§ 92.3 — Current Monthly Income: The Baseline

Revised: April 7, 2009

[1]

The projected disposable income test in § 1325(b) as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)1 determines the amount that unsecured creditors must be paid to confirm most Chapter 13 plans.2 For all Chapter 13 debtors, the projected disposable income calculation begins with “current monthly income” (CMI).3 Although the expense side of the projected disposable income test is significantly different depending on whether the debtor has CMI greater or less than applicable median family income,4 the income side of the projected disposable income calculation is always based on CMI in § 101(10A).5 CMI is a term of art new to the Bankruptcy Code with BAPCPA. It should not be confused with “current income”6 or with “monthly net income.”7

[2]

Disposable income is defined in § 1325(b)(2) as CMI reduced by five categories of exclusions and deductions.8 Every Chapter 13 debtor is directed by Bankruptcy Rule 1007(b)(6) to file a Statement of Current Monthly Income.9 That statement is inartfully prescribed for Chapter 13 cases in Official Form B22C.10

[3]

The current version of Official Form B22C does not produce an accurate Statement of Current Monthly Income for all Chapter 13 debtors.11 Modifications are necessary to ensure that filing Official Form B22C will satisfy the requirement in Bankruptcy Rule 1007(b)(6) that every Chapter 13 debtor file a Statement of Current Monthly Income.12

[4]

CMI is defined in § 101(10A) as follows:

(10A) The term “current monthly income”—
(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor’s spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on—
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and
(B) 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 the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism (as defined in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status as victims of such terrorism.13

There are many important features in this new definition:

[5]

1. Current monthly income is not current. If the debtor files the Schedule of Current Income required by § 521(a)(1)(B)(ii)—Schedule I to Official Form 614—CMI measures average monthly income received by the debtor from all sources (or, in a joint case, that the debtor and the debtor’s spouse received),15 derived during the six-month period preceding the month in which the Chapter 13 case was filed. If the debtor does not file the Schedule of Current Income, then CMI means the average monthly income from all sources that the debtor (or, in a joint case, the debtor and the debtor’s spouse) received and derived during the six-month period ending on the date on which “current income” is determined by the court. In either case, CMI reflects average monthly income received and derived during a six-month period that will almost always be in whole or in part before the petition.

[6]

CMI is not the “current income” required by § 521(a)(1)(B)(ii) and provided by the debtor in Schedule I to Official Form 6.16 CMI is not the “monthly net income” required by § 521(a)(1)(B)(v) and provided by the debtor at the bottom of Schedule J to Official Form 6.17 A Statement of Current Monthly Income is required of every Chapter 13 debtor and is provided by filing new Official Form B22C (with modifications for some debtors).18

[7]

Detailed elsewhere,19 many courts have modified or minimized the statutory prescription that CMI controls the income side of the projected disposable income test based on the perception that the historical basis for CMI in § 101(10A)(A) is inconsistent with “projecting” disposable income. Many of the so-called “majority” courts20 support departing from the statute by explaining that a debtor whose income has gone down since the six-month period before the petition cannot confirm a Chapter 13 plan because the disposable income calculation based on the higher six-month prepetition income average requires greater payment to unsecured creditors than actual income at confirmation will support—rendering any plan not feasible.21

[8]

These courts perhaps have overlooked that § 101(10A)(A)(ii) contains a mechanism for time-shifting the CMI calculation in appropriate cases. Under § 101(10A)(A)(ii), if the debtor does not file the Schedule of Current Income required by § 521(a)(1)(B)(ii), then the six-month counting period for CMI is time-shifted to the six-month period ending on the date on which current income is determined by the court. Decisions out of the bankruptcy courts for the Eastern and Middle Districts of North Carolina have recognized that § 101(10A)(A)(ii) empowers debtors with declining income to avoid the feasibility issue. As explained in In re Montgomery,22 striking Schedule I on the debtor’s motion may be appropriate when the debtor lost a job and income has gone down after the petition:

Section 521 of Bankruptcy Code provides that a debtor must file a schedule of current income (Schedule I), unless the court orders otherwise. . . . [I]f a debtor files a Schedule I, his or her current monthly income is the average monthly income during the six month period ending on the last day of the month directly preceding the petition date. However, if the court orders that the debtor is excused from filing a Schedule I, his or her monthly income is the average monthly income during the six month period ending on a date on which current income is determined by the court. It is clear through the interplay of § 101(10A) and § 521(a)(1)(B) that Congress contemplated instances where a debtor’s Schedule I may not reflect an accurate assessment of a Debtor’s current monthly income. . . . In this case, if the Debtors’ current monthly income is determined pursuant to § 101(10A)(A)(i), it would not accurately depict the Debtors’ current financial condition. Therefore, based on the circumstances of this case, the court will strike the Debtors’ Schedule I, and pursuant to § 101(10A)(A)(ii), the court will set a new six month time period . . . to determine the Debtors’ current monthly income.23
[9]

To take advantage of § 101(10A)(A)(ii), the debtor has to “fail” to file the Schedule of Current Income required by § 521(a)(1)(B)(ii). Detailed elsewhere,24 failing to file a schedule required by § 521(a)(1) generates bad consequences for the debtor—including the (enigmatic) possibility of “automatic dismissal” under § 521(i).25 To avoid dismissal and initiate time-shifting under § 101(10A)(A)(ii), the bankruptcy court in In re Shelor26 explained that the debtor should promptly file a motion to be excused from the filing requirement in § 521(a)(1):

Unless the court has otherwise ordered, Rule 1007(c) of the Federal Rules of Bankruptcy Procedure requires that a Schedule I be filed with the petition or within 15 days thereafter and a failure to file a Schedule I within 45 days after the date of the filing of the petition will result in the automatic dismissal of the case pursuant to section 521(i)(1) . . . . Thus, if a debtor wishes not to file a Schedule I in order to invoke section 101(10A)(A)(ii), such a debtor must promptly seek and obtain an order relieving such debtor of the obligation to file a Schedule I in order to avoid the dismissal of the case on the 46th day after the petition date. If the debtor is successful in obtaining an order that excuses the filing of a Schedule I, then current monthly income is determined pursuant to section 101(10A)(A)(ii).27
[10]

Assuming the court is receptive to relief from the filing requirement in § 521(a)(1), § 101(10A)(A)(ii) then fixes a new six-month counting period for CMI that ends on “the date on which current income is determined by the court.”28 This is a little curious. As mentioned above, “current income” and CMI are separate terms of art with different statutory definitions, and current income is not a component of CMI. Especially with respect to debtors with CMI greater than applicable median family income,29 it is not obvious when or why the bankruptcy court would “determine[ ]” current income for disposable income test purposes. Perhaps the drafters meant to say “current monthly income” rather than “current income” in § 101(10A)(A)(ii).

[11]

The statute does not tell us whether time-shifting under § 101(10A)(A)(ii) is available on the motion of anyone other than the debtor. That the bankruptcy courts cited above were willing to strike the debtor’s Schedule I to allow time-shifting of the CMI calculation when the debtor’s income went down does not tell us whether § 101(10A)(A)(ii) authorizes a bankruptcy court to strike the debtor’s Schedule I on the motion of the trustee or a creditor when income has gone up. Translating “if the debtor does not file” into “striking the filing on the motion of a party in interest” is a stretch. And then there is the question whether Schedule I was “filed” when the court later determines to “strike” the filing.

[12]

The six-month counting period in § 101(10A) has produced interesting and sometimes difficult fact patterns. For most Chapter 13 debtors, CMI is based on historical information for the six months before the petition and debtors must count backwards, not including the month in which the petition was filed, to identify income that becomes part of CMI. In In re Anderson,30 the bankruptcy court held that an annual bonus received by the debtor within six months of the petition came within § 101(10A)(A) and must be added to CMI.31 In In re Beasley,32 the bankruptcy court recognized that, depending on the timing of the petition, a teacher who receives salary only during the school year may have months without income for CMI purposes.33

[13]

Retirement distributions have received inconsistent treatment in the CMI calculation for Chapter 13 debtors—typically because the courts are in disagreement whether a retirement plan distribution is “income” for § 101(10A) purposes.34 But in In re Wayman,35 the issue was whether an IRA distribution was received within the six-month period in § 101(10A). In Wayman, in February 2005, an IRA account that belonged to an ex-spouse was placed in the debtor’s name by a domestic relations decree. In October 2005, the debtor actually received distributions from the IRA. February 2005 was more than six months before the Chapter 13 petition; October 2005 was within six months of the petition. The bankruptcy court concluded that CMI did not include any interest in the IRA because the “receipt” of income occurred when the IRA was transferred to the debtor’s control, not when the debtor chose to receive distributions.36

[14]

What does “derived” add to the counting of the six-month period in § 101(10A)(A)? Income from all sources is counted if received by the debtor, but that income must also be derived during the six-month period. Literally, the word means “to trace to or from a source.”37 If the debtor received income during the six-month period based on a transaction or event outside the six-month period, it might be argued that the income was not derived during the six-month period.

[15]

Imagine a debtor who receives commissions that are based on sales at some prior time. A commission received by the debtor in the sixth month before the month in which a Chapter 13 petition is filed might not be counted if that commission was based on a sale during the prior (seventh) month. At the other end, a commission on a sale by the debtor during the first month before the Chapter 13 petition would not be counted in the CMI calculation if the commission was not received by the debtor until the month in which the petition was filed. Accounts receivable for a business debtor would require similar analysis. “Receives” and “derived” must both having meaning in § 101(10A)(A), and both condition the income that is included in CMI.

[16]

To date, decisions addressing “derived” in § 101(10A) give the word little meaning. For example, the bankruptcy court in In re Sanchez38 concluded that “‘derived’ is largely redundant of ‘received’” for purposes of determining whether a 401(k) distribution was income during the six months prior to the Chapter 13 petition. The bankruptcy court in In re Cruz39 concluded that all of a bonus received by the debtor during the six months before the petition was included in CMI and was not prorated over the employment year because “[w]hether income is included in CMI is determined by when the debtor receives funds, not when they are earned.”40 More directly, the bankruptcy court in In re Burrell41 dispatched “derived” to the junk pile of statutory surplusage in the calculation of CMI:

Based upon the befuddling grammatical structure of the statute itself, the arguably discrepant dictionary definitions of the term “derive” . . . and the variant interpretations and conclusions found in the few cases that have even acknowledged the issue, the Court finds that the statutory definition of “current monthly income” is, in fact, ambiguous. . . . The legislative history only makes reference to when income is received; nowhere is reference made to when the income is earned. The phrase “derived during” is completely absent. Thus, the legislative history appears to strongly suggest that Congress did not intend to create an additional factor for, or further limiting criterion to, the definition of “current monthly income”. Hence, this Court concludes that the “derived during” phrase found its way into the statutory language simply as a result of poor sentence construction and inartful drafting. Because the “derived during” phrase appears to be surplusage adding nothing substantive to the definition of “current monthly income”, the Court believes it would be improper to impart meaning to the language. . . . [T]he definition of “current monthly income” as set forth in 11 U.S.C. § 101(10A) refers to income received during the prescribed six-month period, and . . . no additional criterion that the income actually be earned during that period exists or was intended when BAPCPA was drafted and enacted.42
[17]

Because CMI is retrospective and based on static historical facts, CMI does not change during a Chapter 13 case. CMI at the petition is the same as CMI two years after confirmation. Anywhere the Bankruptcy Code incorporates CMI, the reference will capture the same number. CMI may bear no relationship whatsoever to the debtor’s actual income at the petition, at confirmation or at any other time during the Chapter 13 case. This has enormous consequences for Chapter 13 practice.

[18]

Based in part on (questionable) statutory interpretation and in part on unhappiness with the mess that BAPCPA made of § 1325(b), a substantial number of reported decisions addressing §§ 101(10A) and 1325(b) refuse to accept CMI as the income side of the projected disposable income test.43 “Disposable income” in § 1325(b)(2) is defined as “current monthly income received by the debtor” less five categories of statutory expenses and deductions.44 Although all courts analyzing § 1325(b)(2) acknowledged the importance of CMI to the disposable income calculation, a majority has refused to confine CMI to the prepetition six-month period specified in § 101(10A)(A), instead characterizing CMI as a “presumption” or a “starting point” on the road to projected disposable income.45 A minority of courts actually follow the statute—applying § 101(10A), including the statutory six-month prepetition counting period, to determine the income side of what will be projected disposable income under § 1325(b).46 Even among courts that begin the projected disposable income calculation with some measure of income other than CMI, there is lip service to § 101(10A) by excluding from “actual income” social security and other types of income that are excluded from CMI by § 101(10A).47

[19]

Congress created irresistible temptation by defining CMI based on historical income experience and then defining projected disposable income using that same historical marker. This disconnect has (mis)led the majority of reported decisions to conclude that Congress “could not” have intended to bind the projected disposable income calculation to CMI as defined in § 101(10A).48 This is a huge disagreement that will not be resolved short of Supreme Court or Congressional attention.

[20]

2. Current monthly income is not necessarily income. Long before BAPCPA, there was controversy about the meaning of “income” in Chapter 13 cases.49 Income is used by the Bankruptcy Code, without definition, in the eligibility requirement that the debtor have “regular income”50 and in the confirmation requirement that the debtor apply all projected disposable income to unsecured (after BAPCPA) creditors through the Chapter 13 plan.51 BAPCPA adds to this mix that current monthly income means average monthly income received from all sources “without regard to whether such income is taxable income.”52

[21]

A simple example might be interest on a tax-exempt bond. That interest would be included in CMI for a Chapter 13 debtor notwithstanding that it would not be taxable. Rent received by the debtor would be income even though the taxable portion might be less after deduction of property maintenance expenses and the like.53 Is a gift of money income “without regard” to its tax treatment? What about forgiveness of indebtedness income or “phantom” income that results from some sales and other transactions? If the debtor suffered a foreclosure during the six-month period in § 101(10A)(A), did the debtor “receive” forgiveness of indebtedness income for CMI purposes? If the debtor received a discharge in a prior bankruptcy case during the six-month counting period, is that CMI implicated?

[22]

The pre-BAPCPA debate whether liquidation of an asset produces “income” for disposable income purposes54 was not resolved by BAPCPA and has propagated in post-BAPCPA decisions in several contexts. In In re Breeding,55 the debtors owned two certificates of deposit that were pledged as collateral. There was equity in the certificates. After the petition, the certificates were liquidated and the debtors claimed the net proceeds as exempt property. The trustee objected, arguing that the net cash was “income” captured for unsecured creditors by § 1325(b).

[23]

Without addressing how redemption of the CDs after the petition could fall within the six-month prepetition counting period in § 101(10A),56 the bankruptcy court in Breeding concluded instead that the certificates of deposit were not included in CMI because the certificates were not “income”:

[T]he redemption of the certificates of deposit did not generate income of any kind. This conclusion is based on the principle that a Chapter 13 debtor retains his pre-petition assets and that those assets, such as the certificates of deposit at issue, are not included in the post-petition disposable income calculation. McDonald v. Burgie (In re McDonald), 239 B.R. 406, 410 (B.A.P. 9th Cir. 1999) . . . . [I]ncome is “the return in money from one’s business, labor, or capital invested; gains, profits, salary, wages, etc.” . . . [T]he proceeds from the redemption of the certificates of deposit, which were clearly pre-petition assets, cannot be properly described as income emanating from an asset. Rather, the proceeds are another form of that portion of the pre-petition assets that remained after the assets were redeemed and the secured claims were paid. . . . Converting the certificates of deposit to cash, check, or draft did not produce income for the estate because there was no resulting gain or increase.57
[24]

As was true in the pre-BAPCPA cases cited by Breeding,58 there is a fine line between assets that are counted only toward the best-interests-of-creditors test in a Chapter 13 case59 and income generated from the use or liquidation of assets that might be included in CMI for purposes of § 1325(b). For example, the inventory of a debtor engaged in business may well be an asset, not income, but the liquidation of inventory in the course of a debtor’s business before the petition would certainly generate income for purposes of § 101(10A) and the projected disposable income test.60 BAPCPA gave us a new concept in CMI; BAPCPA did not give us a comprehensive definition of income.

[25]

Withdrawals from an IRA, a 401(k) account or other retirement account present similar issues. Of course, the account itself is easily defined as an “asset” rather than income, but distributions are not so easily characterized. In re Sanchez61 is a study in the difficulties caused by the absence of a comprehensive definition of income for CMI purposes. The bankruptcy court in Sanchez concluded that disbursements from a 401(k) plan within six months of the Chapter 13 petition are included in CMI because a disbursement is income received by the debtor for § 101(10A) purposes:

“Income” is “a gain or recurrent benefit usually measured in money that derives from capital or labor.” “Received” means “to come into possession of” or “acquire.” And, “derived” is largely redundant of “received,” meaning “to take, receive, or obtain especially from a specified source.” A disbursement from a 401(k) plan fits all of these critical terms. . . . [T]he Internal Revenue Service treats 401(k) disbursements as income . . . . Earnings that are contributed to a 401(k) plan are deferred as income and are received by the employee and taxed by the government at a later date, i.e., when the funds are withdrawn. . . . [T]he Court’s determination that disbursements from 401(k) plans are included in CMI is consistent with the apparent intent of Congress to interpret § 101(10A) broadly.62
[26]

Sanchez was appealed to the Bankruptcy Appellate Panel for the Eighth Circuit, and after a procedural trip to the U.S. Court of Appeals for the Eighth Circuit, the case came back to the BAP on the merits and was reversed. The Bankruptcy Appellate Panel for the Eighth Circuit offered the following difficult explanation why distributions from an IRA are not income:

“Income” is not defined in the Bankruptcy Code. Its legal meaning is “money from one’s business, labor, or capital invested; gains, profits, salary, wages, etc.” . . . The corpus of assets and investments are not included in the definition of “income.” Only the interest or profit realized on an asset’s principal value is included within the legal definition of “income.” . . . [D]istributions from IRAs should be excluded because the money deposited into an IRA is received for use prior to the distribution from the IRA. . . . Including money from what is essentially the liquidation of an asset gives an artificially high income which may result in an unrealistic calculation of disposable income. The Bankruptcy Code should not punish debtors who attempt to repay their debts with funds from their retirement accounts by attributing to them an artificially high income. . . . Under the trustee’s definition of income, contributions to the debtor’s IRA could be included in current monthly income twice: once when the money is earned and deposited, and again when the money is withdrawn. . . . A debtor does not “receive” income when he takes a voluntary distribution from an IRA because the IRA already belongs to the debtor. . . . Gains and losses earned on stocks, real estate and other investments are excluded from the definition of “current monthly income.” Thus, gains made on an IRA account should be excluded from the means test.63
[27]

Mentioned above, § 101(10A) defines income without regard to whether it is taxable. This wording supports the view that CMI measures “gross” income, not income net of expenses incurred in the generation of that income. Part I of Official Form B22C at Lines 3 and 4 takes a position contrary to the statute and instructs debtors to deduct business expenses and operating expenses before including in CMI “net” income from the operation of a business or from the ownership of income-producing property.64 There is nothing in § 101(10A) to support this approach. As explained by the Bankruptcy Appellate Panel for the Ninth Circuit in Drummond v. Wiegand (In re Wiegand),65 CMI includes gross receipts from a trade or a business and it is not appropriate to deduct business expenses from gross receipts to determine CMI as Form B22C instructs:

To the extent that Part I of Form 22C requires a business debtor to calculate current monthly income by subtracting ordinary and necessary business expenses from gross receipts, we hold that Part I of Form 22C is inconsistent with § 1325(b)(2). . . . [T]he Code . . . does not define “income.” . . . [T]he plain language of the statute demonstrates that the bankruptcy court’s reliance on the Tax Code and Form 1040 to determine the meaning of income under § 101(10A) was misplaced. The phrase “without regard to whether such income is taxable income” in § 101(10A) reflects a clear congressional intent that Tax Code concepts for determining taxable income are inapplicable to a determination of current monthly income. . . . For a debtor engaged in business, current monthly income can be further reduced by the payment of expenditures necessary for the continuation, preservation, and operation of the business. § 1325(b)(2)(B). . . . [T]he specificity of § 1325(b)(2)(B) controls—business deductions are to be taken from a debtor’s current monthly income to arrive at the debtor’s disposable income. . . . If business expenses are deducted from gross receipts to determine a chapter 13 debtor’s current monthly income, then there would be no need for § 1325(b)(2)(B) . . . . Form 22C ought to be changed to comply with the statute. . . . [O]ur plain meaning interpretation is not absurd . . . . It may be that Congress simply did not want those persons generating significant revenues through a business to have access to three-year chapter 13 plans.66
[28]

There is another disconnect here for debtors with CMI less than applicable median family income.67 Specified in § 1325(b)(2)(B), the business expenses that are deductible to determine disposable income for a debtor with CMI less than applicable median family income include expenditures “necessary for the continuation, preservation, and operation of such business.”68 Form B22C requires a different deduction at Lines 3 and 4 for “ordinary and necessary” business or operating expenses.69 In other words, the statute excludes from projected disposable income for a debtor with CMI less than applicable median family income a broader array of business expenses than Form B22C allows for purposes of calculating CMI. This distorts the disposable income calculation for debtors with CMI less than applicable median family income.

[29]

For debtors with CMI greater than applicable median family income, § 101(10A) does not contemplate the deduction of any business or operating expenses as part of the CMI calculation. Instead, business deductions come later in the calculation of disposable income as reductions of CMI somewhere in Part IV of Form B22C.70

[30]

Although the Bankruptcy Code is clear that CMI includes income from all sources without regard to whether that income is taxable, several courts have cited or consulted the Tax Code to determine whether or to what extent an income item is included in CMI. For example, the bankruptcy court in In re Chavez71 held that disposable income did not include an inheritance that was received during the counting period for CMI because the inheritance would not be income under the Internal Revenue Code: “According to 26 U.S.C. § 102(a), gross income generally ‘does not include the value of property acquired by gift, bequest, devise, or inheritance.’”72 In In re Warren,73 the same bankruptcy court cited the Internal Revenue Code for the proposition that Chapter 13 debtors could deduct their basis and expenses “as though they were preparing their Form 1040” to determine CMI when there was a sale of property during the six months before the petition.74 The bankruptcy court in Sanchez75 cited the Internal Revenue Code in support of its conclusion that disbursements from a 401(k) plan fit all of the criteria to be “income” included in CMI: “Earnings that are contributed to a 401(k) plan are deferred as income and are received by the employee and taxed by the government at a later date, i.e., when the funds are withdrawn.”76

[31]

In contrast, other decisions recognize that the wording of § 101(10A) precludes resort to the Tax Code for guidance with respect to the content of CMI. The Bankruptcy Appellate Panel for the Ninth Circuit in Wiegand77 stated: “The phrase ‘without regard to whether such income is taxable income’ in § 101(10A) reflects a clear congressional intent that Tax Code concepts for determining taxable income are inapplicable to a determination of current monthly income.”78 In In re Jones,79 the bankruptcy court concluded that a one-time reimbursement of expenses for relocation was not income for § 101(10A) purposes notwithstanding that the debtors had to pay taxes on the reimbursement. Similarly, the bankruptcy court in Simon v. Zittel (In re Zittel)80 observed that “the express language of § 101(10A) makes the question of taxation irrelevant” to the conclusion that voluntary withdrawals from retirement accounts during the six months before a Chapter 13 petition are not included in CMI.

[32]

And then there is In re Royal,81 dealing with the question whether the earned income tax credit is “income” for CMI purposes. The tax credit was exempt under state law but not specifically excluded from income by any provision of § 101(10A). The bankruptcy court held that the tax credit was included in CMI because Congress didn’t exclude it:

[W]hen Congress drafted the earned income tax credit statute, it included a subsection which states that the credit would not be considered income for purposes of certain means-tested programs . . . . The implication is that by failing to amend the earned income tax credit statute to exclude the credit from the definition of current monthly income added by BAPCPA, Congress intended for it to be included in the calculation of income. . . . [T]he earned income tax credit is income under the Bankruptcy Code, and must be included in the calculation of a debtor’s CMI. . . . [I]t is also included in “disposable income.” . . . Although both the disposable income definition and the current monthly income definition exclude certain items, exempt income is not excluded. “With the enactment of BAPCPA in 2005, the split of authority over whether or not exempt assets are to be included in the calculation of disposable income has been statutorily answered by Congress.” . . . [A]n earned income tax credit is included in disposable income, a conclusion that is unaffected by its exemptible status.82
[33]

Tax refunds—received during the six months before the petition and to be received during the Chapter 13 case—have produced problems in the CMI calculation.83 “Income” for CMI purposes is income before deductions for taxes and other expense items. Of course, debtors are then entitled to an expense deduction within the CMI calculation for income taxes that will be due on that (gross) income.84 This is the point at which some courts get into trouble.

[34]

Recognizing that a tax refund represents overwithholding of tax expenses, some decisions recite that tax refunds must be included in projected disposable income when received during a Chapter 13 case.85 More accurately, other courts recognize that taxes are accounted for in the projected disposable income test as an expense deduction for estimated “actual” taxes; tax refunds received during the six-month calculation period for CMI are ignored and gross income comes into CMI to be adjusted by an actual expense deduction for taxes.86 This latter approach is consistent with the structure of the statute—CMI is based on gross income without adjustment for the withholding of taxes; disposable income allows a deduction for actual tax expenses without regard to whether the debtor receives a tax refund during the Chapter 13 case.

[35]

Not included in this discussion of tax refunds is the effect of the word “derived” in § 101(10A). In what month is a tax refund “derived” for purposes of CMI? If the tax refund is “received” during the six months before the month in which the petition was filed, does it follow that it was also “derived” during that six-month period? Or is a tax refund derived across all months of the tax year in which it is generated? These questions need not be answered if a tax refund is dealt with as an expense item and income for CMI purposes is calculated based on gross receipts without regard to deductions for taxes.

[36]

3. Current monthly income is not really monthly. CMI is an average of six months of prepetition income received by the debtor. The CMI calculation will level out the incomes of debtors with seasonal or lumpy income. CMI presents a picture of the debtor’s income that bears no certain relationship to reality.

[37]

Because it is based on an average, CMI can be dramatically affected by the timing of the Chapter 13 petition. Filing before a debtor receives a large commission or vacation pay or waiting a few months after the debtor has lost a well-paying job will materially change the CMI calculation. That CMI indicates the debtor has substantial (average) monthly income to pay unsecured creditors through a Chapter 13 plan may distort the reality that for many months during the typical year, the debtor has little or no income after living expenses.

[38]

The distorting effect of the six-month averaging in § 101(10A)(A) has been cited by many courts as a reason for abandoning the statutory definition of CMI in the projected disposable income test.87 For example, in In re Bossie,88 the debtors’ income was higher in summer months than in winter. Because of the timing of the Chapter 13 petition, the six-month reach-back for CMI captured higher income summer months and produced projected disposable income that exceeded the debtor’s ability to make payments into a plan. The bankruptcy court concluded to abandon CMI if the debtors provided evidence that future income available to fund a plan was not accurately represented by CMI. The controversial logic of Bossie—which rejects the CMI platform that BAPCPA erected—is the fulcrum of the debate whether the projected disposable income test is “mechanical” or “forward-looking.”89

[39]

4. Current monthly income includes amounts paid by others. Section 101(10A)(B) includes in CMI “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 the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent).”90 This addition to CMI captures amounts “paid” by others, on a “regular basis” for the “household expenses” of the “debtor or the debtor’s dependents.”

[40]

Less than artful drafting raises a threshold question whether the amounts included in CMI by § 101(10A)(B) are subject to or separate from the conditions for inclusion in CMI in § 101(10A)(A). Discussed immediately above, to be included in CMI by § 101(10A)(A), income must be received by the debtor and derived during the applicable six-month period. Under § 101(10A)(B), an amount paid by an entity other than the debtor on a regular basis for the household expenses of the debtor or a dependent of the debtor is included in CMI without regard to whether it is received by the debtor and without regard to whether it derived during the applicable six-month period if the introductory “includes” in § 101(10A)(B) refers to “the term ‘current monthly income,’” independently of § 101(10A)(A). The two subsections are joined by the word “and,” and each has meaning without the terms or conditions in the other. The two subsections can function independently though the issue is debatable.

[41]

Without the temporal limitation in § 101(10A)(A), the amounts included in CMI by § 101(10A)(B) could be amounts paid at any time so long as the conditions of regularity and use for household expenses are satisfied. This is likely to be a litigated issue when a debtor benefits from “regular” payments of household expenses from an outside source but the amounts paid are not “received” by the debtor and/or the payments were not made within the applicable six-month period before the Chapter 13 petition.

[42]

Imagine a Chapter 13 debtor who received a tobacco or crop subsidy nine months before the Chapter 13 petition. The payment is outside the applicable six-month period in § 101(10A)(A) and would not come into CMI through that subsection. But if the debtor receives such a payment every year and if the payment can be characterized as “for the household expenses of the debtor,” the payment might be dragged into CMI by § 101(10A)(B). More likely examples would include a home mortgage paid by an ex-spouse or a utility supplement paid during winter (or summer) months but not within six months before the petition.91

[43]

One court found this issue in a bonus paid to the debtors more than six months before the petition. In In re Foster,92 the debtors received an annual bonus that averaged in excess of $10,000 and typically was paid in February or March of each year. The debtors filed Chapter 13 on November 30 and did not include the annual bonus in the CMI calculation because the bonus was not received within the six-month period in § 101(10A)(A). The bankruptcy court accepted the trustee’s argument that CMI was just the “starting point” for the projected disposable income calculation;93 but, more specifically, the court had the following to say about § 101(10A)(B) and a bonus received more than six months before the month in which the petition was filed:

Those bonuses were deposited in the debtors’ bank account and may well have been used to pay the debtors’ household expenses. At least, there is no evidence that they were not used for payments of the debtors’ household expenses. Accordingly, the court determines that a proper calculation of “all of the debtors’ projected disposable income to be received in the applicable commitment period” must include . . . all the annual bonuses they regularly received in the past and anticipated for the future.94
[44]

If Foster is correct that § 101(10A)(B) reaches back beyond the six-month period in § 101(10A)(A), then any component of income that is paid regularly for the household expenses of the debtor or a dependent of the debtor could become part of CMI. Notice that the bonus in Foster was “received” by the debtors but the substitution of “paid” in § 101(10A)(B) was not read as a limitation. If the bonus in Foster received more than six months before the petition is included in CMI, an argument can be made that any salary, benefit, compensation or other amount that regularly pays a household expense of the debtor or a dependent of the debtor is included in CMI by § 101(10A)(B) without temporal limitation. This is a very slippery slope. The reading of § 101(10A)(B) in Foster threatens to overwhelm the limitations on CMI in § 101(10A)(A).

[45]

There are several other terms of art here, some not so well defined. “Any entity” would include amounts paid by other individuals, by a governmental unit or by a corporation or partnership. Perhaps most importantly any entity would include a nonfiling spouse.95 “Regular basis” could mean periodic—at a measurable, repeating interval—or it could have less temporal content as in customary or orderly.96 “Household expenses” is not defined by the Bankruptcy Code.97 Household expenses could be confined to the immediate home place expenses of the debtor and the debtor’s dependents or could be more broadly conceived to include food, clothing and shelter for a dependent not residing with the debtor. Household expenses might include only basic items and services such as food, clothing, shelter and utilities or it might gather in all expenses of the members of a household, including transportation, entertainment and even luxury items.

[46]

Where do we look for the meaning of “dependent” in this context? This could be dependent in the tax sense or based on age under state law or could include capacity to take care of oneself. An elderly parent could be a dependent of a debtor for some or all purposes. Would a pension payment to an elderly parent be CMI to the debtor if the parent is a dependent on the debtor’s tax return or is dependent on the debtor for general care, transportation and the like? That § 101(10A) explicitly includes income without regard to tax treatment could exclude reliance on tax notions of dependency.

[47]

One reported decision stretches “household expenses” and “dependent” to reach car payments by an ex-boyfriend. In In re Quigley,98 during good times the debtor signed the note on a pickup truck now in possession of her ex-boyfriend. The Ex was paying the note, but—because the debtor was an owner and codebtor and had CMI above applicable median family income99—the debtor expensed the debt as scheduled and contractually due to a secured creditor.100 The bankruptcy court seemed not to like this idea and evened the score by including the ex-boyfriend’s payments in CMI:

What constitutes a “household expense” is not defined in the Bankruptcy Code. In this court’s view, however, if the Debtor takes a deduction from her current monthly income for a secured debt that she is contractually required to pay, but for which a non-debtor party is making the payments, then the Debtor must also include the amount of the third party payments in her calculation of current monthly income. . . . [T]he Debtor is required to amend Form B22C to increase her calculation of her current monthly income to account for the benefit received by the Debtor of having her ex-boyfriend make her contractually due secured debt payments.101
[48]

The outcome in Quigley is hard to anchor in the statute. However “fair” it may be to require the debtor to balance the secured debt expense for the pickup with the payments by the ex-boyfriend, § 101(10A) does not require that result. The payment by the ex-boyfriend was not received by the debtor for purposes of § 101(10A)(A). The ex-boyfriend does not appear to be a “dependent” nor is the pickup a “household expense” of the debtor for § 101(10A)(B) purposes. Quigley reaches outside the statute to find CMI based on indirect “benefit” to the debtor—a standard specifically limited by § 101(10A)(B).

[49]

Perhaps the statute offers more support for the outcome in In re Hays.102 The debtor in Hays had a 22-year-old daughter living at home whom the debtor claimed as a dependent for purposes of household size in the disposable income calculation.103 The bankruptcy court concluded that any portion of the daughter’s income from a part-time job that was paid on a regular basis for her own household expenses was included in CMI by § 101(10A)(B):

[I]f the 22-year-old daughter’s income is used “on a regular basis for the household expenses of the debtor or the debtor’s dependents,” then her income must also be included in calculating Debtors’ current monthly income pursuant to § 101(10A). If Debtors intend to claim this daughter as a dependent on the expense side of the means test equation, which would be to their benefit, they will also be required to acknowledge that she is a dependent on the income side of the equation, as well. Therefore, if the 22-year-old daughter uses her income on a regular basis for her own household expenses, then that income must be included in Debtors’ current monthly income.104
[50]

In Hays—in contrast to Quigley—the daughter was a “dependent” and the expenses being paid were “household expenses” of that dependent. This fact pattern fit neatly into § 101(10A)(B) with the twist that the income included in CMI was generated by the dependent for whom the household expenses were being paid.

[51]

Many judgments are likely to arise in Chapter 13 cases with respect to CMI and § 101(10A)(B). “Amount paid” strongly implies actual money. A reduction in rent based on a debtor’s income would probably not be an amount paid. But a rent subsidy actually paid to a landlord by an outside source might qualify as CMI to the debtor.105 A payment by a health insurance company to the debtor’s pediatrician might be an amount paid for a household expense of a dependent of the debtor, but is such a payment “regular”? It might be customary or consistent with ordinary expectations, but not periodic or habitual. A payment by a family member of a household expense in some months but not in other months probably isn’t regular in some sense of the word.

[52]

Benefits paid for by an employer other than as wages or salary could present problems for debtors under § 101(10A)(B). For example, suppose an employer pays part of a health insurance premium for the debtor. If the health insurance premium is a household expense, the employer’s share of the premium could be characterized as an amount paid on a regular basis captured as CMI by § 101(10A)(B). Other employment benefits could be gathered into CMI by the same analysis.

[53]

What about a scholarship that pays living expenses for a child away at college? Is a scholarship an “amount paid” when it comes in the form of a credit on a billing statement from the institution supplying the room and board that the debtor’s child doesn’t pay? Is it regular when the credit appears once or twice a year? Is tuition a household expense in the first instance? Is a scholarship that includes living expenses an amount paid for household expenses given that the child does not live at home? Does it matter whether the child is a dependent for tax purposes? These are close calls that could mean a great deal of difference in a Chapter 13 debtor’s CMI calculation.

[54]

There may be difficult overlaps between income received by the debtor that becomes CMI under § 101(10A)(A) when received and derived during the applicable six-month period and amounts paid by an entity on a regular basis for the household expenses of the debtor or a dependent of the debtor that becomes CMI under § 101(10A)(B). For example, alimony or child support paid monthly to the debtor by an ex-spouse would be received for purposes of § 101(10A)(A) but might also be characterized as an amount paid by an entity on a regular basis for the household expenses of the debtor or a dependent of the debtor under § 101(10A)(B). Is periodic child support or alimony measured against the conditions in § 101(10A)(A) or § 101(10A)(B)? If characterized as income received by the debtor, it would be included in CMI by § 101(10A)(A) without regard to regularity and without regard to whether it is for the household expenses of the debtor or a dependent of the debtor. If alimony or child support is characterized as an amount paid by another entity for purposes of § 101(10A)(B), it might be excluded from CMI if the payments by the former spouse are not regular or if the amounts paid are not entirely for household expenses.

[55]

How do we account for court-ordered alimony or child support that is sometimes or partly paid directly to the debtor and other times or partly paid to someone else? For example, a bill from a pediatrician for care of the debtor’s child paid directly to the doctor by an ex-spouse pursuant to a child support order would not be included in CMI unless it was paid on a regular basis and then only if the doctor’s bill is characterized as a household expense under § 101(10A)(B). On the other hand, reimbursement to the debtor by an ex-spouse of that same doctor bill would probably be income received by the debtor under § 101(10A)(A) without regard to whether it was paid regularly, etc. A home mortgage payment by an ex-spouse would not be “received” by the debtor or by the debtor’s spouse for purposes of § 101(10A)(A) and might or might not be captured for CMI by § 101(10A)(B)—depending on the regularity of payments by the ex-spouse and who is living in the home.

[56]

This difference in characterization could make a big difference in some Chapter 13 cases. Alimony and child support payments are the second largest source of income to many Chapter 13 debtors. The irregularity of payments by ex-spouses is a significant likelihood. Excluding an alimony or support payment because it fails a condition in § 101(10A)(B) will make a substantial difference in the CMI of some debtors.

[57]

In a joint case, amounts paid by one spouse on a regular basis for the household expenses of the other spouse are not included in CMI by § 101(10A)(B)—presumably because the income that would be used for any such payment is already accounted for in the income of the paying spouse under § 101(10A)(A). But § 101(10A)(B) has an interesting glitch with respect to the dependents of the spouses in a joint case. As written, § 101(10A)(B) includes in CMI amounts paid by any entity other than the debtor or joint debtor on a regular basis for the household expenses of the debtor’s dependents and the debtor’s spouse. But there is no mention of the household expenses of the debtor’s spouse’s dependents. In other words, in a joint case, amounts paid by entities other than the debtor or joint debtor on a regular basis for the household expenses of the separate dependents of a spouse of the debtor are not captured for CMI by § 101(10A)(B). If such amounts are not received by the debtor for purposes of § 101(10A)(A), they would not be included in CMI by any provision of § 101(10A).

[58]

It is not difficult to imagine a Chapter 13 debtor and spouse in a joint case in which the debtor’s spouse has a child from a previous marriage. Imagine further that a former spouse of the debtor’s spouse is obligated to pay school tuition for the spouse’s child. When the former spouse of the debtor’s spouse makes that payment directly to the institution, that payment might be characterized as an amount paid on a regular basis for the household expenses of a dependent of the debtor’s spouse. It was not received by the debtor’s spouse and would not come into CMI in a joint case under § 101(10A)(A). And if the debtor’s spouse’s child is not also a dependent of the debtor, the payment of tuition would not be part of CMI under § 101(10A)(B) either.

[59]

This missing feature in § 101(10A)(B) obviously could be important to any married Chapter 13 debtor when the spouses bring separate dependents to the current marriage and there are child support payments by a former spouse (or former spouses) for the household expenses of a child who is not a shared dependent. This raises another question: who is the “debtor” and who is the “debtor’s spouse” for purposes of CMI and § 101(10A)(B)?106 The section is quite careful to keep separate the “debtor” and the “debtor’s spouse” and, respecting that distinction, § 101(10A)(B) does not include in CMI amounts paid on a regular basis for the household expenses of a separate dependent of the debtor’s spouse in a joint case (unless received by the debtor’s spouse as income under § 101(10A)(A)).

[60]

All of these questions come to roost in the calculation of disposable income. Only CMI “received” by the debtor is included in disposable income by § 1325(b)(2).107 Section 101(10A)(B) captures amounts that are not received by the debtor. Those amounts must be subtracted from CMI in the disposable income calculation.108

[61]

Official Form B22C seems to (mis)characterize alimony and support as payments made by others under § 101(10A)(B).109 Line 7 of the October 2006 version of Official Form B22C lumped together “amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor’s dependents, including child or spousal support.”110 The January 2008 version of Official Form B22C somewhat differently pulls into CMI “amounts paid by another person or entity, on a regular basis, for the household expenses of the debtor or the debtor’s dependents, including child support paid for that purpose.” If the drafters of Official Form B22C are correct in this characterization, the conditions in § 101(10A)(B) will exclude from CMI irregularly paid spousal or child support and spousal payments not for household expenses.

[62]

Prior to October 2006, Official Form B22C referred to “contributions” to the household expenses of the debtor or the debtor’s dependents. The statute, quoted above, includes in CMI only an “amount paid” by an entity on a regular basis for the household expenses of the debtor or the debtor’s dependents. Line 7 of the prior version of Official Form B22C omitted the condition of regularity altogether, and “amount paid” in the statute was morphed into the word “contributions.” Both of these defects were corrected in the January 2008 version of the Form.

[63]

These were not benign mistakes. CMI is the fundamental platform for calculation of disposable income in a Chapter 13 case. Every dollar that is pulled into CMI becomes a potential dollar of disposable income that must be paid to unsecured creditors. The difference between “contributions” and “amount paid . . . on a regular basis” could be significant in some Chapter 13 cases. Chapter 13 practitioners are advised to follow and apply the language of the statute with respect to calculation of CMI and when necessary make modifications to the inconsistent language in Official Form B22C.111

[64]

5. Current monthly income excludes nonfiling spouse’s income. There has long been controversy about how to account for a nonfiling spouse’s income in the projected disposable income test.112 BAPCPA seems to answer that question definitively: § 101(10A) repeatedly excludes a nonfiling spouse’s income from CMI; § 101(10A)(B) drags back into CMI only that portion of a nonfiling spouse’s income that is paid on a regular basis for the household expenses of the debtor or a dependent of the debtor.113 There are several necessary conditions here.

[65]

For example, if the nonfiling spouse of the debtor “regularly” uses $400 a month from separate income to pay the note on a car driven by the debtor, that $400 is included in CMI if the car note is a “household expense” of the debtor or of a dependent of the debtor. If the nonfiling spouse regularly uses that $400 from separate income to pay the note on a car driven by the nonfiling spouse, that $400 would be included in CMI only if the debtor and if the car note is a household expense of the debtor or of a dependent of the debtor. This condition might or might now be satisfied if the nonfiling spouse is a “dependent” of the debtor—depending on whether the car note is a “household expense” of the nonfiling spouse or of the debtor—and could be satisfied even if the nonfiling spouse is not a dependent of the debtor if the nonfiling spouse’s car is a household expense of someone else who is a dependent of the debtor. If the nonfiling spouse’s income irregularly pays the mortgage on a vacation home, that payment might be excluded from CMI even if the mortgage is a household expense of the debtor or of a dependent of the debtor.

[66]

In re Hall114 illustrates the capture of a nonfiling spouse’s income into CMI by § 101(10A)(B). The debtor in Hall was unemployed during the six months before the month in which the petition was filed. The bankruptcy court easily concluded that income from employment secured by the debtor after the petition was not included in CMI. The more difficult issue in Hall was how to account for the nonfiling spouse’s income used to pay the household expenses of the debtor. Applying § 101(10A)(B), the bankruptcy court concluded that the portion of the nonfiling spouse’s income which is imputed to the debtor is limited to the amount of household expenses the debtor could then deduct:

[D]etermination of the portion of the non-filing spouse’s income to be included [in] . . . CMI is based on the debtor’s available deductions for household expenses . . . . Only the portions of the non-filing spouse’s income which are actually used to pay household expenses should be included . . . . Other income of the non-filing spouse not used to pay household expenses is not considered in calculating either disposable income or projected disposable income.115
[67]

Along the same lines, the portion of a nonfiling spouse’s income spent on cigarettes for the nonfiling spouse would not be included in the debtor’s CMI unless the nonfiling spouse is a dependent of the debtor and cigarettes are a household expense.116 Taxes paid by a nonfiling spouse would not be included in the CMI of a married debtor filing individually when the nonfiling spouse is not a dependent of the debtor.117 The portion of a nonfiling spouse’s income that pays for the nonfiling spouse’s car is not included in CMI when the nonfiling spouse is not a dependent of the debtor.118 A one-time disbursement from an IRA to a nonfiling spouse does not come into CMI through § 101(10A)(B) because even if used to pay household expenses, the disbursement was not regularly used for that purpose.119

[68]

The bankruptcy court in In re Sharp120 carefully explained why child support received by a nonfiling spouse is not necessarily captured by § 101(10A)(B). The nonfiling spouse in Sharp received child support during the six-month prefiling period and spent some but not all of that support on children who were not dependents of the debtor. The trustee argued that when the debtor is married and living in the same household as the nonfiling spouse, all of the nonfiling spouse’s income should be included in CMI. The bankruptcy court appropriately disagreed, giving the following insightful explanation:

[T]he statute . . . limits the amount to be included in the calculation to that which is regularly used for the household expenses of a debtor and his dependents. . . . Here, the wife receives child support and is responsible for the care and custody of children who are not the dependents of the Debtor. . . . [T]he non-filing wife is not required to adjust her expenses to meet the reasonable and necessary standard of scrutiny that the Debtor’s expenses must meet. . . . [E]ven if the wife has excess income after paying all of her bills and supporting her children, that income is hers and does not become disposable income of the Debtor.121
[69]

There is a nasty burden of proof issue emerging in the § 101(10A)(B) cases involving nonfiling spouses. The statute says clearly that a nonfiling spouse’s income is not included in the debtor’s CMI unless the nonfiling spouse’s income is used to pay, on a regular basis, the household expenses of the debtor or a dependent of the debtor. Unfortunately, Official Form B22C is exactly upside down: it requires in Part 1 that a debtor include all of the nonfiling spouse’s income, and then at Lines 13 and 19122 the debtor is instructed to subtract the portion of the nonfiling spouse’s income that is not paid on a regular basis for the household expenses of the debtor or a dependent of the debtor.

[70]

This upside-down construction of Official Form B22C has led some courts to assign to the debtor a difficult negative burden: to prove the portion of a nonfiling spouse’s income that is not paid on a regular basis for the household expenses of the debtor. For example, in In re Barnes,123 the debtor’s nonfiling spouse received a $6,000 bonus during the six months before the month in which the petition was filed. The debtor did not include the bonus in CMI because future bonuses were uncertainly tied to the profitability of future construction jobs. The bankruptcy court analyzed the applicable burdens of proof and found that the burden fell on the debtor to prove a difficult negative:

[S]ince it appears that Debtor’s [nonfiling spouse] has sufficient monthly income to meet his separate expenses, the burden shifts to Debtor to demonstrate, by a preponderance of the evidence, that the bonus is not paid on a regular basis for her household expenses. Debtor did not present any testimony about how the bonus was specifically used and therefore the Court finds that such a bonus could effectively be used to pay for Debtor’s household expenses. . . . Though the amount of future bonuses is unknown and somewhat speculative given the husband’s brief work history with his current employer and the conditions of the bonus, it appears from Debtor’s testimony that her husband may be annually entitled to a bonus, in some amount, if these conditions are met. . . . [I]f paid in the future, the bonus should be captured in Debtor’s plan payment absent evidence that the bonus is necessary for the [nonfiling spouse’s] non-household expenses. . . . Debtor shall provide the Trustee with written notice of her husband’s annual bonus within ten (10) days after the bonus is received by her or her husband. The bonus shall be remitted to the Trustee within twenty (20) days of its receipt absent motion by Debtor that the bonus is necessary for her husband’s non-household expenses.124
[71]

In a joint case, § 101(10A)(A) says that CMI includes income from all sources received and derived by the debtor and the debtor’s spouse during the applicable six-month period. In a joint case, CMI under § 101(10A)(B) also includes amounts paid on a regular basis by any entity other than the debtor or joint debtor for the household expenses of the debtor or joint debtor, or for the household expenses of a dependent of the debtor (only). The CMI of a married debtor not filing jointly will often be different from the CMI of the debtor and the debtor’s spouse in a joint case.

[72]

This difference raises significant strategic considerations. The disposable income test is completely different at confirmation under § 1325(b) depending on whether the debtor’s CMI is above or below applicable median family income.125 Depending on the mathematics of the appropriate version of the disposable income test and the financial circumstances of particular debtors, it may or may not be in the best interests of the debtors to have CMI below (or above) applicable median family income.

[73]

Debtors, with good advice from counsel, can control CMI both by the timing of filing126 and by the threshold decision whether to file an individual case for one or the other debtor, a joint case or separate cases for each spouse. A fair number of married debtors will likely have a choice whether to have CMI over or under median family income. A married debtor filing a Chapter 13 case that is not a joint case will not include in CMI the nonfiling spouse’s income except to the extent of amounts paid by the nonfiling spouse on a regular basis for the household expenses of the debtor or a dependent of the debtor under § 101(10A)(B).127 If the separate CMI of the debtor is below applicable median family income, a separate filing would trigger the more traditional disposable income test in § 1325(b)(2)(A) and (B)—subjecting the debtor’s spending decisions to the scrutiny of the trustee and allowed unsecured creditors.128 If the spouse’s income would push CMI above median family income in a joint case with the debtor, the disposable income test in a joint case would become the mathematical formula in § 707(b)(2)(A) and (B) and the joint debtors would escape most of the trustee’s scrutiny of expenses.129 Separate filings might be implicated if neither debtor alone has CMI above median family income, and a three-year commitment period will result.130

[74]

These important effects of the CMI calculation require careful analysis and calculations before filing separate or joint Chapter 13 cases for married debtors. Only by doing the separate and joint calculations can counsel know how timing and configuration of the filing(s) will change the disposable income test. These are new considerations in Chapter 13 practice brought on by BAPCPA.

[75]

The exclusion of a nonfiling spouse’s income from CMI by § 101(10A) creates confusion when other provisions of BAPCPA require calculation of the current monthly income of the debtor and the debtor’s spouse combined. Detailed elsewhere,131 for reasons that are obscure, BAPCPA calculates an “applicable commitment period” of “not less than five years” when “the current monthly income of the debtor and the debtor’s spouse combined” is greater than applicable median family income.132 Similarly, the length of a Chapter 13 plan is calculated by § 1322(d)(1) based on “the current monthly income of the debtor and the debtor’s spouse combined.”133 Statutory construction of the phrase “combined” CMI is a significant challenge.134

 

[76]

6. Current monthly income excludes social security benefits. Section 101(10A)(B) excludes from CMI “benefits received under the Social Security Act,” payments to victims of war crimes or crimes against humanity and payments to victims of international or domestic terrorism. Of these exclusions, benefits received under the Social Security Act will obviously be most common. The Social Security Act is a vast collection of benefits programs that includes at least the following:

 

 a.
Disability, Retirement and Survivors Benefits (SSDI), including Old Age and Survivors Insurance Benefits under 42 U.S.C. §§ 402–434;
 

 

 

 

 b.
Supplemental Security Income (SSI) for disabled adults and children under 42 U.S.C. §§ 1381–1383F;
 

 

 

 

 c.
Foster care and adoption benefits on behalf of a child receiving SSI under 42 U.S.C. §§ 673 et seq.;
 

 

 

 

 d.
Supplemental income to blind and disabled veterans under 42 U.S.C. §§ 1001–1013;
 

 

 

 

 e.
Medicare under 42 U.S.C. §§ 1395–1395ccc;
 

 

 

 

 f.
Medicaid under 42 U.S.C. §§ 1396–1396v;
 

 

 

 

 g.
Aid to Families with Dependent children (AFDC)—now called Temporary Assistance to Needy Families (TANF)—under 42 U.S.C. §§ 601–606; and
 

 

 

 

 h.
Unemployment Compensation under 42 U.S.C. §§ 501–504 and 1321–1324.135
 

 

 

[77]

Prior to BAPCPA, most courts concluded that social security benefits and other entitlements were included in “regular income” to determine whether an individual was eligible for Chapter 13 under § 109(e).136 Because CMI has no bearing on eligibility, the exclusion of social security benefits from CMI should not affect whether an individual has regular income for eligibility purposes.

[78]

But the exclusion of Social security benefits from CMI does affect the amount that must be paid to unsecured creditors to satisfy the projected disposable income test in § 1325(b). Social security benefits may be available to the debtor to pay living expenses, but social security benefits are not included in CMI and are not projected disposable income under § 1325(b). The courts have recognized that social security benefits are not considered when calculating projected disposable income under § 1325(b)(1) or applicable commitment period under § 1325(b)(4).137

[79]

It is at least interesting that even among courts that have refused to strictly apply CMI as the income side of projected disposable income,138 several courts have acknowledged that social security benefits are excluded from CMI by § 101(10A)(B) and have applied that exclusion from income as reconceptualized.139 Several courts have observed that a Chapter 13 debtor after BAPCPA can voluntarily commit social security benefits to funding the plan to pay unsecured creditors and/or to enhance feasibility notwithstanding the statutory exclusion from CMI.140 Although social security benefits are unambiguously excluded from CMI, one bankruptcy court observed that payroll taxes associated with social security benefits and medical expense deductions may come back into the projected disposable income calculation.141

[80]

Although unemployment compensation is funded in part by provisions of the Social Security Act,142 it has been held that unemployment compensation is not a benefit received under the Social Security Act and is included in CMI. As explained by the bankruptcy court in In re Baden:143

[T]his Court views the distinction between unemployment compensation and social security benefits as a manifestation of Congress’ intent that the Bankruptcy Code treat the current and temporary replacement of wages administered by the state differently than future benefits associated with old age, ordinarily administered by the federal government. . . . Unemployment programs provide funds to partially replace lost wages to maintain unemployed workers at a level of subsistence. . . . Allowing the unemployed to retain any excess funds they receive while failing to pay their bills runs contrary to Congress’ goal of preventing abuse by those who can afford to pay a portion of their bills. . . . [E]xcluding unemployment compensation from the calculation of CMI does not further the Congressional goal of protecting retirement savings. . . . The pre-BAPCPA definition of disposable income generally did include income from all sources according to judicial decisions rendered in that time period . . . . Had Congress intended CMI to exclude unemployment compensation, I find they would have done so with greater specificity.144
[81]

Along the same lines, although there are connections between the Social Security Act and benefits paid to veterans,145 several courts have held that veterans benefits are not social security benefits and are included in CMI, notwithstanding that veterans benefits may be exempt under other state or federal law. As explained by the bankruptcy court in In re Waters:146

With the enactment of BAPCPA in 2005, the split of authority over whether or not exempt assets are to be included in the calculation of disposable income has been statutorily answered by Congress. . . . [U]nder the changes rendered to § 1325(b) by BAPCPA, the debtor’s “current monthly income” for purposes of applying the disposable income test now includes any amount paid by an entity other than the debtor on a regular basis for the household expenses of the debtor. . . . Regarding the application of 11 U.S.C. § 101(10A) to the receipt of VA benefits, those benefits are “income” to the Debtor inasmuch as she receives a monthly benefit check. . . . [T]he benefits are paid by the Department of Veterans Affairs, which is an “entity” . . . . [B]enefits are received on a regular, monthly basis . . . they are received to help pay for the household expenses of the debtor and/or the debtor’s dependents. Accordingly, exempt VA benefits are properly included in the calculation of a debtor’s current monthly income pursuant to § 101(10A) . . . regardless of the exempt status of those benefits under federal or State law.147
[82]

In re Wilson148 presents an interesting twist on the social security question: how does a debtor account for a nonfiling spouse’s social security income? We know from § 101(10A)(B) that the debtor’s social security income is excluded from CMI. The bankruptcy court in Wilson applied the same rule to a nonfiling spouse’s social security income—excluding it altogether from the CMI of the debtor.

[83]

But what if some or all of that nonfiling spouse’s social security income was paid on a regular basis for the household expenses of the debtor or a dependent of the debtor? Does the exclusion of social security income in § 101(10A)(B) extend to the included “amount paid . . . on a regular basis for the household expenses of the debtor or the debtor’s dependents”? Sentence structure supports conflicting outcomes. The exclusion for social security income is in the same sentence as the inclusion of “amount paid” and it is introduced by a “but” that could be read as an exception to the inclusion that precedes it—as well as an exception to subsection (A) that comes earlier. This is the outcome in Wilson. But § 101(10A)(B) could also be read as including any “amount paid” without regard to the exclusion of social security income that follows.

[84]

7. Beware of Official Form B22C: CMI calculation may be wrong. Bankruptcy Rule 1007(b)(6) requires all Chapter 13 debtors to file a Statement of Current Monthly Income, and Official Form B22C purports to be that statement. Unfortunately, many Chapter 13 debtors will miscalculate CMI by following the instructions in Official Form B22C.149 The Official Form attempts to be three things: a Statement of Current Monthly Income; a calculation of applicable commitment period; and a calculation of disposable income for debtors with CMI greater than applicable median family income. As demonstrated above, the calculation of CMI in § 101(10A) excludes the income of a nonfiling spouse except when the nonfiling spouse has paid amounts on a regular basis for the household expenses of the debtor or a dependent of the debtor. In contrast, the applicable commitment period calculation in § 1325(b)(4) uses the “current monthly income of the debtor and the debtor’s spouse combined.”150

[85]

The forms drafters attempted in Official Form B22C to calculate both CMI and applicable commitment period on the same piece of paper with the result that the Statement of Current Monthly Income is lost somewhere in Parts I–III of the Official Form. Moreover, Official Form B22C uses words and phrases that are different from those used by Congress in § 101(10A) to describe critical features of the CMI calculation. The result is that Official Form B22C will not always produce an accurate Statement of Current Monthly Income for all Chapter 13 debtors.

[86]

Debtors’ counsel should consider modifications to the Official Form to more accurately reflect the CMI calculation in § 101(10A) of the statute. Pay particular attention to the inclusion or exclusion of a spouse’s income.151 Do not be confused by the “commitment period” calculation in Part II—that separate calculation requires a different form of CMI for married debtors than does the statement of CMI under § 101(10A).152

[87]

8. CMI is only the income side of disposable income. Although not without controversy,153 once CMI is correctly calculated, “disposable income” for purposes of the confirmation test in § 1325(b) is the portion of CMI that is left after these five deductions:

 

 a.
“[A]mounts reasonably necessary to be expended—” as determined under § 1325(b)(2)(A) and (B) if CMI is less than applicable median family income154 and determined in accordance with § 707(b)(2)(A) and (B) if CMI is greater than applicable median family income;155
 

 

 

 

 b.
Amounts included in CMI by § 101(10A)(B) that are not “received by the debtor”;156
 

 

 

 

 c.
“[C]hild support payments, foster care payments or disability payments for a dependent child made in accordance with applicable nonbankruptcy law to the extent reasonably necessary to be expended for such child”;157
 

 

 

 

 d.
“[A]mounts required to repay” a pension loan described in §§ 1322(f) and 362(b)(19);158 and
 

 

 

 

 e.
Wages withheld or payments received by an employer as contributions to an employee benefit plan, deferred compensation plan, tax-deferred annuity or health insurance plan described in § 541(b)(7).159
 

 

 


 

1  Pub. L. No. 109-8, 119 Stat. 23 (2005).

 

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

 

3  11 U.S.C. § 101(10A), discussed in this section and in § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income. As detailed below in this section and in § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors, some courts have modified or abandoned the use of CMI as the income side of the projected disposable income test.

 

4  See §§ 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors and 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).

 

5  See In re Spraggins, 386 B.R. 221, 225–26 (Bankr. E.D. Wis. 2008) (Kelley) (“[T]he subsection that differentiates between the above-median and below-median debtors deals with ‘amounts reasonably necessary to be expended,’ i.e., the expense component of the disposable income equation. . . . [B]ut the income calculation does not depend on whether a debtor is above or below the median. . . . A literal reading of § 1325(b) dictates that the income portion of Form B22C should be used to determine the income of all Chapter 13 debtors [.]”), supplemental op., No. 07-24728-svk, 2008 WL 2073947 (Bankr. E.D. Wis. May 14, 2008) (Kelley). See below in this section and § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors for discussion of many decisions that disrespect the statutory requirement that CMI in § 101(10A) defines the income side of the projected disposable income calculation.

 

6  See 11 U.S.C. § 521(a)(1)(B)(ii), discussed in § 35.10 [ Schedules I and J—Income and Expenditures ] § 36.16  Schedules I and J—Income and Expenditures.

 

7  See 11 U.S.C. § 521(a)(1)(B)(v), discussed in § 377.1 [ Statement of Monthly Net Income ] § 36.17  Statement of Monthly Net Income.

 

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

 

9  See App. LL.

 

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

 

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

 

12  The necessary modifications to Official Form B22C are discussed below in this section and in § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

13  11 U.S.C. § 101(10A).

 

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

 

15  Accounting for a spouse’s income and expenses in the disposable income test is discussed below in this section and in § 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.

 

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

 

17  See § 377.1 [ Statement of Monthly Net Income ] § 36.17  Statement of Monthly Net Income.

 

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

 

19  See below in this section, and see § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

20  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

21  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors. See, e.g., Coop v. Frederickson (In re Frederickson), 545 F.3d 652, 659 (8th Cir. 2008) (“[D]ebtors who had more disposable income in the past than what they are likely to receive in the future would be forced to confirm a plan that they could not maintain.”).

 

22  No. 07-51781, 2008 WL 597180 (Bankr. M.D.N.C. Mar. 4, 2008) (Carruthers).

 

23  2008 WL 597180, at *1–*2. Accord In re Ingram, No. 06-02714-8-RDD, 2006 WL 6070518, at *1 (Bankr. E.D.N.C. Nov. 20, 2006) (Doub) (When debtor lost job during six months before petition and regained employment at lower income after petition, it is appropriate to excuse the filing of Schedule I to Official Form 6 and to time-shift CMI calculation under § 101(10A)(A)(ii). “11 U.S.C. § 101(10A)[(A)](ii) allows for the court to determine another date on which current monthly income will be determined if the debtor does not file Schedule I. . . . [I]f the debtors’ current monthly income were determined consistently with the general definition, it would include the months during which Mr. Ingram was employed with the National Guard. It would not reflect the significant decrease in income the debtors have suffered due to Mr. Ingram’s involuntary change in employment. If the debtors were forced to use their pre-petition six-month average as their current monthly income, their plan would not be feasible due to their actual monthly income at this time. . . . [T]he language of § 101(10A) anticipates situations where the debtor would be allowed to be exempt from filing Schedule I, thereby giving the court the opportunity to fix a different date upon which current monthly income would be determined. The court cannot envision a more appropriate situation in which to use this authority than the present one.”).

 

24  See §§ 387.1 [ New Filing Requirements and Other Duties: A List ] § 42.1  Filing Requirements and Other Duties: A List and 388.1 [ Consequences of Failure to File Required Information, Including “Automatic Dismissal” ] § 42.2  Consequences of Failure to File Required Information, Including “Automatic Dismissal”.

 

25  See 11 U.S.C. §  521(i)(1), 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”.

 

26  No. 08-80738C-13D, 2008 WL 4344894 (Bankr. M.D.N.C. Sept. 23, 2008) (Stocks).

 

27  2008 WL 4344894, at *2.

 

28  11 U.S.C. § 101(10A)(A)(ii).

 

29  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).

 

30  367 B.R. 727 (Bankr. D. Kan. 2007).

 

31  Accord In re Cruz, No. 08-23419-svk, 2008 WL 3346583, at *2 (Bankr. E.D. Wis. Aug. 11, 2008) (Kelley) (Bonus received during six months before petition is included in CMI and is not prorated over entire year. “The Debtors do not dispute that they received all $12,000 within the six months prior to their Chapter 13 filing. The Debtors’ CMI is derived by totaling all of their income received in that period and dividing by six to obtain a monthly average.”); In re Barnes, 378 B.R. 774 (Bankr. D.S.C. 2007) (Waites) (Bonus received by nonfiling spouse within six months of petition is included in CMI.). See also In re Foster, No. 05-50448 HCD, 2006 WL 2621080 (Bankr. N.D. Ind. Sept. 11, 2006) (unpublished), discussed below in this section.

 

32  342 B.R. 280 (Bankr. C.D. Ill. 2006).

 

33  342 B.R. at 283–85 (“Mrs. Beasley is a teacher . . . and is paid an annual salary in excess of $63,000. The School District pays its teachers their annual salaries, however, over the period when school is actually in session rather than throughout the calendar year. Accordingly, Mrs. Beasley received no income in July, 2005, and only about $1,500 of income in August, 2005. The Trustee asserts that the use of the period of July through December, 2005, to determine Mrs. Beasley’s income for calculation of her husband’s applicable commitment period resulted in a skewed calculation. . . . [S]trict compliance with the definition of ‘current monthly income’ means that some debtors with high but irregular income may be able to avoid the imposition of the longer payment period by the timing of their filings, while debtors with lower incomes are forced to pay for five years. That may be unfair, but that is what the statute requires as it is currently written. The remedy for that problem is legislative, not judicial.”). Accord In re Schneider, No. 07-32487, 2008 WL 1885768 (Bankr. N.D.N.Y. Apr. 28, 2008) (Cangilos-Ruiz) (When schoolteacher receives income during only nine months, six-month look-back for calculating CMI included summer months during which debtor had no income; disposable income was different on Form B22C than annualized monthly income on Schedules I and J, but discrepancy was adequately explained.).

 

34  See below in this section.

 

35  351 B.R. 808 (Bankr. E.D. Tex. 2006).

 

36  351 B.R. at 811 (“[H]er receipt of income as evidenced by the transfer of the IRA to her control was outside the six-month period.”). See below in this section for discussion of whether an IRA distribution is income for § 101(10A) purposes.

 

37  Webster’s New 20th Century Dictionary 491 (2d ed. 1983).

 

38  In re Sanchez, Nos. 06-40886, 06-40865, 2006 WL 2038616 (Bankr. W.D. Mo. July 13, 2006) (unpublished), appeal dismissed sub nom. Zahn v. Fink (In re Zahn), 367 B.R. 654 (B.A.P. 8th Cir. 2007), rev’d, 526 F.3d 1140 (8th Cir.) (Riley, Colloton, Benton), on remand, 391 B.R. 840 (B.A.P. 8th Cir. 2008) (Kressel, Mahoney, McDonald).

 

39  No. 08-23419-svk, 2008 WL 3346583 (Bankr. E.D. Wis. Aug. 11, 2008) (Kelley).

 

40  2008 WL 3346583, at *2.

 

41  399 B.R. 620 (Bankr. C.D. Ill. 2008) (Gorman).

 

42  399 B.R. at 627.

 

43  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

44  11 U.S.C. § 1325(b)(2), discussed in § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

45  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors. See, e.g., Hamilton v. Lanning (In re Lanning), 545 F.3d 1269, 1282 (10th Cir. 2008) (Murphy, Brorby, Tymkovich) (“[W]e hold that, as to the income side of the § 1325(b)(1)(B) inquiry, the starting point for calculating a Chapter 13 debtor’s ‘projected disposable income’ is presumed to be the debtor’s ‘current monthly income,’ as defined in 11 U.S.C. § 101(10A)(A)(i), subject to a showing of a substantial change in circumstances.”); Coop v. Frederickson (In re Frederickson), 545 F.3d 652, 659 (8th Cir. 2008) (Wollman, Beam, Riley) (The final calculation of projected disposable income “can take into consideration changes that have occurred in the debtor’s financial circumstances as well as the debtor’s actual income and expenses as reported on Schedules I and J.”); Kibbe v. Sumski (In re Kibbe), 361 B.R. 302, 312 (B.A.P. 1st Cir. 2007) (Feeney, Boroff, Somma) (“[W]here, as here, the ‘current monthly income’ amount is not true to the debtor’s actual current income, courts should assume that Congress intended that they rely on what a debtor can realistically pay to creditors through his or her plan and not on any artificial measure.”); In re Almonte, 397 B.R. 659 (Bankr. E.D.N.Y. 2008) (Grossman) (“[C]rystal ball” approach in Hamilton v. Lanning (In re Lanning), 545 F.3d 1269 (10th Cir. 2008), would exclude from projected disposable income cash advances that were received during the six months preceding the bankruptcy but that are not reasonably expected to be received during the life of the plan.); In re Purdy, 373 B.R. 142, 152 (Bankr. N.D. Fla. 2007) (Killian) (Because projected disposable income is a “forward-looking term,” it is calculated “based on a Debtor’s current projected income, not the historical average income for the six months prior to filing the petition.”); In re Arsenault, 370 B.R. 845, 849–51 (Bankr. M.D. Fla. 2007) (Williamson) (“[T]he Court should give meaning to the word ‘projected’ . . . . [T]he Court should consider not only the Debtors’ historical finances, but it should also consider what the Debtors expect to receive in the course of the applicable commitment period. . . including future annual bonuses.”); In re Grant, 364 B.R. 656 (Bankr. E.D. Tenn. 2007) (Projected disposable income uses CMI as “starting point” that changes if Schedules I and J reveal circumstances have changed between historical calculation of CMI and effective date of plan.); In re Edmondson, 363 B.R. 212, 217–18 (Bankr. D.N.M. 2007) (Income side of projected disposable income test is not restricted to current monthly income on Form B22C; it is appropriate to consider debtor’s actual income reported on Schedule I. “‘[P]rojected disposable income’ must take into account the debtor’s actual current income as reported on Schedule I, projected to include the actual income the debtor expects to receive over the life of the plan. . . . [S]trict adherence to Form B22C will result in absurd and illogical results.”); In re Carlton, 362 B.R. 402, 406–07 (Bankr. C.D. Ill. 2007) (Schedule I, not CMI calculation in Form B22C, is appropriate source for income side of disposable income test. “Many courts have studied the CMI . . . . The clear majority weight of opinion is that these calculations do not result in a determination of a debtor’s ‘projected disposable income’ referred to in § 1325(b)(1)(B). . . . The first step in calculating projected disposable income is to determine the actual income of the Debtors which is expected to be earned or be available to fund plan payments. That income is disclosed in Schedule I.”); In re Zimmerman, No. 06-31086, 2007 WL 295452, at *6–*8 (Bankr. N.D. Ohio Jan. 29, 2007) (unpublished) (“[I]n determining a debtor’s projected disposable income to be received during the term of the Chapter 13 plan, the court will first look at debtor’s ‘current monthly income’ as defined in § 101(10A) and as limited in § 1325(b)(2). The court will presume that figure is the income projected to be received by the debtor during the term of the Chapter 13 plan unless the debtor, the trustee, or an unsecured creditor who has objected to confirmation of the plan can show that a substantial change in circumstances exists such that the court may conclude that the presumed figure does not reasonably project debtor’s income in the future.”); In re Ward, 359 B.R. 741, 744–45 (Bankr. W.D. Mo. 2007) (“[B]ecause the means test is based on ‘current monthly income’ (‘CMI’), which is a historical average sometimes having nothing to do with reality, we have determined that the phrase ‘projected disposable income’ in § 1325(b)(1)(B) cannot mean that we are to mechanically apply the means test to determine how much should be paid into the plan for payment of unsecured creditors. ‘Instead, the Form B22C means test serves merely as a starting point in determining the amount of projected disposable income available to unsecured creditors.’ . . . CMI is presumed to be representative of the debtor’s projected income, unless it is shown that CMI does not accurately reflect a debtor’s true projected, or prospective income.”); In re Teixeira, 358 B.R. 484, 486–87 (Bankr. D.N.H. 2006) (Citing In re Jass, 340 B.R. 411 (Bankr. D. Utah 2006), there is a presumption that projected disposable income begins with current monthly income, but when debtor overcomes presumption by showing changed circumstances, Schedule I will be used for income side. “In ordinary cases, below-median and above-median debtors will determine their ‘disposable income’ pursuant to section 1325(b)(2) by subtracting expenses from ‘current monthly income.’ . . . If the presumption is rebutted, below-median debtors will use Schedule I to determine income . . . . Above-median debtors will use income from Schedule I to determine income.”); In re Pak, 357 B.R. 549, 552 (Bankr. N.D. Cal. 2006) (Citing In re Jass, 340 B.R. 411 (Bankr. D. Utah 2006), CMI is the starting point for determining projected disposable income. “The Jass court held that the proper approach was to presume that the debtor’s ‘projected disposable income’ was based on the debtor’s ‘current monthly income.’ However, the debtor should be permitted to rebut this presumption by presenting evidence of a substantial change in his financial condition post-filing. If so, the court should base its determination on the income shown on Schedule I.”), aff’d, 378 B.R. 257 (B.A.P. 9th Cir. 2007), overruled by Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008) (Pregerson, Siler, Bea); In re Bossie, No. A06-00432-DMD, 2006 WL 3703203, at *1 (Bankr. D. Alaska Dec. 12, 2006) (unpublished) (Citing In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006), projected disposable income is based on the debtor’s “‘anticipated income during the term of the plan, not merely an average of her prepetition income.’ . . . The figure stated on Line 58 of Form 22C is not the sole factor to be utilized in determining their projected disposable income.”); In re Balcerowski, 353 B.R. 581, 589–90 (Bankr. E.D. Wis. 2006) (Actual income and expenses from Schedules I and J, not just Form B22C, must be consulted to determine disposable income. “Rather than directing parties to look at Schedule I—which contains the debtor’s income information as of the date he filed his petition—BAPCPA now directs parties to look at the debtor’s average income for the six-month period preceding the bankruptcy. This directive works well if a debtor has the same income at the time he files his bankruptcy petition as he had during the six months preceding the month in which he filed. But many debtors experience changes . . . . If the purpose of the disposable income calculation in the Chapter 13 context is to ferret out exactly how much money a debtor has available to pay creditors . . . then looking only to the income the debtor made in the six months before he files does not further that objective.”); In re Pederson, No. 06-00635S, 2006 WL 3000104, at *5 (Bankr. N.D. Iowa Oct. 13, 2006) (unpublished) (CMI is only starting point to determine projected disposable income under § 1325(b)(1)(B). “I do not believe that a debtor or a creditor is bound by the ‘current income’ figure in calculating projected disposable income. Because it is a starting point, a debtor, creditor or trustee may attempt to prove that the historical average is not an accurate measure of the income anticipated to be received during the term of the plan.”); In re LaSota, 351 B.R. 56, 58, 60 (Bankr. W.D.N.Y. 2006) (Adopting In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006), and In re Jass, 340 B.R. 411 (Bankr. C.D. Utah 2006), and rejecting In re Barr, 341 B.R. 181 (Bankr. M.D.N.C. 2006) and In re Alexander, 344 B.R. 742 (Bankr. E.D.N.C. 2006), “‘[p]rojected’ disposable incom,e is not ‘current’ disposable income, despite the heroic efforts of some of my esteemed colleagues who reach the opposite result as a matter of case authority that binds them, or by means of careful sentence-parsing or of perceived legislative intentions.” Debtor with CMI above applicable median family income who shows no disposable income on Form B22C but surplus income on Schedules I and J must commit surplus income to payments under plan because use of “current disposable income” under these circumstances “would yield an ‘absurd’ result.”); In re Edmunds, 350 B.R. 636, 646–47 (Bankr. D.S.C. 2006) (“[T]he income component of projected disposable income is a forward-looking concept and the Court adopts the majority approach regarding income as set forth in [In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006),] and [In re Demonica, 345 B.R. 895 (Bankr. N.D. Ill. 2006),] and disagrees with the approach of [In re Barr, 341 B.R. 181 (Bankr. M.D.N.C. 2006),] and [In re Alexander, 344 B.R. 372 (Bankr. E.D.N.C. 2006)]. . . . The strict use of ‘current monthly income’ to determine the amount to be paid in a plan to unsecured creditors ignores that Congress used the word ‘projected’ to modify ‘disposable income’ and ignores the language in § 1325(b)(1) which indicates that a court is to determine the income ‘to be received’ during the applicable commitment period. . . . ‘[P]rojected disposable income’ is not limited to a debtor’s pre-petition income average under Form B22C. . . . [T]he income component of ‘projected disposable income’ relates to a debtor’s actual income expected to be received during a five-year plan.”); In re Foster, No. 05-50448 HCD, 2006 WL 2621080, at *6–*7 (Bankr. N.D. Ind. Sept. 11, 2006) (unpublished) (CMI and Form B22C are starting point for income side of disposable income calculation. “‘[P]rojected disposable income’ is different from ‘disposable income’ and . . . Congress, by leaving the word ‘projected’ in § 1325(b)(1)(B), intended a distinction between the terms. . . . This court therefore treats the CMI analysis as the initial but not the ultimate measure of the debtors’ financial condition and ability to fund their plan. ‘The numbers resulting from the calculations on Form B22C represent a starting point for the Court’s inquiry. It represents a floor, not a ceiling. Such a construction gives the Court the ability to evaluate the debtor’s past and current financial status to determine a debtor’s disposable income when a debtor’s circumstances change from the six months preceding the filing of the petition.’”); In re Nevitt, Nos. 05-77798, 05-77943, 2006 WL 2433491, at *2 (Bankr. N.D. Ill. Aug. 18, 2006) (unpublished) (Projected disposable income calculation is based on Schedule I for a debtor with CMI less than applicable median family income. “Form B22C cannot be used to determine projected disposable income for debtors whose earnings fall below the median family income. . . . Schedule I, instead of Form B22C, should be used to calculate projected disposable income.”); In re Fuller, 346 B.R. 472 (Bankr. S.D. Ill. 2006) (Although BAPCPA contemplates that income for disposable income test purposes is CMI—income received in the six months preceding the petition—actual income at the petition is more appropriate basis for determining projected disposable income.); In re Demonica, 345 B.R. 895, 900 (Bankr. N.D. Ill. 2006) (Citing In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006), income side of projected disposable income is determined from Schedule I, not from Form B22C. “The [Hardacre] court held that ‘projected disposable income’ ‘must be based upon the debtor’s anticipated income during the term of the plan, not merely an average of [the debtor’s] prepetition income.’ . . . [T]his Court finds that the term ‘projected disposable income’ must mean something other than the income as computed on Form B22C. . . . Schedule I sets forth a debtor’s income at the time of filing and should be amended when a debtor’s income either increases or decreases. Therefore, a debtor’s Schedule I, which reflects current income as opposed to a historical average, should be used to determine ‘projected disposable income.’”); In re Risher, 344 B.R. 833, 836–37 (Bankr. W.D. Ky. 2006) (Current monthly income is “a starting point for the Court’s inquiry . . . a floor, not a ceiling”; projected disposable income is based on the debtor’s actual anticipated income over the life of the plan, and “not just by a strict application of the statutory definition of ‘current monthly income.’”); In re Dew, 344 B.R. 655, 660–61 (Bankr. N.D. Ala. 2006) (“[A] debtor’s current monthly income is the starting point for determining his disposable income under section 1325(b)(2). . . . [I]n determining whether a below median income debtor is offering all of his projected disposable income under a plan, the first step, and in most cases the last step, is to look at the debtor’s Schedules I and J. If the Schedules are accurately completed in good faith and plan payments are substantially the same as the debtor’s monthly net income shown on Schedule J, then the Court will conclude that the debtor is offering his projected disposable income under his plan as required by Section 1325(b)(1)(B).”); In re Grady, 343 B.R. 747, 751–53 (Bankr. N.D. Ga. 2006) (When actual income at confirmation is less than CMI because one debtor suffered a heart condition, actual income determines projected disposable income. “[D]isposable income on the CMI form is not the ultimate measure of the Debtors’ financial condition and ability to fund plan payments. . . . Congress intended the Debtors to propose a monthly payment to unsecured creditors based on their financial situation as of the date when the first payment is due. The Debtors are authorized to pay the projected disposable income under Schedule J as opposed to the disposable income on the CMI form.”); In re Hardacre, 338 B.R. 718, 722–23 (Bankr. N.D. Tex. 2006) (CMI as defined in § 101(10A) does not determine projected disposable income in § 1325(b)(1); financial circumstances on effective date of plan must be considered. “[T]he term ‘projected disposable income’ must be based upon the debtor’s anticipated income during the term of the plan, not merely an average of her prepetition income. . . . [S]ection 1325(b)(1)(B)’s use of the phrase ‘projected disposable income’ rather than ‘disposable income’ is instructive. . . . [S]ection 1325(b)(1)(B) refers to the projected disposable income ‘to be received in the applicable commitment period.’ . . . This suggests that Congress intended to refer to the income actually to be received by the debtor during the commitment period, rather than prepetition average income. . . . [S]ection 1325(b)(1) requires the court to determine whether a debtor is committing all of her projected disposable income ‘as of the effective date of the plan.’ . . . This language suggests that the debtor’s income ‘as of the effective date of the plan’ is the one that is relevant to the calculation of ‘projected disposable income,’ not her income prior to filing. . . . This does not mean that section 101(10A)’s definition of current monthly income is irrelevant to the calculation of projected disposable income. Section 101(10A) continues to apply inasmuch as it describes the sources of revenue that constitute income, as well as those that do not.”).

 

46  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors. See, e.g., Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008) (Pregerson, Siler, Bea) (Applying Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994), approving of In re Alexander, 344 B.R. 742 (Bankr. E.D.N.C. 2006), and rejecting In re Hardacre, 338 B.R. 718 (Bankr. N.D. Tex. 2006), and In re Jass, 340 B.R. 411 (Bankr. D. Utah 2006), disposable income is a mechanical calculation based on the statutory definition of current monthly income that does not change when “projected” under § 1325(b)(2).); Featherson v. Drummond (In re Featherson ), No. CV 08-16-GF-SEH, 2008 WL 5217936 (D. Mont. Dec. 11, 2008) (Haddon) (Citing Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008), income from one-time sale of livestock is included in current monthly income and in projected disposable income because a “mechanical test” is imposed by the statute and disposable income is not merely a starting point.); Mancl v. Chatterton (In re Mancl), 381 B.R. 537, 541 (W.D. Wis. 2008) (Crabb) (BAPCPA eliminated discretion to calculate income other than as specified in § 101(10A) for Chapter 13 debtors; rigid, mechanical formula in § 101(10A) may produce Chapter 13 cases in which debtors are required to pay less to unsecured creditors than they are able to pay, but this inevitable outcome is required by statute. “The only reasonable interpretation of the phrase ‘projected disposable income’ is properly calculated current monthly income projected forward for each month during the plan commitment period. . . . [R]equiring strict adherence to the statute is entirely consistent with congressional objectives in changing the law. Replacing the previous nuanced and discretionary computation of disposable income with the uncompromising six-month average income determination deprived bankruptcy courts of discretion and made a certain number of harsh results inevitable for both debtors and creditors. It also enhanced consistency and predictability and limited the opportunities for manipulation of the process.”); In re Greer, 388 B.R. 889, 892–95 (Bankr. C.D. Ill. 2008) (Perkins) (CMI calculation includes no consideration of debtor’s loss of job after the petition. “Congress apparently believed that a 6-month historical average of a debtor’s income is a better, more reliable predictor of future income over three to five years than a snapshot of the debtor’s current income on the petition date. . . . Use of the new CMI standard has caused courts to suffer cognitive dissonance. . . . The new CMI structure now forces courts to rely upon historical income, even if no longer seen as probative because of changed circumstances. . . . Section 1325(b)(2) does not contemplate any blending or averaging of CMI with actual or anticipated income and does not reflect an intent that CMI should be applied as a presumption. . . . A debtor’s CMI is determined by the 6-month period preceding the filing. Post-filing changes to income are simply not relevant to that calculation and may not be considered for plan confirmation purposes.”); In re Spraggins, 386 B.R. 221 (Bankr. E.D. Wis. 2008) (Kelley) (Income side of projected disposable income test for debtor with CMI less than applicable median family income is CMI calculation in Part I of Form B22C, not Schedule I.), supplemental op., No. 07-24728-svk, 2008 WL 2073947 (Bankr. E.D. Wis. May 14, 2008) (Kelley); In re Miller, 381 B.R. 736, 739 (Bankr. W.D. Ark. 2008) (Barry) (Debtors with CMI greater than actual income at time of confirmation may be unable to satisfy feasibility requirement because projected disposable income is always based on CMI. “[I]n each of the cases before the Court, the debtors were required to figure their respective disposable incomes by averaging their monthly income for the six months preceding the filing of their bankruptcy petitions. In most of these cases, that resulted in a disposable income figure that exceeds the debtors’ present (and actual) disposable income.”); In re Austin, 372 B.R. 668, 675–76 (Bankr. D. Vt. 2007) (Brown) (“There can be little doubt that § 1325(b)(2), by incorporating CMI as the basis for a debtor’s income, relies upon income data from the pre-petition period. The statute makes no reference to any other income and since ‘current monthly income’ is a defined term, the Court finds no support for using income from the date of filing or any other time period to compute ‘disposable income.’”); In re McGillis, 370 B.R. 720, 752 (Bankr. W.D. Mich. 2007) (Hughes) (For all Chapter 13 debtors, CMI is income side of disposable income calculation. “Section 1325(b), as amended, establishes a set formula against which the debtor’s proposed plan payments to unsecured creditors must be measured if either the Chapter 13 trustee or an eligible creditor objects. Omitted from this formula is any consideration of a debtor’s Schedule I earnings. For better or worse, it is the debtor’s average historical income or, as the Bankruptcy Code describes it, the debtor’s ‘current monthly income,’ that is now used to establish the income component of this calculation.”); In re Kolb, 366 B.R. 802, 817–18 (Bankr. S.D. Ohio 2007) (Walter) (“‘[D]isposable income’ looks at a debtor’s past income in calculating CMI. Congress apparently determined that basing future payment obligations on a past income average was the exclusive way to ‘project’ a debtor’s financial situation into the future, rather than relying on the income and expenses listed on a debtor’s schedules. It may be that Congress did not trust debtors to provide current information or may have decided that past income, over a six month period, was simply more accurate. Congress may have wanted formulaic certainty over judicial discretion . . . . Regardless of the reason(s), the plain meaning of §§ 1325(b)(2) and 1325(b)(1)(B) demands recourse to prepetition income (as adjusted by the calculation of CMI), minus the allowed expenses of § 707(b)(2)(A), as the best estimate for a debtor’s future income and expenses. . . . [T]his method does not rise to the level of absurdity.”); In re Girodes, 350 B.R. 31 (Bankr. M.D.N.C. 2006) (For debtor with CMI less than applicable median family income, disposable income calculation begins with CMI from Form B22C; amounts reasonably necessary to be expended are found on Schedule J and disposable income is calculated by subtracting Schedule J expense amounts from CMI.); In re Rotunda, 349 B.R. 324, 330–33 (Bankr. N.D.N.Y. 2006) (“Congress opted to use an average of a debtor’s income over the six months prepetition in calculating CMI, apparently with the intent to provide a more realistic picture of the debtor’s financial status . . . . This is a policy decision that the Court may perhaps question but it cannot alter.”); Baxter v. Johnson (In re Johnson), 346 B.R. 256 (Bankr. S.D. Ga. 2006) (Current monthly income requires consideration only of income earned during the applicable six-month “look-back” period.); In re Alexander, 344 B.R. 742, 749 (Bankr. E.D.N.C. 2006) (Current monthly income is the income side of the disposable income calculation whether the debtor has CMI over or under applicable median family income. “What is now considered ‘disposable’ is based upon historical data—current monthly income derived from the six-month period preceding the bankruptcy filing. . . . [T]o arrive at ‘projected disposable income,’ one simply takes the calculation mandated by § 1325(b)(2) and does the math.”).

 

47  See below in this section, and see § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

48  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

49  See, e.g., the discussion of regular income in § 8.1 [ What Is Regular Income? ] § 11.1  What Is Regular Income? and the discussion of projected disposable income in § 164.1 [ Projected (Disposable) Income ] § 91.2  Projected (Disposable) Income.

 

50  See 11 U.S.C. § 109(e), discussed in § 11.1  What Is Regular Income?.

 

51  See § 494.1 [ Projected Disposable Income ] § 101.1  What Do Unsecured Creditors Get?. See also § 164.1 [ Projected (Disposable) Income ] § 91.2  Projected (Disposable) Income.

 

52  11 U.S.C. § 101(10A)(A).

 

53  There is a mistake in this regard in Official Form B22C at Lines 3 and 4. See below in this section, and see § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

54  See § 164.1 [ Projected (Disposable) Income ] § 91.2  Projected (Disposable) Income.

 

55  366 B.R. 21 (Bankr. E.D. Ark. 2007) (Mixon).

 

56  See above in this section.

 

57  366 B.R. at 24–25.

 

58  See § 164.1 [ Projected (Disposable) Income ] § 91.2  Projected (Disposable) Income.

 

59  See § 160.1 [ In General: Plan Payments vs. Hypothetical Liquidation ] § 90.1  In General: Plan Payments vs. Hypothetical Liquidation.

 

60  See, e.g., Featherson v. Drummond (In re Featherson ), No. CV 08-16-GF-SEH, 2008 WL 5217936 (D. Mont. Dec. 11, 2008) (Haddon) (Income from one-time sale of livestock is included in current monthly income and in projected disposable income.); In re Warren, No. 07-60695-13, 2007 WL 2916563 (Bankr. D. Mont. Oct. 5, 2007) (unpublished) (Kirscher) (Sale of property during six months before petition produces income that is included in CMI by § 101(10A).).

 

61  In re Sanchez, Nos. 06-40886, 06-40865, 2006 WL 2038616 (Bankr. W.D. Mo. July 13, 2006) (unpublished), appeal dismissed sub nom. Zahn v. Fink (In re Zahn), 367 B.R. 654 (B.A.P. 8th Cir. 2007), rev’d, 526 F.3d 1140 (8th Cir. 2008) (Riley, Colloton, Benton), on remand, 391 B.R. 840 (B.A.P. 8th Cir. 2008) (Kressel, Mahoney, McDonald).

 

62  2006 WL 2038616, at *2–*3. Accord In re DeThample, 390 B.R. 716, 720–21 (Bankr. D. Kan. 2008) (Nugent) (Acknowledging split of authority, 401(k) distribution received during six-month period in § 101(10A) is included in CMI. “This Court agrees with the [In re Sanchez, No. 06-40886, 2006 WL 2038616 (Bankr. W.D. Mo. July 13, 2006) (unpublished),] court that the receipt of the 401(k) disbursement constitutes a part of debtors’ income and is included in CMI. . . . [T]he common, dictionary definition of ‘income’ includes a ‘a gain or recurrent benefit . . . that derives from capital or labor.’ . . . [T]his Court reads § 101(10A) to include every dime a debtor gets during the relevant period except for those amounts specifically excluded by § 101(10A)(B), like Social Security benefits.”).

 

63  391 B.R. at 845–46. Accord In re Marti, 393 B.R. 697, 700 (Bankr. D. Neb. 2008) (Saladino) (Withdrawals from IRA accounts are not income for purposes of CMI and projected disposable income test. “[T]he Debtor completed his means test form as if the withdrawals from retirement plan accounts constitute ‘income’ to be counted as ‘current monthly income’ in performing the means test calculations. . . . ‘Income’ is not separately defined in the Code, but is defined in Black’s Law Dictionary as ‘the return in money from one’s business, labor, or capital invested; gains, profits, salary, wages, etc.’ Thus, Debtor’s voluntary withdrawals from retirement savings are simply not income. Therefore, the current monthly income is zero, so under § 1325(b)(1)(B), Debtor has no projected disposable income to apply to the plan.”); Simon v. Zittel (In re Zittel), Nos. 07-31616, 07-31805, 07-31719, 2008 WL 750346, at *3 (Bankr. S.D. Ill. Mar. 19, 2008) (Meyers) (Voluntary withdrawals from retirement accounts during six months before Chapter 13 petition are not included in CMI because wages involved were received outside six-month period in § 101(10A)(A). Disagreeing with In re Sanchez, and In re Zahn, Nos. 06-40886, 06-40865, 2006 WL 2038616 (Bankr. W.D. Mo. July 13, 2006) (unpublished) (Venters), “income received by an employee and deposited into a retirement savings account is just as ‘received for use’ as if those funds had been deposited into a checking or savings account. . . . [O]nce placed in a retirement account, the funds are unavailable to the wage earner only in the sense that there may be hoops to jump through to access them. . . . [W]ages, once received by the debtor, are ‘received for use’ and within the ‘care, custody and control’ of the debtor until they are spent, no matter how they are allocated.”).

 

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

 

65  386 B.R. 238 (B.A.P. 9th Cir. 2008) (Jury, Pappas, Dunn).

 

66  386 B.R. at 239–43. Accord In re Sharp, 394 B.R. 207, 215–16 (Bankr. C.D. Ill. 2008) (Gorman) (Reluctantly following Drummond v. Wiegand (In re Wiegand), 386 B.R. 238 (B.A.P. 9th Cir. 2008), CMI calculation is based on gross income from operation of a business. “[T]he calculation of current monthly income on the B22C form requires the inclusion of the gross business income of a self-employed debtor without the allowance of deductions for business expenses. . . . [T]o construe ‘current monthly income’ as allowing the deduction of business expenses as part of the initial calculation would require this Court to disregard the plain language of § 1325(b)(2)(B), which clearly makes business expenses a deduction to be taken after current monthly income has been calculated. . . . [Section] 1325(b)(2)(B) is clear that business expenses are deductions from current monthly income—not part of the calculation of what current monthly income is.”); In re Bembenek, No. 08-22607-svk, 2008 WL 2704289, at *2 (Bankr. E.D. Wis. July 2, 2008) (Kelley) (Current monthly income includes business income before deduction of business expenses; Line 3 of Form B22C is inconsistent with § 101(10A). “Section 101(10A) includes all income within CMI. It does not say ‘net income’ or ‘income after allowable expenses.’ . . . [T]o allow a business expense deduction in Part I would render § 1325(b)(2)’s deduction for those same expenses ‘superfluous,’ since the deduction is then made twice. . . . Form B22C is inconsistent with the Bankruptcy Code. . . . Form B22C should be changed. Until that time, debtors ought to deduct business deductions allowed under § 1325(b)(2) in the Other Expenses category in Part IV of Form 22C.”); In re Arnold, 376 B.R. 652, 654 (Bankr. M.D. Tenn. 2007) (Harrison) (CMI is based on gross income, not net income, and business expenses are not deducted for a self-employed debtor to determine CMI; Line 3 of Form B22C is inaccurate of the statute. “11 U.S.C. § 101(10A) . . . defines gross income, not net income, as current monthly income—nothing in 11 U.S.C. § 101(10A) indicates that expenses, whether business or personal, may be deducted in determining current monthly income. To arrive at disposable income, business expenses are deducted from current monthly income.”). Contra In re Featherston, Nos. 07-60296-13, 07-60441-13, 2007 WL 2898705 (Bankr. D. Mont. Sept. 28, 2007) (unpublished) (Kirscher) (Gross receipts from liquidation of cattle and other business assets during six months before petition are included in CMI but net of ordinary and necessary business expenses; proceeds from liquidation of Treasury securities during six months before petition are not income when money invested belonged to debtors’ children and proceeds were paid to son for college expenses.), aff’d, No. CV 08-16-GF-SEH, 2008 WL 5217936 (D. Mont. Dec. 11, 2008) (Haddon) (published as Featherson); In re Warren, No. 07-60695-13, 2007 WL 2916563 (Bankr. D. Mont. Oct. 5, 2007) (unpublished) (Kirscher) (Applying In re Featherston, Nos. 07-60296-13, 07-60441-13, 2007 WL 2898705 (Bankr. D. Mont. Sept. 28, 2007), to determine CMI sale of property during six months before petition produces income that must be reduced by price of investment and allowable expenses as if it were tax reporting.). See also In re Jackson, 353 B.R. 849 (Bankr. E.D.N.C. 2006) (Doub) (Because Part I of Form B22C instructs debtors to subtract ordinary and necessary business expenses from gross receipts to determine business income in the CMI calculation, debtors cannot also deduct expenses from the operation of a business or profession on Schedule J or elsewhere to determine projected disposable income.).

 

67  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).

 

68  11 U.S.C. § 1325(b)(2)(B), discussed in §§ 167.1 [ Debtor Engaged in Business ] § 91.6  Debtor Engaged in Business, 470.1 [ Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Applicable Median Family Income ] § 93.1  Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Median Family Income and 477.12 [ Other [Necessary] Expenses—Unsecured Debts ] § 95.15  Other [Necessary] Expenses—Unsecured Debts.

 

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

 

70  See §§ 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation and 477.12 [ Other [Necessary] Expenses—Unsecured Debts ] § 95.15  Other [Necessary] Expenses—Unsecured Debts.

 

71  No. 07-60567-13, 2007 WL 3023145 (Bankr. D. Mont. Oct. 11, 2007) (unpublished) (Kirscher).

 

72  2007 WL 3023145, at *8.

 

73  No. 07-60695-13, 2007 WL 2916563 (Bankr. D. Mont. Oct. 5, 2007) (unpublished) (Kirscher).

 

74  2007 WL 2916563, at *5. Accord In re Featherston, Nos. 07-60296-13, 07-60441-13, 2007 WL 2898705, at *12 (Bankr. D. Mont. Sept. 28, 2007) (unpublished) (Kirscher) (Gross receipts from liquidation of cattle and other business assets during six months before petition are included in CMI but net of ordinary and necessary business expenses. “Under the Internal Revenue Code . . . those expenses must be allowed in the amounts disclosed in the appropriate tax schedules or forms, where business expenses are allowed to be deducted in determining gains to be entered on Form 1040.”), aff’d, No. CV 08-16-GF-SEH, 2008 WL 5217936 (D. Mont. Dec. 11, 2008) (Haddon) (published as Featherson). Contra Drummond v. Wiegand (In re Wiegand), 386 B.R. 238, 242 (B.A.P. 9th Cir. 2008) (Jury, Pappas, Dunn) (Current monthly income includes gross receipts from trade or business, and it is not appropriate to deduct business expenses from gross receipts to determine CMI. “[T]he plain language of the statute demonstrates that the bankruptcy court’s reliance on the Tax Code and Form 1040 to determine the meaning of income under § 101(10A) was misplaced. The phrase ‘without regard to whether such income is taxable income’ in § 101(10A) reflects a clear congressional intent that Tax Code concepts for determining taxable income are inapplicable to a determination of current monthly income.”).

 

75  In re Sanchez, Nos. 06-40886, 06-40865, 2006 WL 2038616 (Bankr. W.D. Mo. July 13, 2006) (unpublished), appeal dismissed sub nom. Zahn v. Fink (In re Zahn), 367 B.R. 654 (B.A.P. 8th Cir. 2007), rev’d, 526 F.3d 1140 (8th Cir. 2008) (Riley, Colloton, Benton), on remand, 391 B.R. 840 (B.A.P. 8th Cir. 2008) (Kressel, Mahoney, McDonald).

 

76  2006 WL 2038616, at *2.

 

77  386 B.R. 238 (B.A.P. 9th Cir. 2008) (Jury, Pappas, Dunn).

 

78  386 B.R. at 242.

 

79  No. BK07-81646, 2007 WL 4893472 (Bankr. D. Neb. Dec. 14, 2007) (unpublished) (Saladino).

 

80  Nos. 07-31616, 07-31805, 07-31719, 2008 WL 750346 (Bankr. S.D. Ill. Mar. 19, 2008) (Meyers).

 

81  397 B.R. 88 (Bankr. N.D. Ill. 2008) (Hollis).

 

82  397 B.R. at 94–102.

 

83  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 477.13 [ Other [Necessary] Expenses—Taxes ] § 95.16  Other [Necessary] Expenses—Taxes.

 

84  See § 477.13 [ Other [Necessary] Expenses—Taxes ] § 95.16  Other [Necessary] Expenses—Taxes.

 

85  See, e.g., Navejer v. King, No. 07-C-654, 2007 WL 3129731, at *1–*2 (E.D. Wis. Oct. 22, 2007) (unpublished) (Randa) (Without discussion of § 101(10A), local practice requires Chapter 13 debtors to include one half of tax refunds in projected disposable income. “Bankruptcy courts generally consider income tax refunds to be disposable income for purposes of Chapter 13. . . . In this district, the long-standing practice is to include half of the debtor’s tax refund in the plan. This is done in recognition of the fact that unexpected expenses may arise during the course of the plan. . . . [T]ax refunds generally cannot be considered necessary for the maintenance and support of the debtor, no matter how the debtor arranges his finances.”); In re Risher, 344 B.R. 833, 836–37 (Bankr. W.D. Ky. 2006) (Tax refunds are included in projected disposable income even if not otherwise captured by the statutory definition of CMI.).

 

86  See § 477.13 [ Other [Necessary] Expenses—Taxes ] § 95.16  Other [Necessary] Expenses—Taxes. See, e.g., Baxter v. Johnson (In re Johnson), 346 B.R. 256, 269 (Bankr. S.D. Ga. 2006) (Current monthly income requires consideration only of income earned during the applicable six-month “look-back” period and does not include tax refunds because tax refunds are treated as expenses, not income for disposable income test purposes. “Form B22C . . . requires that the Debtors enter their gross income. Form B22C (lines ##1–3) inputs gross receipts, without any deductions for taxes or (if applicable) business expenses. Were the previous year’s tax refunds included as gross income, then ‘disposable income’ would be inaccurately skewed. That is because gross income is itself taxed and refunded. Including both would create a double accounting problem that would persist for the plans’ durations.”).

 

87  See above in this section, and see § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

88  No. A06-00432-DMD, 2006 WL 3703203 (Bankr. D. Alaska Dec. 12, 2006) (unpublished).

 

89  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

90  11 U.S.C. § 101(10A)(B).

 

91  So long as not paid pursuant to the Social Security Act. See below in this section.

 

92  No. 05-50448 HCD, 2006 WL 2621080 (Bankr. N.D. Ind. Sept. 11, 2006) (unpublished).

 

93  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

94  2006 WL 2621080, at *8. Accord In re Arsenault, 370 B.R. 845 (Bankr. M.D. Fla. 2007) (Williamson) (Citing In re Foster, No. 05-50448 HCD, 2006 WL 2621080 (Bankr. N.D. Ind. Sept. 11, 2006) (unpublished), income side of disposable income test includes bonus received outside six-month period in § 101(10A).).

 

95  See below in this section, and see § 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.

 

96  See Webster’s New 20th Century Dictionary 1522 (2d ed. 1983).

 

97  See definition of household goods in 11 U.S.C. § 522(f)(4). See § 409.1 [ Section 522(f) after BAPCPA: Household Goods Corrupted ] § 49.4  Section 522(f) after BAPCPA: Household Goods Corrupted.

 

98  391 B.R. 294 (Bankr. N.D. W. Va. 2008) (Flatley).

 

99  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).

 

100  See 11 U.S.C. §  707(b)(2)(A)(iii), discussed in § 485.1 [ Average Monthly Payments on Account of Secured Debts ] § 96.1  Average Monthly Payments on Account of Secured Debts.

 

101  391 B.R. at 316–17.

 

102  No. 07-41285, 2008 WL 1924233 (Bankr. D. Kan. Apr. 29, 2008) (unpublished) (Karlin).

 

103  Household size is relevant to picking National Standards deductions under 11 U.S.C. § 707(b)(2)(A)(ii)(I). See § 475.1 [ National Standards ] § 95.2  National Standards.

 

104  2008 WL 1924233, at *2.

 

105  Unless pursuant to the Social Security Act. See below in this section.

 

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

 

107  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income, 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses and 489.1 [ Amounts Paid by Others under § 101(10A)(B) ] § 99.2  Amounts Paid by Others under § 101(10A)(B).

 

108  See § 489.1 [ Amounts Paid by Others under § 101(10A)(B) ] § 99.2  Amounts Paid by Others under § 101(10A)(B).

 

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

 

110  Awkwardly, the instructions to Line 7 of Official Form B22C provide that debtors “do not include amounts paid by the debtor’s spouse.” This results because the drafters of Official Form B22C require married debtors to report a spouse’s income in “Column B” of Part I of Official Form B22C without regard to whether the spouse is a joint debtor. This misdirection by the forms drafters is discussed in § 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income.

 

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

 

112  See § 164.1 [ Projected (Disposable) Income ] § 91.2  Projected (Disposable) Income.

 

113  See above in this section, and see §§ 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses and 489.1 [ Amounts Paid by Others under § 101(10A)(B) ] § 99.2  Amounts Paid by Others under § 101(10A)(B).

 

114  No. 06-71296, 2007 WL 445517 (Bankr. C.D. Ill. Feb. 12, 2007) (unpublished) (Gorman).

 

115  2007 WL 445517, at *3. Accord In re Stansell, 395 B.R. 457, 461–64 (Bankr. D. Idaho 2008) (Pappas) (When debtor’s spouse died a month before petition, debtor’s CMI includes only that portion of deceased spouse’s income that was paid on a regular basis for the household expenses of the debtor or a dependent of the debtor. “[B]y virtue of the § 101(10A) definition, a non-filing spouse, has no ‘current monthly income’ for purposes of § 1325(b)(4). . . . [W]hile the non-filing spouse has no current monthly income, that portion of the non-filing spouse’s income that was regularly contributed to the household expenses of the debtor during the relevant six-month time frame is included as part of the debtor’s current monthly income. See § 101(10A)(B). . . . Since Debtor’s spouse is dead, it would seem the amount of income she received, or that the couple received, during the six months prior to Debtor’s bankruptcy is irrelevant to Debtor’s ability to pay his debts going forward. . . . But the wisdom of the current bankruptcy policy is of no moment here . . . . [T]he Court lacks any discretion in how Debtor’s current monthly income is computed . . . . [F]or purposes of determining the applicable commitment period for his plan under § 1325(b)(4)(A)(ii), only the amount of Debtor’s deceased wife’s income received during the six months prior to the filing of his bankruptcy case that was actually contributed to pay Debtor’s household expenses is includable in his current monthly income.”); In re Quarterman, 342 B.R. 647, 651 (Bankr. M.D. Fla. 2006) (Current monthly income does not include the income of a nonfiling spouse except amounts regularly paid for household expenses of the debtor or the debtor’s dependents. “[B]ased upon the explicit language of section 101(10A), current monthly income does not include all the income of the non-debtor spouse, but rather only amounts expended on a regular basis for household expenses. If income is not (1) expended regularly (2) on household expenses, then it is not included in the debtor’s current monthly income.”).

 

116  See In re Lopes, No. 08-12008-JNF, 2008 WL 3893707, at *3 (Bankr. D. Mass. Aug. 21, 2008) (Feeney) (Creditor failed to articulate “cogent objection” to exclusion from CMI of $410 per month for cigarettes for nonfiling spouse.).

 

117  See In re Dugan, No. 07-40899-13, 2008 WL 3558217, at *2–*6 (Bankr. D. Kan. Aug. 12, 2008) (Karlin) (CMI for a married debtor filing individually includes only that portion of the nonfiling spouse’s income paid on a regular basis for household expenses of the debtor or a dependent of the debtor and does not include taxes paid separately by nonfiling spouse. “The taxes Debtor’s wife’s employer is required to withhold . . . is not money that is used ‘on a regular basis’ for Debtor’s (or his dependents’) household expenses, [and] would thus not fall within § 101(10A)(B).”).

 

118  In re Charles, 375 B.R. 338, 342 (Bankr. E.D. Tex. 2007) (Parker) (“Under BAPCPA, the contribution of a non-filing spouse of a Chapter 13 debtor has now been clearly defined under the Code. New § 101(10A)(B) . . . . The contribution demanded of a non-filing spouse in this context is now limited to the actual household expenses paid by that spouse for the benefit of the debtor or her dependents.”).

 

119  See Zahn v. Fink (In re Zahn), 391 B.R. 840, 846 (B.A.P. 8th Cir. 2008) (Kressel, Mahoney, McDonald) (In an alternative holding: “because the IRA was her husband’s property, the debtor did not really receive the distribution from the IRA trustee at all. Her husband received it and used it to pay household expenses and pay debts. It is includible in income under that situation only if it is received ‘on a regular basis’ which these distributions were not.”).

 

120  394 B.R. 207 (Bankr. C.D. Ill. 2008) (Gorman).

 

121  394 B.R. at 214–16.

 

122  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income, 379.2 [ Form B22C: Commitment Period Calculation ] § 36.20  Form 122C-1: Commitment Period Calculation and 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation.

 

123  378 B.R. 774 (Bankr. D.S.C. 2007) (Waites).

 

124  378 B.R. at 779–80. Accord In re Dugan, No. 07-40899-13, 2008 WL 3558217 (Bankr. D. Kan. Aug. 12, 2008) (Karlin) (Debtor has burden to prove portion of nonfiling spouse’s income that is excludable at Lines 13 and 19 of Official Form B22C.); In re Burke, No. 07-62311, 2008 WL 2811480 (Bankr. N.D. Ohio July 21, 2008) (Kendig) ($525 marital adjustment at Line 19 of Form B22C for voluntary payment by debtor’s nonfiling spouse to nonfiling spouse’s 18-year-old son is not supported by evidence when remittances to son averaged $146.43 per month; court does not reach question whether amounts spent by nonfiling spouse are properly excluded from CMI.). But see In re Lopes, No. 08-12008-JNF, 2008 WL 3893707, at *3 (Bankr. D. Mass. Aug. 21, 2008) (Feeney) (Creditor failed to articulate “cogent objection” to exclusion from CMI of $410 per month for cigarettes for nonfiling spouse.); In re Hoskings, No. 07-13785-RGM, 2008 WL 2235350, at *3 n.6 (Bankr. E.D. Va. May 29, 2008) (Mayer) (Credit union failed to prove that any portion of nonfiling spouse’s income should have been included in CMI pursuant to § 101(10A)(B). Married debtor was separated from spouse and filed individual Chapter 13 case. Debtor excluded all of nonfiling spouse’s income from CMI calculation. Credit union objected but presented no evidence with respect to what portion of estranged husband’s income was paid on a regular basis for the household expenses of the debtor or a dependent of the debtor. In a note, “[i]t remains the creditor’s burden to show how much, if any, should be included. Here, the creditor chose to present no evidence on this issue.”).

 

125  See 11 U.S.C. § 1325(b)(2) and (3), discussed in §§ 466.1 [ In General ] § 92.1  In General, 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors and 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).

 

126  See above in this section. See, e.g., In re Beasley, 342 B.R. 280, 282–85 (Bankr. C.D. Ill. 2006) (Because of the timing of the filing, a nonfiling spouse’s irregular income as a teacher included months in which the nonfiling spouse received no income; CMI was accordingly reduced and applicable commitment period calculation was three years. “Although the Debtor is married, he filed an individual petition without his spouse joining in the filing. As required by 11 U.S.C. § 101(10A), however, Mrs. Beasley’s income was included on Part I of Form B22C where current monthly income is calculated. Because the petition was filed on January 18, 2006, Mrs. Beasley’s income for the six preceding calendar months—July through December, 2005 was used to calculate her average monthly income. . . . Mrs. Beasley is a teacher . . . and is paid an annual salary in excess of $63,000. The School District pays its teachers their annual salaries, however, over the period when school is actually in session rather than throughout the calendar year. Accordingly, Mrs. Beasley received no income in July, 2005, and only about $1,500 of income in August, 2005. The Trustee asserts that the use of the period of July through December, 2005, to determine Mrs. Beasley’s income for calculation of her husband’s applicable commitment period resulted in a skewed calculation. . . . [S]trict compliance with the definition of ‘current monthly income’ means that some debtors with high but irregular income may be able to avoid the imposition of the longer payment period by the timing of their filings, while debtors with lower incomes are forced to pay for five years. That may be unfair, but that is what the statute requires as it is currently written. The remedy for that problem is legislative, not judicial.”).

 

127  See above in this section, and see §§ 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses and 489.1 [ Amounts Paid by Others under § 101(10A)(B) ] § 99.2  Amounts Paid by Others under § 101(10A)(B).

 

128  See 11 U.S.C. § 1325(b)(2), discussed in § 470.1 [ Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Applicable Median Family Income ] § 93.1  Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Median Family Income.

 

129  See 11 U.S.C. § 1325(b)(3), discussed beginning at § 94.1  Big Picture: Too Many Issues.

 

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

 

131  See §§ 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses, 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation and 500.1 [ Length of Plan ] § 112.2  Length of Plan after BAPCPA.

 

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

 

133  11 U.S.C. § 1322(d)(1) & (2) (emphasis added), discussed in § 500.1 [ Length of Plan ] § 112.2  Length of Plan after BAPCPA.

 

134  See §§ 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation and 500.1 [ Length of Plan ] § 112.2  Length of Plan after BAPCPA.

 

135  See Chapter 7 of Title 42 for a complete listing of Social Security Act benefits programs.

 

136  See §§ 9.5 [ Social Security ] § 12.5  Social Security and 9.7 [ AFDC, Welfare and Other Entitlements ] § 12.7  Family Assistance, Welfare and Other Entitlements.

 

137  See, e.g., In re Wilson, 397 B.R. 299, 319 (Bankr. M.D.N.C. 2008) (Waldrep) (“Social Security income has certain protections under BAPCPA. It is specifically excluded from the definition of current monthly income under Section 101(10A).”); In re Rush, 387 B.R. 26, 33 (Bankr. W.D. Mo. 2008) (Dow) (Debtors exclude from CMI calculation social security income that is included on Schedule I. “[T]he definition of current monthly income specifically excludes amounts attributable to Social Security. § 101(10A). Congress has therefore determined that debtors need not commit such income to the payment of unsecured creditors under the plan.”); In re Barfknecht, 378 B.R. 154, 159–62 (Bankr. W.D. Tex. 2007) (Clark) (Social security benefits are excluded from CMI by § 101(10A) and are not “projected” disposable income for purposes of § 1325(b); debtor’s commitment of only part of social security benefits to fund Chapter 13 plan is not by itself evidence of lack of good faith for § 1325(a)(3) purposes. “[N]either disposable income nor current monthly income (or ‘CMI’) includes any benefits received under the Social Security Act by a consumer debtor in a bankruptcy case. . . . [A] plain reading of the statute demands that benefits received under the Social Security Act do not count as income for any purposes. . . . [B]enefits received under the Social Security Act are not income for the purposes of calculating projected disposable income and cannot be considered as part of the ability to pay test of section 1325(b)(1)(B).”); In re Rotunda, 349 B.R. 324, 330–33 (Bankr. N.D.N.Y. 2006) (“The statute expressly excludes benefits received under the Social Security Act from CMI. . . . It was . . . Congress’ decision to exclude Social Security benefits from the payment of unsecured creditors’ claims even in a chapter 13 context. This is a policy decision that the Court may perhaps question but it cannot alter.”); In re Schanuth, 342 B.R. 601, 605 (Bankr. W.D. Mo. 2006) (“In light of § 101(10A)’s explicit exclusion of social security benefits from the calculation of CMI, . . . the Court cannot compel the Debtors to include those benefits in their calculation of disposable income.”); In re Beasley, 342 B.R. 280 (Bankr. C.D. Ill. 2006) (For applicable commitment period purposes, $1,700 of monthly social security income was not required to be included in CMI.).

 

138  See above in this section, and see § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

139  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors. See, e.g., In re Upton, 363 B.R. 528 (Bankr. S.D. Ohio 2007) (Although projected disposable income is appropriately based on Schedules I and J and not bound by Form B22C, because social security benefits are excluded from CMI by § 101(10A), social security benefits are not considered in projected disposable income test.); In re Ward, 359 B.R. 741, 744–45 (Bankr. W.D. Mo. 2007) (“[W]e have determined that the phrase ‘projected disposable income’ in § 1325(b)(1)(B) cannot mean that we are to mechanically apply the means test to determine how much should be paid into the plan for payment of unsecured creditors. ‘Instead, the Form B22C means test serves merely as a starting point in determining the amount of projected disposable income available to unsecured creditors.’ . . . CMI is presumed to be representative of the debtor’s projected income, unless it is shown that CMI does not accurately reflect a debtor’s true projected, or prospective income. That being said, however, the Debtor is correct that Congress expressly conferred special treatment to social security benefits . . . . [I]t is not appropriate to disregard CMI ‘where the additional income offered to rebut CMI’s accuracy is derived from a source that 11 U.S.C. § 101(10A)(B) specifically excludes from the calculation of CMI.’ . . . [T]he Debtor is correct that her social security income is not required to be included in the analysis of whether she is contributing all of her ‘projected disposable income’ to her plan under § 1325(b)(1)(B).”); In re Siegel, No. 06-02291-dd, 2006 WL 3483987, at *1–*2 (Bankr. D.S.C. Nov. 20, 2006) (unpublished) (Duncan) (“In this district the Court considers income and expenses from both Form B22C and from Schedules I and J for confirmation purposes. . . . In light of the exclusion of Social Security benefits from the current monthly income calculation, the Court cannot compel the Debtors to fund a plan using this income.”).

 

140  See, e.g., In re Siegel, No. 06-02291-dd, 2006 WL 3483987, at *1–*2 (Bankr. D.S.C. Nov. 20, 2006) (unpublished) (Duncan) (Although Social Security income is excluded from CMI, debtors can voluntarily contribute Social Security benefits to disposable income and to satisfy feasibility analysis in § 1325(a)(6); court rejects trustee’s argument that debtor cannot use only a portion of Social Security benefits to satisfy § 1325(a)(6). “In light of the exclusion of Social Security benefits from the current monthly income calculation, the Court cannot compel the Debtors to fund a plan using this income. This does not preclude the Debtors’ option of ‘voluntarily devoting a portion of that income to a chapter 13 plan.’ . . . The Court may consider the voluntarily devoted Social Security benefit as income in the disposable income and feasibility analyses.”); In re Schanuth, 342 B.R. 601, 605 (Bankr. W.D. Mo. 2006) (CMI calculation excludes Social Security benefits, but debtors can voluntarily commit Social Security to enhance feasibility. “[T]here is nothing in the statute that precludes the Debtors from voluntarily devoting a portion of [Social Security] income to a chapter 13 plan or that prevents the Court from considering that income in evaluating the feasibility of a plan proposed by the Debtors.”).

 

141  See In re Devilliers, 358 B.R. 849, 865–66 (Bankr. E.D. La. 2007) (“Congress, in plain and unambiguous language specifically excluded social security benefits from current monthly income. The result is that they are also excluded in calculating disposable income. . . . While the language of 42 U.S.C.A. § 407(a) exempting benefits from seizure is extremely broad, it does have two important exceptions. . . . [F]ederal payroll taxes incurred as a result of social security benefits are payable from those benefits. Additionally, 42 U.S.C.A. § 405(j) allows the Social Security Administration to pay benefits directly to a representative payee if done for the benefit of the individual recipient. . . . As a result, while the benefits attributable to social security are excluded from the calculation of disposable income, both the payroll taxes incurred as a result of their payment, as well as debtor’s actual medical expenses are susceptible to objection by Trustee as an unnecessary or unreasonable deduction from current monthly income. Because social security income is both available and answerable to pay these expenses, debtor will bear the burden of establishing the reasonableness of any requested deduction from current monthly income for this purpose.”).

 

142  See above in this section.

 

143  396 B.R. 617 (Bankr. M.D. Pa. 2008) (Thomas).

 

144  396 B.R. at 621–23.

 

145  See above in this section.

 

146  384 B.R. 432 (Bankr. N.D. W. Va. 2008) (Flatley).

 

147  384 B.R. at 436–38. Accord In re Wyatt, No. 08-14792-SSM, 2008 WL 4572506 (Bankr. E.D. Va. Oct. 10, 2008) (Mitchell) (Veterans Administration disability compensation is income for purposes of calculating CMI.); In re Hedge, 394 B.R. 463, 466 (Bankr. S.D. Ind. 2008) (Lorch) (VA disability payments are included in CMI. “The payments . . . are paid by an entity as that term is defined in § 101(15). The payments are received on a regular basis and are presumed to be used for the purpose of helping with the [debtors’] household expenses. . . . [T]hese payments are not specifically excluded from disposable income [as] defined by statute.”); In re Redmond, No. 07-80634-G3-13, 2008 WL 1752133 (Bankr. S.D. Tex. Apr. 14, 2008) (Letitia Clark) (Veterans Administration disability payments are included in income for purposes of projected disposable income calculation.).

 

148  397 B.R. 299 (Bankr. M.D.N.C. 2008) (Waldrep).

 

149  See above in this section, and see § 36.19  Form 122C-1: Statement of Current Monthly Income, § 36.20  Form 122C-1: Commitment Period Calculation, § 94.3  Accounting for Spouses, § 95.3  Local Standards: Housing and Transportation and discussion of other [necessary] expenses beginning at § 95.4  Other [Necessary] Expenses—In General; All Categories.  

 

150  11 U.S.C. § 1325(b)(4)(A)(ii), discussed in § 493.1 [ Applicable Commitment Period Calculation ] § 100.1  Applicable Commitment Period Calculation.

 

151  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income and 473.1 [ Accounting for Spouses ] § 94.3  Accounting for Spouses.

 

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

 

153  See § 467.1 [ Projected Disposable Income: All Debtors ] § 92.2  Projected Disposable Income: All Debtors.

 

154  See 11 U.S.C. § 1325(b)(2)(A) and (B), discussed in § 470.1 [ Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Applicable Median Family Income ] § 93.1  Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Median Family Income.

 

155  See 11 U.S.C. § 707(b)(2)(A) and (B), discussed beginning at § 94.1  Big Picture: Too Many Issues.

 

156  See § 489.1 [ Amounts Paid by Others under § 101(10A)(B) ] § 99.2  Amounts Paid by Others under § 101(10A)(B).

 

157  11 U.S.C. § 1325(b)(2), discussed in § 490.1 [ Child Support, Foster Care and Disability Payments ] § 99.3  Child Support, Foster Care and Disability Payments.

 

158  See 11 U.S.C. §§ 1322(f) and 362(b)(19), discussed in §§ 433.1 [ When Does § 362(c)(4) Apply? ] § 61.1  When Does § 362(c)(4) Apply? and 491.1 [ Pension Loan Repayments ] § 99.4  Pension Loan Repayments.

 

159  11 U.S.C. § 541(b)(7), discussed in § 492.1 [ Employee Benefit Plan Contributions ] § 99.5  Employee Benefit Plan Contributions.