In this case, In re Bostwick, 2009 WL 1788046 (Bky.D.Minn. June 23, 2009), the debtor earned $49,992 per year.  Minnesota’s median income for a one-person household was $45,832 per year; for a two-person household, $59,778.  She paid $800 per month rent to the landlord for use of one bedroom and the common areas of a single family home.  Her roommate paid $800 per month rent for a different bedroom and use of the common areas.  These two unrelated roommates split the utility costs.  A third bedroom was vacant, and the landlord was looking for a renter at the same $800 per month rent.

The chapter 13 trustee objected to the debtor’s plan, claiming that she should have included her roommate’s rent payments as “income paid towards the debtor’s household expenses.”  The trustee also argued that this would push the debtor’s income over the median for a two-person household in Minnesota, requiring a five year plan, rather than three years as the debtor had proposed.

The court held that the utilities were a shared household expense, and therefore the roommate’s half of the utilities should be added to the debtor’s income.  However, this only increased the debtor’s income by a few thousand dollars per year.  Next, the court held that the roommate’s rent expense was his own obligation, and it did not constitute a payment toward the debtor’s household expenses.  Also, none of the roommate’s other income was paid for the debtor’s household expenses, and his income was properly excluded from consideration.

The court also held that under Census Bureau guidelines, the debtor lived in a two-person household.  There was no separate entrance in the home for each of the different tenants, and except for having separate bedrooms and storage, they lived and ate meals together in the home’s common areas.  The fact that the debtor and roommate were unrelated also had no bearing on the question of household size.

The court held that the debtor’s annual income was below the median income for a two-person household, and accordingly her three-year chapter 13 plan was confirmed.

By Craig Andresen, Attorney at LawcloseAuthor: Craig Andresen, Attorney at Law Name: Craig Andresen, Attorney at Law
Email: craig@cwalaw.com
Site: http://www.cwalaw.com
About: Helping consumers in every county in Minnesota since 1987. Call (952) 831-1995, or visit my website, to set up an initial consultation and learn how I can help you. Mention Bankruptcy Law Network when you call.See Authors Posts (118)