In re Uhlig, 504 B.R. 916

Above-median-income chapter 13 debtors filed in April 2013 and proposed an amended plan in June 2013.
Original plan proposed up to $15,590.43 for unsecured creditors; amendment added that any nonexempt net appreciation in debtors’ whole life insurance cash value would be paid into the plan.
Debtors deducted term life insurance premiums on Form B22C but did not deduct whole life insurance premiums.
Trustee objected that postpetition increases in whole life policy cash surrender value are "projected disposable income" under 11 U.S.C. § 1325(b) and must be paid to unsecured creditors.
Debtors argued projected disposable income is calculated under § 1325(b)(2)/(3) and does not require disgorgement of postpetition savings or cash-value growth produced by whole life policies.
Court heard briefs and resolved that the trustee’s objection to confirmation is overruled.

Issue	Trustee's Argument	Debtors' Argument	Held
Whether postpetition increases in cash surrender value of a debtor-owned whole life policy are "projected disposable income" under § 1325(b) for an above-median debtor	Increase in cash value is future income that should be submitted to the plan and paid to unsecured creditors	Projected disposable income is determined under § 1325(b)(2)/(3); allowing disgorgement would effectively require committing savings beyond the statutory measure	Held for debtors: postpetition cash-value appreciation need not be treated as additional projected disposable income for plan confirmation

Hamilton v. Lanning, 560 U.S. 505 (Sup. Ct. 2010) (adopts forward-looking approach to "projected disposable income" and permits adjustments for known or virtually certain changes)
In re Williamson, 296 B.R. 760 (Bankr. N.D. Ill. 2003) (treats whole life policy portion as investment; premiums raising cash value may not be reasonable expense)
In re DeRosear, 265 B.R. 196 (Bankr. S.D. Iowa 2001) (concludes whole life policies function as savings vehicles and such premiums typically should be disallowed)
In re Leung, 311 B.R. 626 (Bankr. S.D. Fla. 2004) (portion of premium applied to cash value is not reasonably necessary expense)
In re Heffeman, 242 B.R. 812 (Bankr. D. Conn. 1999) (addresses deductibility and reasonableness of life insurance premiums in bankruptcy)
In re Scott, 457 B.R. 740 (Bankr. S.D. Ill. 2011) (above-median debtors entitled to claim IRS standard deductions under means test)
In re Melancon, 400 B.R. 521 (Bankr. M.D. La. 2009) (applies national standards for applicable monthly expense amounts)
In re Egbert, 384 B.R. 818 (Bankr. E.D. Ark. 2008) (confirms debtors may take standard deductions even if actual expenses are lower)