In Re Henderson
455 B.R. 203
Bankr. D. Idaho2011Background
- Debtors are above-median-income in Chapter 13 with negative Form 22C disposable income but Schedule I/J show $1,140 monthly net income.
- Debtors propose a three-year plan paying $1,140/month to the trustee, with all funds covering secured debt and administrative expenses; no funds for unsecured creditors.
- Trustee objects to confirmation, contending the plan must extend for the five-year applicable commitment period under § 1325(b)(1)(B) and § 1325(b)(4).
- Ninth Circuit authority (Kagenveama) held that debtors with no projected disposable income are not required to have a five-year plan; Lanning and Ransom later addressed related means-test issues but did not fully overrule Kagenveama on the commitment period.
- Court analyzes Kagenveama, Lanning, and Ransom to determine whether above-median-income debtors with no projected disposable income must commit to five years; Court ultimately denies Trustee’s five-year requirement, allowing a three-year plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether above-median-income debtors with no projected disposable income must have a five-year plan | Hendersons rely on Kagenveama; no five-year mandate when disposable income is zero | Trustee argues § 1325(b)(1)(B) requires five years for above-median debtors | No five-year requirement; § 1325(b)(1)(B) not applicable to debtors with no projected disposable income |
| Effect of Lanning and Ransom on Kagenveama's applicability | Lanning/Ransom do not undermine Kagenveama's holding about commitment period for zero projected income | Lanning/Ransom compel reconsideration of commitment period under means-testing context | Lanning did not overrule Kagenveama's commitment-period holding; Ransom addresses means-test deductions, not period length |
| Role of BAPCPA’s purposes in interpreting § 1325(b)(1)(B) | General fairness should support flexible interpretation; no five-year mandate for zero income | Creditors’ interests and the means test push toward five-year commitment where applicable | Kagenveama's holding aligned with § 1325(b)(1)(B) and BAPCPA's overall aims; not converted by Lanning/Ransom |
| Impact of post-Lanning/Ransom circuit splits on this case | Ninth Circuit remain bound to Kagenveama unless overruled | Other circuits (Tennyson, Carroll) diverge on zero-income cases | Court adheres to Kagenveama; Debtors need not a five-year plan in this case |
| Whether confirmation should be denied due to misalignment with five-year requirement | Plan complies with § 1322/1325(a) and Kagenveama | Plan fails if five-year period required | Trustee’s objection denied; plan confirmed on terms consistent with Kagenveama. |
Key Cases Cited
- In re Kagenveama, 541 F.3d 868 (9th Cir. 2008) (applies a non-five-year commitment when no projected disposable income exists; discusses 'applicable commitment period')
- Hamilton v. Lanning, 130 S. Ct. 2464 (U.S. 2010) (forward-looking approach to projected disposable income; adjusts for known changes)
- Ransom v. FIA Card Servs., 131 S. Ct. 716 (U.S. 2011) (limits deduction of means-test expenses when not incurred; discusses purpose of means test)
- In re Tennyson, 611 F.3d 873 (11th Cir. 2010) (holds applicable commitment period is temporal for above-median debtors; disputes zero-income applicability)
- Carroll v. Carroll, 634 F.3d 327 (6th Cir. 2011) (analyzes applicable commitment period via guideposts; discusses balance of purposes)