§ 99.2     Amounts Paid by Others under § 101(10A)(B)
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 99.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Section 1325(b)(2) states unambiguously that disposable income means “current monthly income received by the debtor,” less various amounts.1

[2]

Under § 101(10A)(A), current monthly income (CMI) is an average of monthly income from all sources that the debtor receives or, in a joint case, the debtor and the debtor’s spouse receive.2 CMI also includes any “amount paid” by any entity other than the debtor (or in a joint case, the debtor and the debtor’s spouse) on a regular basis for the household expenses of the debtor or a dependent of the debtor under § 101(10A)(B).3 CMI thus includes some amounts that are not necessarily income “received” by the debtor but are amounts paid by others for the household expenses of the debtor or a dependent of the debtor.

[3]

For example, § 101(10A)(B) would include in CMI amounts paid by a former spouse for the household expenses of a dependent of the debtor, or in a joint case, for the household expenses of the debtor’s spouse, that are not income received by the debtor for purposes of § 101(10A)(A). An ex-spouse who pays the debtor’s house note would be an example. An ex-spouse who pays a car note for a car driven by the debtor’s spouse or a former spouse who pays room and board for a dependent of the debtor to attend school might be captured by § 101(10A)(B). These amounts are not “received” by the debtor and must be subtracted from CMI to determine disposable income under § 1325(b)(2). This will be true for all Chapter 13 debtors without regard to whether the debtor’s CMI is greater than or less than applicable median family income.

[4]

This adjustment of CMI on the way to disposable income is not so strange in the context of the convoluted logic of § 1325(b) after BAPCPA. One strand of that “logic” was to determine the cash available to pay unsecured creditors in Chapter 13 cases. Amounts paid by others for the household expenses of a debtor or the debtor’s dependents could be viewed as substitutes for income that enhance the debtor’s resources to pay unsecured creditors—hence the provenance of § 101(10A)(B). Somewhere between that thought and § 1325(b), someone failed to follow through with changes to the wording of the disposable income test which, before BAPCPA, focused on income received by the debtor. This vestige of former law must be respected. It is no less logical to exclude from disposable income amounts that are not actually received by the debtor than it is to begin the whole enterprise with a surrogate for the debtor’s actual income—CMI.

[5]

It is at least interesting that the adjustment of CMI required by § 1325(b)(2) appears nowhere in Official Form B22C. The marital adjustments at Lines 13 and 19 of Official Form B22C are not worded consistently with the statute and are only applicable (according to the instructions) to married debtors not filing jointly.4 To determine disposable income under § 1325(b)(2) for all Chapter 13 debtors, an adjustment in CMI is required to eliminate amounts paid by others that were not received by the debtor that were included in CMI by § 101(10A)(B) but are excluded from disposable income by § 1325(b)(2).

[6]

The limitation of disposable income to CMI “received by the debtor” in § 1325(b)(2) could further complicate the accounting for income and expenses of spouses. Detailed elsewhere,5 § 101(10A) treats the debtor and the debtor’s spouse as the two entities that are present in a joint case. CMI includes the income of a debtor’s spouse in a joint case and under § 101(10A)(B), CMI includes amounts paid by a married debtor’s spouse on a regular basis for the household expenses of the debtor or a dependent of the debtor even in a non-joint filing by the debtor.

[7]

What exactly does CMI “received by the debtor” mean in § 1325(b)(2)? CMI in a joint case would include the income of the debtor’s spouse even if that income is “received” by the spouse and not by the debtor. If the debtor’s spouse is a “debtor” for purposes of § 1325(b)(2), then disposable income includes CMI received by either the debtor or the joint debtor in a joint case. If the debtor in § 1325(b)(2) means only the debtor and not the debtor’s spouse in a joint case—a possible interpretation in light of the separate treatment of a debtor’s spouse in § 101(10A) and elsewhere6—then the omission from § 1325(b)(2) of any reference to CMI received by the debtor’s spouse could be very significant.


 

1  11 U.S.C. § 1325(b)(2) (emphasis added).

 

2  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.

 

3  11 U.S.C. § 101(10A)(B) is discussed in § 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline.

 

4  Lines 13 and 19 of Official Form B22C are discussed further in §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation.

 

5  See § 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.

 

6  See § 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.