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Means Test: Expenses above the standards

In re Shinkle, 382 B.R. 85 (Bankr. E.D. Ky., 2008)

Code section 707(b)(2)(B) gives examples of special circumstances such as a serious medical condition or a call to active duty in the armed services. The statute also requires that a debtor’s special circumstances leave him with “no reasonable alternative” to incurring additional expenses or an adjustment of current monthly income. The court in In re Scarafiotti, 375 B.R. 618, 631 (Bankr.D.Colo.2007), found that the debtors had demonstrated special circumstances in their son’s need to be in a particular school where his mental and emotional difficulties were being successfully addressed, and that a modest increase in the debtors’ housing allowance was justified. Id.

        The UST argues that the Debtors herein have failed to cite any circumstances which offer them no reasonable alternative. He states that while the Debtors contend that they must live in Boone County, they have made no showing of inability to find less expensive housing there, They further have made no showing that it is necessary for them to live in a house, rather than an apartment, and certainly not that it is necessary for them to live in their current house, aside from the fact that they might have an opportunity to own it. By contrast, special circumstances were demonstrated in In re Graham, 363 B.R. 844, 847 (Bankr.S.D.Ohio 2007), where the debtor husband had to move 800 miles from his wife and her two children from a previous marriage in order to find gainful employment. The debtor wife could not join her husband because of the constraints of her shared custody agreement. These debtors were allowed to claim a second set of housing expenses for the husband. Id.

        The UST further notes that while the Debtors herein have cited the cost of moving as a factor justifying their remaining in their current home, they have provided no documentation of the cost of moving as required by Code section 707(b)(2)(B)(ii). That cost is, obviously, a one time cost to the debtors. The UST finally contends that the Debtors only want to become homeowners at the expense of their creditors, and that there is no demonstrable justification for their housing expense outside the parameters contemplated by the IRS Local Standards. The potential to become homeowners again is not limited to this particular property.

        While the Bankruptcy Code allows some flexibility in regard to the allowable amount debtors’ may claim for housing expenses, the court agrees with the UST that the Debtors have not demonstrated special circumstances that justify their claim for an additional housing allowance. The amount shown on Line 21 of their Form B22A should therefore be zero. With this adjustment the Debtors’ 60 month disposable income is far greater than $10,000.00, resulting in the presumption of abuse under section 707(b)(2). The Debtors’ case therefore will be DISMISSED unless debtor’s file an appropriate motion to convert their case to Chapter 13, or another chapter of the Bankruptcy Code, within 15 days of entry of this Memorandum Opinion. In re Shinkle, 382 B.R. 85 (Bankr. E.D. Ky., 2008)