§ 36.17 — Statement of Monthly Net Income

Revised: July 14, 2007

[1]

Unless the court orders otherwise, § 521(a)(1)(B)(v), as amended by BAPCPA, mandates that the debtor file “a statement of the amount of monthly net income, itemized to show how the amount is calculated.”1 Monthly net income is not a defined term of art.

[2]

The new Statement of Monthly Net Income is one of three different income statements now required of Chapter 13 debtors. The pre-BAPCPA requirement that the debtor file “a schedule of current income and current expenditures” remains.2 The Schedule of Current Income is Schedule I to Official Form 6.3 The Schedule of Current Expenditures is Schedule J to Official Form 6.4 BAPCPA added a new measure of income, Current Monthly Income, which is the subject of new Official Form B22C,5 and is required of every Chapter 13 debtor by Interim Bankruptcy Rule 1007(b)(5).6

[3]

The new Statement of Monthly Net Income is presumed to be something different from the Schedules of Current Income and Current Expenditures and different from the new Statement of Current Monthly Income. The word “current” is not used in new § 521(a)(1)(B)(v) to describe the statement of Monthly Net Income. The word “current” is used in new § 101(10A) as part of the new term of art “current monthly income”; but current in § 101(10A) does not mean current in the temporal sense because the definition in § 101(10A) looks backwards to the debtor’s income during the six months before the month in which the Chapter 13 petition is filed.7 Given that a Schedule of Current Income and Current Expenditures is already required by § 521(a)(1)(B)(ii), what could the Statement of Monthly Net Income be if it is not a statement of current (in the sense, “at this time”) monthly net income?

[4]

The drafters of the Interim Rules seem to have reached the same confusing question and answered it by modifying Schedule I—the Schedule of Current Income—and Schedule J—the Schedule of Current Expenditures—in Official Form 6. A new “Statement of Monthly Net Income” appears at the bottom of Schedule J that is calculated by netting “total combined monthly income” from Schedule I against “total monthly expenses” from Schedule J. In other words, the rules drafters added “current” (temporal sense) to the new statutory requirement that the debtor file a Statement of Monthly Net Income.

[5]

The second requirement in new § 521(a)(1)(B)(v)—that the Statement of Monthly Net Income be “itemized to show how the amount is calculated”—is addressed in new Schedules I and J of Official Form 6 by numbering the various categories of income and expenditures and subtracting the totals in Line 20c.

[6]

It is still true—in fact, it is more true—that Schedules I and J to Official Form 6 are not an accurate calculation of income or expenditures for purposes of the various tests for confirmation in a Chapter 13 case.8 BAPCPA exacerbates the problem of multiple mandatory filings that look like budgets but don’t provide the information needed in a Chapter 13 case by adding a new Statement of Monthly Net Income and by overlaying a whole new concept, current monthly income.9 Chapter 13 debtors are now required to provide income and expense information comprehensively in two completely different formats based on two completely different statutory directives. The Statement of Monthly Net Income required by § 521(a)(1)(B)(v) is provided by line items and one calculation within Schedules I and J of Official Form 6. Current monthly income—the new six-months-before-the-petition kind—is contained in a complex, separate new form, Official Form B22C.10

[7]

Notice that Schedule I, Current Income in Official Form 6, requires the debtor to itemize income information about the debtor’s spouse “whether or not a joint petition is filed, unless the spouses are separated and a joint petition is not filed.”11 For purposes of the retrospective new current monthly income defined in § 101(10A), a nonfiling spouse’s income is excluded for the most part12 without regard to whether the spouses are separated.13 The new Statement of Monthly Net Income generated by Schedules I and J of Official Form 6 will overstate income anytime it is appropriate under the statute to exclude a nonfiling spouse’s income. Because Schedules I and J of Official Form 6 use income as of the petition and include a nonfiling spouse’s income, the Statement of Monthly Net Income should never be used when the Code uses the new term of art, “current monthly income.”14

[8]

Because the mandatory Statement of Monthly Net Income is in § 521(a)(1), failure to file the new Statement within 45 days of the petition can trigger the new automatic dismissal in § 521(i).15 Automatic dismissal is not appropriate if the “information” required by the new Statement is filed within 45 days of the petition, even if the Statement itself is not. The information required by the new Statement of Monthly Net Income is already contained in Schedules I and J of Official Form 6, short only the subtraction of one existing line from another. If the rules drafters have correctly interpreted new § 521(a)(1)(B)(v), automatic dismissal for failure to file the information required by the new Statement of Monthly Net Income is unlikely if the debtor filed Schedules I and J of Official Form 6.

[9]

Don’t forget that the new Statement of Monthly Net Income in § 521(a)(1)(B)(v) is a debtor duty with respect to which the court is authorized to “order[ ] otherwise.”16 The Schedule of Current Income and Expenditures—Schedules I and J to Official Form 6—must be filed with the petition or within 15 days thereafter under Interim Rule 1007(c). The new Statement of Monthly Net Income is buried in Schedules I and J and would appear to be subject to the same timing. If for some reason the debtor is not able to file Schedules I and J with the petition or within 15 days thereafter, counsel should move the bankruptcy court to order otherwise. A motion for extension of time to file the Statement of Monthly Net Income within Schedules I and J requires notice to the U.S. trustee and the Chapter 13 trustee and a showing of “cause.”17


 

1  11 U.S.C. § 521(a)(1)(B)(v).

 

2  11 U.S.C. § 521(a)(1)(B)(ii).

 

3  See § 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16  Schedules I and J—Income and Expenditures.

 

4  See § 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16  Schedules I and J—Income and Expenditures.

 

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

 

6  See § 387.1 [ New Filing Requirements and Other Duties: A List ] § 42.1  Filing Requirements and Other Duties: A List.

 

7  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.

 

8  See §§ 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16  Schedules I and J—Income and Expenditures and 163.1 [ In General ] § 91.1  In General168.1 [ Payment-in-Full Option ] § 91.7  Payment-in-Full Option.

 

9  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.

 

10  See App. D. See §§ 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 for discussion of new Official Form B22C.

 

11  Instructions in Schedule I to Official Form 6.

 

12  But see 11 U.S.C. § 101(10A)(B), 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.

 

13  See 11 U.S.C. § 101(10A), discussed in §§ 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline and 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.

 

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

 

15  Automatic dismissal under § 521(i) is discussed in §§ 388.1 [ Consequences of Failure to File Required Information, Including “Automatic Dismissal” ] § 42.2  Consequences of Failure to File Required Information, Including “Automatic Dismissal” and 540.1 [ New and Changed Grounds for Dismissal ] § 152.3  Cause for Dismissal Added or Changed by BAPCPA.

 

16  11 U.S.C. § 521(a)(1)(B).

 

17  Interim Bankr. R. 1007(c).