Melinda Sue Pattison

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Case 1:05-bk-17994 Doc33 Filed 07/06/06 Entered 07/07/06 08:58:17 Desc Main
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This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southem District of Ohio.

IT IS SO ORDERED.

di

Dated: July 06, 2006 JWincent Aug, Jr.
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT
WESTERN DIVISION
In re Case No. 05-17994
Melinda S. Pattison Chapter 13 (Judge Aug)

Debtor
ORDER SUSTAINING TRUSTEE’S OBJECTION TO CONFIRMATION

This matter is before the Court on the Chapter 13 Trustee’s objection to
confirmation (Doc. 22) and the parties’ post-hearing briefs (Docs. 31, 32). A hearing was
held on May 4, 2006.

The issue before the Court in how to properly calculate the amount of the Debtor’s
disposable income under 11 U.S.C. §1325(b)(1)(B).

The Debtor initially filed a chapter 7 petition on October 7, 2005. After the United
States Trustee filed a motion to dismiss under 11 U.S.C. §707(b), the Debtor converted
her case to one under chapter 13.

There are three debts to be paid through the Debtor’s plan in the total amount of
$15,293. See Doc. 32, p. 2. All the debts were incurred by the Debtor prior to her
marriage to her current husband. The Debtor does not work but she receives monthly

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child support payments from her prior husband in the amount of $467. The Debtor’s
current husband has a monthly gross income of $8,621. The Debtor has two children, one
from her prior husband and one from her current husband. According to the Debtor’s
calculations, the available family income to fund the plan is $1,148 monthly (total net
monthly income of $6,213 less total monthly expenses of $5,065).

The Debtor has proposed a monthly plan payment of $75. According to the
parties, this would be a 14% plan.

The Trustee contends that because the Debtor and her husband are a joint
economic unit, and because of their high total family income, the Debtor’s plan should be
a 100% plan. The Debtor contends that since her monthly income is 7.5% of the total
family income, she should be responsible for 7.5% of the total family expenses (or
$379.88), leaving her with monthly disposable income of $88.03.

Section 1325(b)(1)(B) requires a debtor to include all disposable income into the
plan. This seemingly straightforward requirement is affected when the non-debtor spouse
has income. The majority of cases hold that the income of the non-debtor spouse must be
included in computing the debtor’s disposable income. E.g., In re Ehret, 238 B.R. 85, 88
(Bankr. D. N.J. 1999)(citations omitted); Jn re Rose, 101 B.R. 934, 943 (Bankr. S. D.
Ohio 1989)(Cole, J.). These decisions are based on the rationale that a portion of the non-
debtor spouse’s income is likely to be applied to the cost of the debtor’s needs, thereby
potentially increasing the share of the debtor’s own income that is not reasonably
necessary for support and, hence, available as disposable income. Jn re Carter, 205 B.R.
733, 736 (Bankr. E.D. Penn. 1996).

The majority of the cases further hold that the expenses of the non-debtor spouse
must also be included in the computation. E.g., In re Rose, 101 B.R. at 943.

A few courts have adopted a mechanical analysis, apportioning the payment of
household expenses by the debtor and non-debtor spouse to match the apportionment of
their respective incomes. See In re Nichols, 249 B.R. 160 (Bankr. N. D. Ill. 2000). The
Debtor in this case urges us to adopt this analysis. We acknowledge that this mechanical
approach may be generally appropriate when the respective incomes of the debtor and the
non-debtor spouse are relatively similar’ because such an apportionment is probably a
true reflection of how the costs of the family expenses are actually paid. However, when
there is a great disparity between the two incomes, a mechanical apportionment is not at
all reflective of the payment of the family expenses. This is demonstrated by the facts of

1

In MeNichols, the debtor earned 40% of the family income and the non-debtor
spouse earned 60%.

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the present case. The Debtor could not possibly support herself, much less her
dependents, on $467 a month. Rather, the facts of this case present a financial picture in
which the non-debtor spouse is paying virtually all of the Debtor’s expenses, thus freeing
up all of the Debtor’s monthly income as disposable income. To hold otherwise would
allow the Debtor to live relatively “high on the hog” while her unsecured creditors receive
virtually nothing. See In re McNichols, 259 B.R. at 172 (quotation in original). This is
especially true in this case given the relatively small amount of debt to be paid.’

Accordingly, we hold that the amount of the Debtor’s disposable income is $467
monthly.

The Trustee’s objection to confirmation ins hereby SUSTAINED.

The Debtor shall have 20 days from the entry date of this Order to file an amended
plan consistent with this Order, or this case will be dismissed.

IT IS SO ORDERED.
Distribution list:

Debtor

Stephen Crowe, Esq.

Chapter 13 Trustee
US. Trustee

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2

While the Chapter 13 Trustee did not raise the issue of good faith, we question
whether this Debtor is truly deserving of bankruptcy relief under either chapter 7 or chapter 13.