853 F.3d 116
4th Cir.2017Background
- Gabriel and Monte Jackson filed Chapter 7; their income exceeded the state median so they completed the § 707(b) means test.
- On Form 22A-1/22A-2 they used IRS National and Local Standards for housing and vehicle expenses (deducting the full standard amounts despite actual payments being substantially lower).
- Bankruptcy Administrator moved to dismiss the petition as abusive, arguing debtors may deduct only the lesser of actual expenses or the applicable National/Local Standard.
- Bankruptcy Court denied the motion; parties sought and the Fourth Circuit granted direct appeal on the narrow statutory question.
- The Fourth Circuit also held it had jurisdiction to hear the direct appeal and addressed the substantive interpretation of 11 U.S.C. § 707(b)(2)(A)(ii)(I).
Issues
| Issue | Plaintiff's Argument (Bankruptcy Administrator) | Defendant's Argument (Jacksons) | Held |
|---|---|---|---|
| Whether § 707(b)(2)(A)(ii)(I) permits debtors to deduct full National/Local Standard amounts when actual expenses are lower | Debtors may deduct only the lesser of actual expenses or the National/Local Standard | Statute unambiguously requires using the full National/Local Standard once an expense is incurred and the official form directs deducting standards regardless of actual expenses | A debtor who incurs an expense in a category may claim the full National/Local Standard amount for that category |
Key Cases Cited
- Ransom v. FIA Card Servs., 562 U.S. 61 (2011) (interpreted "applicable" expense as one the debtor will incur; declined to decide whether standards may exceed actual expenses)
- Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000) (plain-meaning rule for statutory text)
- Davis v. Michigan Department of Treasury, 489 U.S. 803 (1989) (statutory language must be read in context)
- Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) (avoid statutory interpretations that produce absurd results)
- Mussachio v. United States, 136 S. Ct. 709 (2016) (time bars are jurisdictional only when Congress clearly says so)
- In re Schwartz, 799 F.3d 760 (7th Cir. 2015) (§ 158(d)(2)(A) direct-appeal jurisdiction when parties jointly certify specified conditions)