Recently I appeared with a client at a 341 hearing and the trustee raised an interesting point about family size calculations for purposes of the median income/means test calculation.
As you may know, when you first come to my office, you have to provide me income data for the past 6 months so I can run a median income test. If your average monthly income during that 6 month period is less than the average monthly income for a similarly sized family in Georgia, we are free to file Chapter 7 or a less than 5 year Chapter 13.
As you might expect, the average income for a family of 3 is higher than the average income for a family of 2. So it is easier for a 3 person family to fall below the median income limit (meaning you have more choices).
In my case, my client filed individually. He is married and has one teenage child from a prior marriage. He pays child support.
When I prepared this case, I showed that he had a family size of 3 (debtor, spouse and teenage child). The trustee objected saying that because the child does not live with him, the actual family size is 2.
This raises a number of interesting questions. What if a debtor and his ex-wife share custody equally? What if the child lives at college? What if the child is spending her junior year of high school abroad? What if the ex-spouse has legal custody but the child actually lives some or all of the time with the debtor.
There are no answers yet for these questions but it is easy to see how these types of issues will spawn a lot of appellate litigation.