Even though a couple were married only one month before the husband filed a chapter 13 petition, Chicago’s Bankruptcy Judge Michael B. Slade decided that the husband was entitled to claim a house of “2” even though the wife contributed nothing to household expenses.

The income of the debtor-husband was above the median. The number in his household therefore would affect how much he would be required to pay creditors under a chapter 13 plan. See Section 707(b)(2)(A).

The couple were married only one month before the debtor filed his chapter 13 petition. The non-debtor wife testified that she used her income to pay her personal expenses and paid none of the household expenses.

The chapter 13 trustee filed an objection to confirmation of the debtor’s plan, contending that the payments should be larger because the household should consist of only one person, not two. The trustee argued that the debtor’s “financial circumstances are unchanged by his marriage” because he was paying the same amounts for housing before and after marriage.

Judge Slade responded by saying “that married couples who live together — even those who try to keep their finances separate — are intertwined in numerous ways” and “that marriage has consequences, legal and economic.”  The debtor’s payment of all of the household expenses, he said, “demonstrates, beyond doubt, interdependence, as [the debtor’s] income is also used to pay some of her expenses.”

The outcome depended on the meaning of “household,” a term not defined in the Bankruptcy Code. “All dictionary definitions of the term that I have located, however, would include two spouses living together,” Judge Slade said.

In terms of authorities on how to count the number in a household, Judge Slade identified three “competing approaches.”

The “heads on beds” approach simply counts the number of people living in the housing unit. The “IRS dependent” approach includes only those whom the debtor may claim as a dependent. The “economic unit” approach rests on the financial interdependency between the debtor and others. The Seventh Circuit has not taken a position, Judge Slade said.

Judge Slade said he was “persuaded that Congress most likely intended bankruptcy courts to apply something like the ‘economic unit’ test, looking to the details of the debtor’s factual situation and determining, in the court’s best judgment, how many other persons’ finances are intertwined at least to some degree with the debtor’s.”

But “regardless of what test is applied,” Judge Slade said it was “hard to see how [the debtor’s] wife would not be part of his ‘household,’” for several reasons. First, he said, “none of the parties has cited a single case in which a debtor’s cohabitating spouse was not counted in a debtor’s household size.”

Second, he said that the Bankruptcy Code does in other places, “explicitly address situations where a debtor is married but has finances separate from his or her spouse. 11 U.S.C. § 707(b)(7)(B).” Third, “the Official Forms strongly suggest that debtors should count in these calculations their cohabitating spouse.”

Refusing to be the first judge who “excluded a cohabitating spouse from the ‘household,’” Judge Slade said it was “highly relevant that the Debtor pays housing costs for he and his wife.” He overruled the trustee’s objection, holding “that the Debtor’s cohabitating spouse is part of his ‘household’ for purposes of the relevant calculations under the Bankruptcy Code.”