§ 95.25     Administrative Expenses, Sorta
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 95.25, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

For Chapter 13 debtors with current monthly income (CMI) greater than applicable median family income,1 “amounts reasonably necessary to be expended—”2 are determined in accordance with § 707(b)(2)(A) and (B).3 Among the 10 classes of expenses allowed as monthly expenses by § 707(b)(2)(A)(ii) is this provision for administrative expenses:

In addition, for a debtor eligible for chapter 13, the debtor’s monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 percent of the projected plan payments, as determined under schedules issued by the Executive Office for United States Trustees.4

Of course, all Chapter 13 debtors required to consult § 707(b)(2)(A) and (B) to determine disposable income will claim to be eligible for Chapter 13.

[2]

The phrase “actual administrative expenses of administering a chapter 13 plan” is of uncertain meaning in this context. The compensation and reimbursement of expenses of a standing Chapter 13 trustee under 28 U.S.C. § 586(e) do not fit neatly into administrative expenses as described in § 503 of the Bankruptcy Code.5 The reference to 10 percent and to schedules issued by the Executive Office for U.S. Trustees suggests that the drafters of this section thought that the percentage fee for compensation and reimbursement of expenses determined by the Attorney General under 28 U.S.C. § 586(e) was included in “actual administrative expenses.” Ten percent is the maximum the Attorney General can allow under 28 U.S.C. § 586(e)(1)(B)(i) for a debtor who is not a family farmer.6 It is likely that courts will overlook the confusing reference to administrative expenses in subclause (III) of § 707(b)(2)(A)(ii).

[3]

But there could be more to this inquiry about administrative expenses. In many judicial districts, the “actual administrative expenses” of administering a Chapter 13 plan are substantially less than the maximum 10 percent allowed by subclause (III) of § 707(b)(2)(A)(ii). The phrase “actual administrative expense of administering a chapter 13 plan” is broader than just the amount of compensation and reimbursement of expenses allowed to a standing Chapter 13 trustee. There are other expenses of administration in a Chapter 13 case that qualify as “administrative expenses” for purposes of § 503. For example, Chapter 13 debtors pay attorney’s fees that are determined under § 330(a)(4)(B) and are allowable administrative expenses under § 503(b)(2).7 If the Executive Office for U.S. Trustees schedules actual expenses of administering a Chapter 13 plan for a district at less than 10 percent of projected plan payments, will Chapter 13 debtors be allowed to add other administrative expenses such as attorney’s fees?

[4]

The wording of the section perhaps somewhat favors the view that only the percentage amount scheduled by the Executive Office for U.S. Trustees will be allowed under subclause (III). It is unlikely that the schedules of administrative expenses issued by the Executive Office for U.S. Trustees will include amounts other than the percentage fee for compensation and reimbursement of expenses determined by the Attorney General under 28 U.S.C. § 586(e). Debtors may have to press for inclusion of other admini-strative expenses in this percentage calculation.

[5]

Notice also that the maximum percentage of 10 percent is then applied to “projected plan payments.” For purposes of subclause (III), the additional monthly expense for actual administrative expenses is the percentage determined by the Executive Office for U.S. Trustees multiplied by the projected plan payment. How will Chapter 13 debtors determine the projected plan payment for this purpose? Presumably, it will be based on the proposed plan, which may or may not exist at the time the debtor is required to file Official Form B22C.

[6]

This additional monthly expense must be claimed at Line 50 of Official Form B22C.8 Line 50 instructs the debtor to multiply “projected average monthly Chapter 13 plan payment” times the “current multiplier for your district as determined under schedules issued by the Executive Office for United States Trustees.” The instructions do not reveal how the debtor should determine projected average monthly Chapter 13 plan payments. Debtors who have not proposed a plan at the time of filing Official Form B22C will have to make an educated guess about the content of that plan to fill in Line 50 of Official Form B22C.

[7]

The wording of Line 50 of Official Form B22C certainly suggests that the rules drafters believe that subclause (III) of § 707(b)(2)(A)(ii) does not permit a monthly expense deduction for any administrative expenses other than the percentage scheduled by the Executive Office for U.S. Trustees. There is no place in Line 50 to add other administrative expenses to the percentage scheduled by the Executive Office for U.S. Trustees. Other administrative expenses allowable under § 503 will be entitled to priority under § 507 and should be included in the payment of priority claims allowed by § 707(b)(2)(A)(iv).9 The amount of payments on priority claims is entered at Line 49 on Official Form B22C.10


 

1  See § 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).

 

2  See 11 U.S.C. § 1325(b)(2) and (3), discussed in § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

3  11 U.S.C. § 1325(b)(3), discussed in § 471.1 [ Big Picture: Too Many Issues ] § 94.1  Big Picture: Too Many Issues.

 

4  11 U.S.C. § 707(b)(2)(A)(ii)(III).

 

5  See §§ 293.1 [ Trustee’s Fees and Expenses ] § 136.4  Trustee’s Fees and Expenses before BAPCPA and 514.1 [ Trustees’ Fees and Expenses ] § 136.5  Trustees’ Fees and Expenses after BAPCPA.

 

6  See 28 U.S.C. § 586(e), discussed in § 293.1 [ Trustee’s Fees and Expenses ] § 136.4  Trustee’s Fees and Expenses before BAPCPA.

 

7  See § 515.1 [ Debtors’ Attorneys’ Fees ] § 136.7  Debtors’ Attorneys’ Fees after BAPCPA.

 

8  See Line 50 of Official Form B22C, discussed in § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation.

 

9  See 11 U.S.C. § 707(b)(2)(A)(iv), discussed in § 486.1 [ Total Priority Debts and Divide by 60 ] § 97.1  Total Priority Debts and Divide by 60.

 

10  See § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation.