Robert Ranta v. Thomas Gorman
721 F.3d 241
4th Cir.2013Background
- Debtor Mort Ranta filed Chapter 13 proposing $525/month for 60 months; plan would fully cure mortgage arrears and joint card debt but pay <1% on his individual unsecured card debt.
- On schedules he reported combined employment take-home pay and $3,319/month in Social Security benefits; Schedule J showed net monthly surplus of ~$525 when Social Security was included.
- Trustee objected under 11 U.S.C. § 1325(b)(1)(B), arguing Schedule J expenses were overstated and that debtor’s "projected disposable income" (PDI) was higher.
- Debtor argued Social Security is excluded from "current monthly income" and thus from PDI, so he had zero/negative PDI and need not pay unsecured creditors under §1325(b).
- Bankruptcy court denied confirmation as not feasible because it found debtor could afford more if Social Security were counted; district court affirmed. Fourth Circuit granted review, held orders were final for appeal, and remanded.
Issues
| Issue | Plaintiff's Argument (Ranta) | Defendant's Argument (Trustee) | Held |
|---|---|---|---|
| 1. Is Social Security excluded from "projected disposable income" under §1325(b)? | Social Security is excluded from "current monthly income" (§101(10A)) and so must be excluded from PDI. | PDI should include Social Security for below‑median debtors; policy and Schedule I/J usage support inclusion. | Social Security income is excluded from PDI for both above‑ and below‑median debtors; statutory text controls. |
| 2. May bankruptcy courts consider Social Security when assessing plan feasibility under §1325(a)(6)? | If excluded from PDI, it still can be used to show the debtor can make plan payments; plan feasible if actual income (including SSI) funds payments. | Inclusion of SSI in feasibility undermines BAPCPA’s effort to prevent abuse; feasibility should track PDI. | Courts must consider Social Security income for feasibility; PDI exclusion does not bar using excluded income to fund a plan. |
| 3. Is denial of confirmation (without dismissal) a final order appealable to the circuit under 28 U.S.C. § 158(d)(1)? | Denial conclusively resolves the only discrete dispute (confirmation) and is final for appeal; practical considerations favor immediate review. | Denial is interlocutory because debtor can propose amended plan; flexible finality, as applied elsewhere, counsels against treating denial as final. | Fourth Circuit holds denial of confirmation may be final and appealable under §158(d)(1); pragmatic "flexible" finality supports jurisdiction here. |
| 4. Does Lanning permit courts to include non‑PDI items (like SSI) in projected disposable income? | Lanning allows adjustments for foreseeable changes, but not to override statutory exclusions. | Lanning’s forward‑looking discretion permits courts to consider SSI in PDI in exceptional cases. | Lanning does not authorize disregarding the statutory definition; courts cannot include SSI in PDI but may account for foreseeable changes to disposable income (not statutory exclusions). |
Key Cases Cited
- Hamilton v. Lanning, 560 U.S. 505 (2010) (PDI is a forward‑looking projection of disposable income; courts may adjust for foreseeable changes)
- Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011) (construed BAPCPA; held Social Security excluded from current monthly income and PDI; SSI may be used to demonstrate feasibility)
- In re Ragos, 700 F.3d 220 (5th Cir. 2012) (Social Security excluded from PDI; courts should not circumvent statutory exclusion)
- In re Cranmer, 697 F.3d 1314 (10th Cir. 2012) (concluded SSI is excluded from PDI under BAPCPA)
- In re Bartee, 212 F.3d 277 (5th Cir. 2000) (pragmatic approach to finality; denial of confirmation can be final where discrete dispute resolved)
- In re Armstrong World Indus., 432 F.3d 507 (3d Cir. 2005) (considered practical finality in allowing appeal of denial of confirmation)
- Maiorino v. Branford Sav. Bank, 691 F.2d 89 (2d Cir. 1982) (denial of confirmation treated as interlocutory; debtor may propose another plan)
- In re Saco Local Dev. Corp., 711 F.2d 441 (1st Cir. 1983) (articulated "flexible finality" in bankruptcy; discrete creditor disputes can be final)