Joseph Bledsoe, III v. Cheryl Cook, 70 F.4th 746

In 2021 Robert and Cheryl Cook filed Chapter 13 and completed Official Form 122C-2 to calculate disposable income under the means test.
On Form 122C-2 they deducted their actual monthly mortgage payment ($2,233.34), producing $253.27 in monthly disposable income available to unsecured creditors.
The Chapter 13 trustee objected, arguing above-median debtors must use the IRS Local Standard for “Mortgage/Rent” ($1,098), not actual mortgage payments, which would increase payments to unsecured creditors.
The bankruptcy court overruled the trustee and confirmed the Cooks’ plan; the trustee obtained direct appellate review to the Fourth Circuit.
The Fourth Circuit (Heytens, J.) affirmed, holding that for above-median debtors Clause Three of 11 U.S.C. § 707(b)(2)(A)(iii) permits deduction of contractually due secured-debt payments (including mortgage payments) when calculating disposable income; Clause Two’s National/Local Standards do not limit that deduction because they expressly exclude payments for debts.
The court rejected policy-based limits on Clause Three, noting Congress’s intent in the 2005 Bankruptcy Reform Act to cabin judicial discretion and rely on statutory formulas rather than case-by-case expense determinations.

Issue	Cooks' Argument	Trustee's Argument	Held
Whether above-median Chapter 13 debtors may deduct actual mortgage payments when computing disposable income under the means test	Clause Three requires deducting contractually due secured-debt payments (so Cooks may deduct $2,233.34)	Clause Two’s National/Local Standards control housing deductions and limit mortgage deduction to the Local Standard amount ($1,098)	Affirmed: Clause One requires reducing income by amounts determined under Clause Three; Clause Three permits deducting contractually due mortgage payments
Whether Clause Two’s IRS National/Local Standards (housing) preclude deducting actual mortgage payments	Form 122C-2 and Clause Three calculations control for secured debts	The Local Standard’s ‘‘housing’’ allowance (which lists mortgage) caps deductible mortgage amounts	Held: Clause Two expressly excludes payments for debts; it does not limit Clause Three deductions for secured debts

Ransom v. FIA Card Servs., N.A., 562 U.S. 61 (2011) (describing means-test and disposable-income framework)
In re Welsh, 711 F.3d 1120 (9th Cir. 2013) (held above-median debtors may deduct actual mortgage payments)
Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011) (same conclusion on mortgage deduction)
Arkansas Game & Fish Comm’n v. United States, 568 U.S. 23 (2012) (canon: read statutory text as a whole)
Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229 (2010) (context on 2005 Bankruptcy Abuse Prevention and Consumer Protection Act)
Johnson v. Zimmer, 686 F.3d 224 (4th Cir. 2012) (standard of review for statutory interpretation in this circuit)
Lynch v. Jackson, 853 F.3d 116 (4th Cir. 2017) (distinguishable Fourth Circuit precedent addressing National/Local Standards amounts)