Summary of a Recent
Judicial Development in
Bankruptcy

Unborn Children Do Not Count as Members of Household

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In In re Fleishman, 2007 Bankr. LEXIS 2312 (Bankr. D. Or. July 9, 2007), corrected by 372 B.R. 64 (Bankr. D. Or. 2007), the United States Bankruptcy Court for the District of Oregon held that for purposes of calculating the "applicable commitment period," a debtors' household does not include unborn children, and the "applicable commitment period" is determined as of the plan confirmation date.

Background

Debtors filed their Chapter 13 petition in February 2007, and soon after filed their "B22C Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income" (B22C). Id. at *1-2. Debtors included their unborn child in their calculations for the applicable commitment period for their plan based on the fact that the child would be a part of their household from June 2007 through the remaining life of their plan. Id. at *2. If the unborn child was not included as a member of their household, their annual income would have been above the median income for a household of three and their applicable commitment period for plan purposes would have been 60 months. Id. at *3. If their unborn child was considered a member of their household, their annual income would have been below the median income for a household of four and their applicable commitment period would have been only 36 months. Id. The trustee objected to confirmation of their plan and argued that the applicable commitment period should be 60 months. Id.

Arguments

The trustee argued that the unborn child should not be counted as part of the household, and so the applicable commitment period should have been 60 months rather than 36 months. Id. at *3.

The Debtors argued that their unborn child should count as a member of the household, relying on several student loan discharge cases. Id. at *14.

Analysis and Holdings

Unborn children
The court noted that the Census Bureau does not define the terms "person" or "individuals." Id. at *8. However, the court reasoned that it made no sense to include unborn children for purposes of determining how many "persons" occupy a housing unit because some pregnancies terminate before a child is born, so "counting such pregnancies as 'persons' automatically would build inaccuracies into the statistics the Census Bureau is charged with compiling as accurately as possible." Id. at *8-9. Furthermore, the court recognized that unborn children do not count as members of households for tax exemption purposes. Id. at *9. The court even referenced Roe v. Wade, 410 U.S. 113, in which the U.S. Supreme Court did not recognize unborn children as having general constitutional rights as "persons." Id.

Time of determination
Under § 1325(b)(1), the "applicable commitment period" is determined "as of the effective date of the plan." Absent a clear definition of the "effective date of the plan," the court logically concluded that the effective date of the plan is the confirmation date, because the plan is not binding on a debtor and creditors until it is confirmed, and a debtor may amend the B22C freely to recalculate the applicable commitment period as appropriate post-petition. Id. at *25-26.

The case was decided on July 9, 2007.