§ 36.20     Form 122C-1: Commitment Period Calculation
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 36.20, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

As explained above,1 Part II of Official Form B22C is an attempt to calculate the applicable commitment period described in § 1325(b)(4) at a point in the flow of Form B22C at which no accurate calculation of CMI has yet occurred. Applicable commitment period in § 1325(b)(4) is ambiguously based on “current monthly income of the debtor and the debtor’s spouse combined.”2 The meaning of “combined” in this context is problematic. CMI, defined in § 101(10A), clearly excludes a nonfiling spouse’s income—except amounts regularly paid for the household expenses of the debtor or a dependent of the debtor.3 The applicable commitment period calculation in § 1325(b)(4) incongruously requires the CMI of the debtor and the debtor’s spouse “combined” even in a not-joint Chapter 13 case.4

[2]

Part II of Official Form B22C stakes out a peculiar interpretation of combined. Part II begins at Line 12 by carrying over the total of the debtor’s and spouse’s income from Line 11. This amount, of course, is not CMI as defined by § 101(10A) but is simply a combination all of the income of the debtor and the debtor’s spouse without regard to whether the debtor’s spouse is a joint debtor.

[3]

Line 13 is where the problems with Official Form B22C become acute. The instructions now read:

If you are married, but are not filing jointly with your spouse, AND if you contend that calculation of the commitment period under § 1325(b)(4) does not require inclusion of the income of your spouse, enter the amount of the income listed in Line 10, Column B that was NOT paid on a regular basis for the household expenses of you or your dependents. Otherwise, enter zero.
[4]

The optional “marital adjustment” at Line 13 invites (only) married debtors not filing jointly to subtract from the “total” at Line 11 income attributable to a nonfiling spouse that was included because of the instruction that a nonfiling spouse must complete Column “B” of Part I. Dragged into Part I was all of the nonfiling spouse’s income. Under § 101(10A), CMI for a married debtor not filing jointly does not include the nonfiling spouse’s income except to the limited extent described in § 101(10A)(B).5 The marital adjustment at Line 13 will correct for this over-inclusion of income in CMI only if the debtor “contends” brilliantly that the applicable commitment period calculation does not require inclusion of the income of a nonfiling spouse except for amounts paid by the nonfiling spouse on a regular basis for the household expenses of the debtor or a dependent of the debtor. Inconsistently, Line 7 instructs debtors, “Do not include amounts paid by the debtor’s spouse.”6

[5]

Line 13 addresses the applicable commitment period calculation, not the calculation of CMI. Applicable commitment period for a married debtor whether filing jointly or separately is based on the “combined” CMI of the debtor and the debtor’s spouse. At Line 13, we don’t have an accurate calculation of CMI7 and the form layers on a second problem, to determine the meaning of “combined” CMI for applicable commitment period purposes.

[6]

Perhaps the issues here are illustrated by considering a married debtor who is filing jointly with a spouse. Literally, the “marital adjustment” at Line 13 would not apply to a married debtor filing jointly, but counsel has to decide what “combined” means in § 1325(b)(4) even with respect to married debtors filing jointly. Section 101(10A) tells us how to calculate CMI for a married debtor filing jointly.8 If the phrase “current monthly income of the debtor and the debtor’s spouse combined” in § 1325(b)(4)(A)(ii) means the same thing as CMI “in a joint case” in § 101(10A), then the CMI of joint debtors “combined” can appear at Line 14 of Official Form B22C without making the contention at Line 13.9

[7]

But “combined” and “joint” probably are not synonymous in this context.10 The calculation of CMI for joint debtors is not the same as the CMI for a debtor and a debtor’s spouse combined. Married debtors filing jointly are not invited to make the marital adjustment at Line 13 and have no place in Part II of the form at which to remove income inappropriately included in the Report of Income in Part I that is not part of CMI and/or not part of the combined CMI of the debtor and the debtor’s spouse.

[8]

There are at least three possible interpretations of “combined” in § 1325(b)(4): (1) treat “combined” CMI the same as “joint” CMI; (2) calculate CMI separately as if each spouse was the “debtor,” then add together; and (3) use the hybrid option built into Part II of Official Form B22C.

[9]

The rules drafters’ definition of “combined” is different from the calculation of CMI separately for each spouse. The marital adjustment at Line 13 would exclude all of the nonfiling spouse’s income except for amounts paid on a regular basis for the household expenses of the debtor or a dependent of a debtor. This formulation is a nod to the possibility that the definition of CMI in § 101(10A) is inconsistent with “combined” CMI that includes a spouse’s income other than the portion paid on a regular basis for the household expenses of the debtor or a dependent of the debtor under § 101(10A)(B).11 Substituting “nonfiling spouse” for “debtor” everywhere in § 101(10A) produces a different meaning for “combined”: amounts regularly paid for the household expenses of a dependent of the debtor’s spouse who is not a dependent of the debtor would be captured by the substitution approach.

[10]

All of this signals that the rules drafters have prematurely pulled the trigger on a knotty question of statutory interpretation by offering a definition of “combined” in the guise of a “marital adjustment” at Line 13 of Part II of Form B22C. Married Chapter 13 debtors not filing jointly must decide whether to follow the instructions at Line 13 of Official Form B22C or to modify the form to produce a different applicable commitment period calculation. For married debtors filing jointly, the form provides no easy invitation to define “combined” CMI for applicable commitment period purposes.

[11]

Don’t forget that the problem at Line 13 is two layers deep: At this point in Form B22C, we don’t have an accurate statement of CMI that can be combined or adjusted for § 1325(b)(4) purposes;12 the “marital adjustment” at Line 13 is not a complete resolution of either the CMI miscalculation or of the meaning of “combined” for § 1325(b)(4) purposes. The path of least resistance is to accept the marital adjustment if you are a married debtor not filing jointly and subtract at Line 13 all of the spouse’s income included in Part I except for amounts paid on a regular basis for the household expenses of the debtor or the debtor’s dependents. Joint debtors should consider adjustments at Line 13 to express “combined” CMI notwithstanding the contrary instruction.

[12]

Unmarried debtors are instructed to enter zero at Line 13. The same for married debtors filing jointly, notwithstanding that a “marital adjustment” to reflect a definition of “combined” in § 1325(b)(4) is warranted for married debtors filing jointly as well as for married debtors not filing jointly.

[13]

Lines 15, 16 and 17 of Official Form B22C complete the calculation of applicable commitment period.13 Detailed elsewhere,14 upon proper objection to confirmation, a Chapter 13 plan after BAPCPA must provide that all of the debtor’s projected disposable income received in the “applicable commitment period” is applied to make payments to unsecured creditors.15 The applicable commitment period is defined as either “3 years” or “not less than 5 years,” depending on whether “the current monthly income of the debtor and the debtor’s spouse combined” is less than or greater than the median family income for a household of the size of the debtor’s in the applicable state.16

[14]

Line 15 purports to annualize “current monthly income” because CMI is a component of the applicable commitment period calculation in § 1325(b)(4), but the amount carried over from Part I of Form B22C even if adjusted at Line 13 is not an accurate statement of CMI for debtors engaged in business and for married debtors not filing jointly.17 Line 14 is not a statement of CMI and annualizing Line 14 at Line 15 simply produces an annualized misstatement of CMI. For § 1325(b)(4) purposes, the form should annualize CMI for debtors who are not married and annualize “combined” CMI for debtors who are married. This can’t be done at Line 15 without first generating a correct Statement of Current Monthly Income for all debtors and then a correct meaning for “combined” CMI at Line 13 with respect to married debtors.

[15]

Be careful determining household size and selecting the correct median family income amount from the Census Bureau data referenced in Line 16. These are not the simple matters they may first appear.18

[16]

Line 16 of Official Form B22C directs debtors to a Web site to get the median family income figure for the applicable state and household size. Be careful retrieving these median family income numbers. Median family income is not calculated by the Census Bureau for every state in every year. It is not unusual to find that the numbers available are not for the year in which the petition is filed. The numbers retrieved must be adjusted for inflation to the year of the petition. An inflation calculator of the sort necessary is found on the Consumer Price Index home page.19

[17]

Line 16 assumes that the “applicable state” for median income purposes is the debtor’s state of residence.20 But Form B22C nowhere instructs the debtor how to determine “household size.” Ambiguously, Line 16 speaks of “family size” and “household size.” The two concepts are not the same. According to the U.S. Census Bureau Web site, a family is “a group of two or more people who reside together and who are related by birth, marriage or adoption.”21 A family “includes a householder and one or more people living in the same household who are related to the householder by birth, marriage or adoption.”22 In contrast, the Census Bureau considers a household to “include[ ] all of the people who occupy a housing unit as their usual place of residence” without regard to whether the occupants are related by birth, marriage or adoption.

[18]

Section 1325(b)(3) and (b)(4), as amended by BAPCPA, use both terms. But the median family income data reported by the Census Bureau seem to use family rather than household size as the counting factor. Line 16 of Official Form B22C could be interpreted to use the debtor’s household size to determine the appropriate median family income.

[19]

Using the applicable median family income from Line 16 and the “combined” CMI required by § 1325(b)(4), Line 17 divides debtors into three-year and five-year commitment periods. This information is then reflected in the check boxes at the top of page 1 of the form. Between October 2005 and October 2006, debtors with CMI less than applicable median family income were instructed at Line 17 to skip Parts III, IV, V and VI. This instruction had the unfortunate effect of distorting the Statement of CMI for a married debtor not filing jointly who did not “contend” correctly at Line 13.23 That instruction was removed from Line 17 in October 2006, and all debtors now complete Part III of the form.

[20]

For an unmarried Chapter 13 debtor, the CMI of the debtor should appear on Line 14 of Official Form B22C to be annualized at Line 15 and compared to median family income from Line 16. The applicable commitment period box will be checked at Line 17 based on whether the debtor’s CMI is over or under median family income. Once again, this works only if adjustments were made to produce an accurate statement of CMI at Line 14.24

[21]

For debtors with CMI (combined or otherwise) under applicable median family income, Line 17 generates a commitment period of three years and the instructions skip the rest of Official Form B22C. Go to Line 60 and sign the form. You are done.

[22]

For debtors with CMI over applicable median family income, the commitment period calculation is five years and as the instructions say, move on to the disposable income calculation in Part III.25


 

1  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

2  11 U.S.C. § 1325(b)(4) (emphasis added), discussed in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

3  See 11 U.S.C. § 101(10A), discussed in §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline.

 

4  11 U.S.C. § 1325(b)(4), discussed below in this section and in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

5  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline.

 

6  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

7  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

8  See 11 U.S.C. § 101(10A)(A), discussed in §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline.

 

9  This assumes that CMI is correctly calculated by making other adjustments to Form B22C before you reach Line 13. See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

10  See 11 U.S.C. § 1325(b)(4), discussed in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

11  See § 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline.

 

12  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

13  11 U.S.C. § 1325(b)(4) is discussed in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

14  See § 466.1 [ In General ] § 92.1  In General.

 

15  11 U.S.C. § 1325(b)(1), discussed in § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

16  11 U.S.C. § 1325(b)(4)(A) (emphasis added), discussed in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

17  See above in this section, and see § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

18  See § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

19  www.westegg.com/inflation.

 

20  This assumption is discussed in § 469.1 [ Comparison of CMI to Applicable Median Family Income: § 1325(b)(3) ] § 92.4  Household Size and Comparison of CMI to Median Family Income: § 1325(b)(3).

 

21  Glossary at http://factfinder.census.gov/home/saff/main.html?_lang=en.

 

22  Glossary at http://factfinder.census.gov/home/saff/main.html?_lang=en.

 

23  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

24  See § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

25  Parts III, IV, V and VI of Official Form B22C are discussed in § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation.