Johnson v. Zimmer, No. 11-2034 (4th Cir. 2012)
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In this direct appeal from the United States Bankruptcy Court for the Eastern District of North Carolina, the Fourth Circuit addressed a question of first impression in the circuit courts of appeal: in light of the 2005 amendments to the Bankruptcy Code, codified in Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"), how is the "household" size of a debtor seeking bankruptcy relief to be calculated under Chapter 13. Petitioner Tanya Johnson filed a voluntary petition for Chapter 13; upon receiving notice of Petitioners motion for confirmation of the plan, Petitioner's ex-husband objected because he felt the plan overstated Petitioner's household size and monthly expenses. As a result, the ex-husband maintained that Petitioner's disposable monthly income was insufficient to make payments to two unsecured loans for which he and Petitioner were jointly liable. In examining the parties' dispute, the bankruptcy court observed that the Code does not define "household," there was no binding precedent on point, and that other bankruptcy courts followed three different approaches to define that term. Finding no error in the bankruptcy court's method of calculating the Petitioner's household size based on how many individuals operate as an "economic unit" with the Petitioner, the Fourth Circuit affirmed the bankruptcy court's order denying the Petitioner's motion for confirmation with leave to amend the Debtor's "disposable income calculation and plan to reflect the household size [of five]."
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