► In This Issue:

• It’s a House(hold) Party! Determining Household Size for the Purpose of Means Testing
• Letter to the Editor (Re: Trustee Sales in the 1st Circuit)
• Complimentary Webinar to Discuss Role of CFPB in Bankruptcy)

It’s a House(hold) Party! Determining Household Size for the Purpose of Means Testing

John Brookhuis Brookhuis Law, LLC Atlanta

Means testing was introduced to the world of bankruptcy with the adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). The means test is set forth in 11 U.S.C. § 707‌(b) and is applied to above-median debtors in chapter 13 through 11 U.S.C. § 1325‌(b). The means test has more than one direct use and contains many elements and nuances, but at its core, the primary purpose is to determine whether a consumer debtor has enough disposable income that would allow him/her to propose a viable repayment plan to his/her creditors.

A crucial element of the means test in determining whether a debtor (or debtors, in a joint case) has excess disposable income is the size of the household. This determines what deductions a debtor can take from his/her “current monthly income,” defined by the Bankruptcy Code as “the average monthly income from all sources that the debtor receives ... during the six-month period ending on the last day of the calendar month immediately preceding the date of the commencement of the case.” The Internal Revenue Service (IRS) sets national and local standards for the amount of each deduction that is allowed based on similarly situated individuals or families. These deductions are then applied to the debtor’s income and work to reduce the disposable income by those amounts. The standard deduction amounts increase with each additional member of the debtor’s household, thus the size of the debtor’s household is the key to the amount that the debtor may deduct against his/her income.
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Letter to the Editor (Re: Trustee Sales in the 1st Circuit)

Edward J. Ford Ford & McPartlin, P.A. Portsmouth, NH

Re: Trustee Sales in the 1st Circuit: A Reply to Attorney David G. Baker’s response to my article in the November 2015 issue of the American Bankruptcy Institute Journal discussing In Re Traverse, 753 F.3d 19 (1st Cir.), cert. denied sub nom. DeGiacamo v. Traverse, 1358 S.Ct. 459, 190 L.Ed. 2d 332 (2014). David Baker's article, "Another View: Trustee Sales in First Circuit" can be found in the May 2016 edition of the Journal.

Dear Sirs:

Attorney Baker and I agree on a number of things. We disagree about the effect of a claim of exemption. Attorney Baker says: “[o]nce the debtor’s interest in the property has been exempted, and thus withdrawn from the estate, the trustee cannot sell that interest.” That statement is inaccurate.
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Complimentary Webinar to Discuss Role of CFPB in Bankruptcy

The next ABILive webinar will be held on Wednesday, June 22nd, at 1 pm ET. This webinar, titled "Yes, Bankruptcy Practitoners Need to Know about the CFPB," will feature David Hixson of the CFPB, Alane Becket of Becket & Lee, LLP, and Karen Rowse-Oberle of Butler, Butler & Rowse-Oberle, P.L.L.C. This webinar will discuss the role of the Consumer Financial Protection Bureau, and will be especially informative for financial service providers, student lenders, bankers, mortgage lenders, and consumer bankruptcy professionals. Click here to register.

This webinar is open to all professionals - feel free to invite your colleagues!