthly income
with the Wyoming median family income for a house of that same size, Debtor is a below
median income debtor.
Discussion
The Debtor argues that for the purposes of determining his applicable
commitment period and disposable income his household size is five. 	The Trustee
argues that the applicable commitment period is determined at the time that the Debtor
filed for bankruptcy petition and should be calculated as two. Additionally, the Trustee
argues that the Debtor voluntarily re-married and should not be able to claim a larger
household size for purposes of determining projected disposable income.
Determination of the applicable commitment period
The issue is what date is used to determine the Debtor's applicable commitment
period for his chapter 13 plan and the extent which his post-petition and pre-confirmation
changes in household size affect that calculation. This is an issue of first impression with
this court.
Page2
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 2 of 6

A Debtor may amend his petition and schedules, and in fact has a duty to do so, to
provide the parties and court current information regarding his financial situation. 1
The Bankruptcy Code establishes the applicable commitment period upon a
trustee's objection to confirmation of a plan. 2 The applicable commitment period is three
years if the current monthly income of the "debtor and the debtor's spouse combined" is
below the applicable state median income but five years if that current monthly income is
above the applicable state median income. 3
The Bankruptcy Court for the District of Kansas discussed the Bankruptcy Code
and when the applicable commitment period is determined in In re Anderson. According
to Anderson, "§ 1325(b)(1) provides the only guidepost for determine when the
applicable commitment period is determined." 4 Section 1325(b)(1 )(B) states,
Page 3
If the trustee of the holder of an allowed unsecured claim objections
to the confirmation of the plan, then the court may not approve the plan
unless, as of the effective date of the plan 5-
[T]he plan provides that all the debtor's projected disposable income
to be received in the applicable commitment period beginning on the date
that the first payment is due under the plan will be applied to make
payments to unsecured creditors under the plan."
The Kansas Court determined that "as of the effective date of the plan" is the date
I Fed. R. Bankr. P. 1009(a).
2 §1325(b).
3 8-1325 Collier on Bankruptcy, P 1325.11.(d) (16'' ed., Matthew Bender & Company, Inc.)
4 In re Anderson, 367 B.R. 727, 731 (Bankr. D. Kan. 2007).
5 Emphasis added.
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 3 of 6

on which the debtor's proposed plan is confirmed. "The debtor's household size on the
date the plan is confirmed is the pertinent benchmark." 6
Other courts which have addressed this specific issue include the United States
Bankruptcy Court for the District of Oregon in In re Fleishman 7 and the United States
Bankruptcy Court for the District of Illinois, Western Division in In re Baker. 8 Both
courts have followed the Anderson court and its analysis of the Bankruptcy Code.
This court finds the analysis of the Bankruptcy Code in Anderson persuasive. The
clear language of the statute reflects that upon the trustee's objection of a plan under
§1325(b)(l), the Debtor's applicable commitment period is determined, upon the
effective date of the plan or its confirmation. Therefore, if the court confirms the
Debtor's Amended Plan, and according to the calculations on his Amended Form 22C,
his applicable commitment period is 36 months.
Next the tru;;tee objects to the Debtor claiming his spouse and two step-children as
dependents. This court has addressed the standard for determining dependents in In re
Heinze. 9 In Heinze, this court adopted the "dependent" approach as established by the
Bankruptcy Court ofLouisiana, 10 stating:
2009).
Page4
6 !d. at 731.
7 In re Fleishman, 372 B.R. 64 (Bankr. Ore. 2007).
8 In re Baker, Case No. 08 B 72480, 2008 Bankr. LEXJS 391, Bankr. N.D. lll. West Div. January 30,
9 In re Heinze, Case No. 10-20455, 2011 Bankr. LEXIS 187, (Bankr. D. Wyo. January II, 2011).
10 In re Dunbar, 99 B.R. 320 (Bankr. M.D. La. 1989).
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 4 of 6

In the "dependant" approach, the debtor must have reasons to
provide support for a dependant and the claimed dependant must have a
reason to rely on the debtor ... The court considers the following factors to
determine if the dependant should be included in the household size: (1)
the length of time the claimed dependant resided in the household; (2) the
reason the claimed dependant resides in the household; (3) the age of the
alleged dependant; (4) how much income or support the dependant receives
from a third party; (5) whether the dependant is in school; and, (6) whether
the dependant could be claimed as an IRS deduction or qualifY in another
legal way, i.e. for purposes of medical insurance.
The Debtor testified that his current wife and children have been living with him
for one year; that the step-children live in the home full time; his wife has primary
custody of the children, whose ages are 12 and two and one-half years old, respectively;
and both children are suppose to receive child support from their natural fathers. 	One
child has visitation with his father in New Hampshire and receives the child support.
However, the visitation of the other child is pending and no child support is received.
The Debtor testified that he pays the rent, food, gas for heat, fuel for vehicles, cell phone,
clothing for himself, and medical insurance for his wife and her children. He also pays
child support for his children, medical insurance, pay one-half of the uninsured medical
expenses, and buys clothing for his own children. The Debtor's spouse owes a small
business. However, according to her 2010 tax return the business operated at a loss.
Debtor and Debtor's spouse will file their 2011 tax return together and claim her
children. 11
11 According to the alternating year agreement regarding his children's tax exemptions, he will not claim
his children for the 20 II tax year ..
Page5
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 5 of 6

The court finds that the Debtor meets the standards to claim his spouse and step-
children as dependents for the purpose of determining household size. The spouse and
children have been living with the Debtor for one-year; the parties have married; the
children are minors; the spouse does not have an independent income source and receives
child support only for one of the children; one of the children is in school; the other is
not of school age; both children and the Debtor's spouse will be claimed as an IRS
deduction in their joint return for 2011.
Based upon the above analysis, the Debtor's Amended Plan complies with
§1325(a)(3) and §1325(b)(4) and may be confirmed as a three-year plan, claiming the
dependants to encompass a household size of five. 	The Court overrules the Trustee's
Objection to Confirmation.
This opinion constitutes the Court's findings of fact and conclusions of law. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
DATED this~day of March, 2012.
Service to:
Page6
Frank Watkins
Mark Stewart
Case 11-21090 Doc 71 Filed 03/23/12 Entered 03/23/12 11:29:49 Desc Main
Document Page 6 of 6