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"Projected Disposable Income"

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Case Law Topics

  • Chapter 13: How is "Projected Disposable Income" Calculated for Above Median Income Debtors

    U.S. Supreme court finally resolves this question choosing to follow the line of cases started by In re Nowlin (type C) in this outline.
    Held: When a bankruptcy court calculates a debtor's projected disposable income, the court may account for changes in the debtor's income or expenses that are known or virtually certain at the time of confirmation.

    Throughout its discussion the court seemed to agree with the "Type C" cases listed here that use form 22C as the standard for what expenses are and are not allowed, but these amounts can be adjusted if changes in the debtor's income or expenses "are known or virtually certain at the time of confirmation." Note that's a pretty high bar.

    Note also that the court says you should keep the formula from Form 22C but adjust it based on facts. It does not say to throw out 22C and rely on Schedules I and J.

  • Chapter 13: Debtor may request alternate six month measuring period for CMI if result would be more accurate

    This odd procedural chicanery is made possible by section 101 which says that if you don't file a Schedule I, the judge can set the applicable date for measuring CMI.

    There is some question whether the debtor can make a motion to do this. Some cases seem to say yes.

    This line of cases has been viewed as an alternative to the either or debate over whether to use Form 22C or Schedules I and J in determining "projected disposable income"

  • Chapter 13: Debtor must have sufficient income to fund plan to be eligible for Chapter 13

  • Special Circumstances: Can't fund a Chapter 13 makes Chapter 7 OK?

    "because Congress has simultaneously directed that ERISA contributions and loan repayments be deductible from CMI in Chapter 13 cases, on the facts presented, such a conversion would yield no distribution to unsecured creditors ... the difference in treatment causes an absurdity that is directly contrary to the congressional intent, that while debtors with an ability to repay creditors should file under Chapter 13, debtors lacking that ability are to be permitted Chapter 7 relief."
    -In re Siler, 426 BR 167, (Banrk.W.D.N.C. 2010)

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