In Re Berger
- Reporters:
- , ,
- Before:
- Walker
MEMORANDUM OPINION
JAMES D. WALKER, JR., Bankruptcy Judge.
This matter comes before the Court on American Express Centurion Bank’s objection to plan confirmation. This is a core matter within the meaning of
Findings of Fact
Debtors Donald and Karen Berger filed a Chapter 13 petition on February 2, 2007. Their Statement of Current Monthly Income (“CMI”), which is Form B22C, shows a monthly gross income of $8,069.15, which exceeds the median income in Georgia for their household size of four people. Such debtors are commonly referred to as above-median-income debtors. Based on the calculations in Form B22C, Debtors have disposable income of $341.02. Their Schedules I and J show monthly income of $5,857.22 and monthly expenses of $4,219.96, leaving excess monthly income of $1,637.26. Debtors’ proposed Chapter 13 plan provides for 60 monthly payments to the trustee — $450 per month for the first 18 months, and $630 per month for the remainder of the plan. The increase in payments coincides with Debtors’ satisfaction of a 401(k) loan. No further increase is proposed when a second 401(k) loan is satisfied later during the term of the plan.
American Express Centurion Bank is an unsecured creditor with claims of more than $21,000. American Express filed an objection to confirmation of Debtors’ plan on the ground that it fails to propose payment of all Debtors’ disposable income to unsecured creditors. The parties submitted briefs on the issue. After considering the facts and the arguments of the parties, the Court will overrule the objection for the reasons that follow.
Conclusions of Law
OVERVIEW
American Express’s objection is based on § 1325(b) of the Bankruptcy Code, which provides as follows:
(b)(1) If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan—
(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.
Debtors’ plan provides for less than full payment of unsecured claims. Therefore, *45 in light of American Express’s objection, the Court may not confirm the plan unless it provides Debtors will pay all their projected disposable income into the plan. The parties dispute the meaning of “projected disposable income.”
Prior to the 2005 Bankruptcy Code amendments,
1
The 2005 amendments changed the definition of disposable income to “current monthly income received by the debtor [other than certain child support payments] less amounts reasonably necessary to be expended — (A)(1) for the maintenance or support of the debtor or a dependent of the debtor,” for domestic support obligations, for qualified charitable contributions, and for business expenses.
The parties take different positions on the interpretation of “projected disposable income” in light of the amendments. American Express argues the Court may look beyond Form B22C to determine Debtors’ projected disposable income. According to its position, the term “projected disposable income” has a different meaning than “disposable income.” “Disposable income” requires a historical inquiry into the debtor’s income and subtraction of expenses based on IRS standards. “Projected disposable income to be received,” on *46 the other hand, requires a prospective inquiry and should take into account actual income and expenses. Therefore, American Express urges the Court to consider Debtors’ income and expenses as detailed on Schedules I and J in deciding whether Debtors propose to pay all their projected disposable income into the Chapter 13 plan.
Debtors argue that in the absence of a reasonable expectation of a substantial change in circumstances, the disposable income as calculated on Form B22C is controlling. Because Debtors anticipate no substantial change in their income or expenses, they contend their monthly plan payments need not exceed $341.02.
Bankruptcy courts are closely split as to the proper means for calculating projected disposable income of an above-median-income debtor. A growing minority of cases holds the amount computed on Form B22C is determinative. In re Miller, 361 B.R. 224 (Bankr.N.D.Ala.2007); In re Brady, 361 B.R. 765 (Bankr.D.N.J.2007); In re Kolb, 366 B.R. 802 (Bankr.S.D.Ohio 2007); In re Naslund, 359 B.R. 781 (Bankr. D.Mont.2006); In re Barr, 341 B.R. 181 (Bankr.M.D.N.C.2006); In re Alexander, 344 B.R. 742 (Bankr.E.D.N.C.2006); In re Farrar-Johnson, 353 B.R. 224 (Bankr. N.D.Ill.2006) (only considering the relevance of Schedule J). The majority holds the court may consider Schedules I and J, although the cases offer varying opinions about the amount of weight given to the schedules. In re Grant, 364 B.R. 656 (Bankr.E.D.Tenn.2007); In re LaPlana, 363 B.R. 259 (Bankr.M.D.Fla.2007); In re Clemons, No. 05-85163, 2006 Bankr.Lexis 1366 (Bankr.N.D. Ga. June 1, 2006); In re Grady, 343 B.R. 747 (Bankr.N.D.Ga.2006); In re Watson, 366 B.R. 523 (Bankr.D.Md. 2007).
PRINCIPLES OF STATUTORY INTERPRETATION
When interpreting the meaning of “projected disposable income,” the Court must begin with the text of the statute. Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 1030, 157 L.Ed.2d 1024 (2004). If the statute is clear on its face, the Court must enforce the plain meaning unless doing so would lead to an absurd result or a result demonstrably at odds with congressional intent. 3 U.S. v. Ron Pair Enter., Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989). The mere presence of ungrammatical language will not render the statute ambiguous. Lamie, 540 U.S. at 534, 124 S.Ct. at 1030. Furthermore, harsh results are not necessarily absurd. Id. at 538,124 S.Ct. at 1032. “The fact that Congress may not have foreseen all the consequences of a statutory enactment is not a sufficient reason for refusing to give effect to its plain meaning.” Union Bank v. Wolas, 502 U.S. 151, 158, 112 S.Ct. 527, 531,116 L.Ed.2d 514 (1991).
LEGAL ANALYSIS
Beginning with the text of the statute, Congress has provided a specific definition of “disposable income” with regard *47 to above-median-income debtors that refers to the means test in § 707(b)(2). A primary element of the majority’s reasoning is “projected disposable income” has a meaning separate and distinct from “disposable income” — it is forward-looking rather than historic. Grady, 343 B.R. at 750-51; La Plana, 363 B.R. 259, 265-66. To conclude otherwise, they reason, would render the word “projected” superfluous. In re Jass, 340 B.R. 411, 415-16 (Bankr. D.Utah 2006).
However, the majority’s interpretation renders not just one word superfluous, but the entirety of subsection 1325(b)(2), which states, “disposable income” is defined “[f]or purposes of this subsection [
Another provision of the Code lends support to the view that “projected disposable income” must be defined by reference to the means test for an above-median-income debtor. Section 1129(a)(15) provides that when an unsecured creditor objects to an individual debtor’s Chapter 11 plan, the debtor must pay all unsecured claims in full or make distributions valued at “not less than the projected disposable income of the debtor
(as defined in
In addition, the most relevant dictionary definition of the verb “project” is “[t]o calculate, estimate, or predict (something in the future), based on present data or trends:
projecting next year’s expenses.”
The American Heritage Dictionary of the English Language, 4th ed., (2004) (emphasis in original). Thus, according to the ordinary meaning of “project,” the Court should look at existing data and extrapolate it over the term of the plan. In this respect, “applying historical data such as CMI to future months is no less ‘future-oriented’ than applying the more recent income and expenses from a debtor’s schedules.”
Kolb,
366 B.R. at 815 n. 17. Prior to the amendments, courts extrapolated projected disposable income from information in Schedules I and J. Under the amendments, Congress has directed the Court to extrapolate from a different source — disposable income as calculated in accordance with the means test and reported on Form B22C. See
Brady,
361 B.R. at 771-72. As one court noted, “The use of ‘shall’ in
Another point raised by the majority for the proposition that courts may look outside Form B22C to determine projected disposable income is the inclusion of the phrase “to be received” in
[T]he fact that the phrase [“to be received”] is “forward-looking” is not inconsistent with the court’s analysis. The phrase simply refers to the payments that will be received throughout the life of the plan.... At worst, the phrase could be viewed as figurative, a *48 loose and inartful expression that the current monthly income belongs to or is attributable to the debtor.
Id. (internal citations omitted).
From a policy perspective, rigid application of the disposable income formula can lead to seemingly inequitable results. This case offers a good example. Debtors’
actual
funds available to pay unsecured creditors exceeds the Form B22C amount by more than $1,000 per month. Thus, the unsecured creditors are shortchanged and Debtors receive a windfall. In different circumstances, if a debtor’s income drops dramatically or his expenses increase substantially post-petition, his plan may be unconfirmable pursuant to
While the results of applying the formula may be troubling in some cases, they are not absurd and do not justify deviating from the plain language of the statute. The Eleventh Circuit Court of Appeals recently cautioned courts against crossing into congressional territory by attempting to “fix” or “improve” statutes. Bracewell v. Kelley (In re Bracewell), 454 F.3d 1234, 1246 (11th Cir.2006). It is for Congress to decide whether the inequities produced by application of a strict formula are preferable to the inequities that may result from a judge’s use of discretion after considering all the facts. As one court explained, Congress has provided “detailed and inflexible” definitions
particularly as to expenses and deductions for above-median-income debtors. As to such debtors, it appears that Congress intended to adopt a specific test to be rigidly applied rather than a standard to be applied according to the facts and circumstances of the case. Calculating “disposable income” for above-median-income debtors ... is now separated from a review of Schedules I and J and no longer turns on the court’s determination of what expenses are reasonably necessary for the debtor’s support.
Barr, 341 B.R. at 185.
CONCLUSION
For the foregoing reasons, the Court holds the plain language of
An Order in accordance with this Opinion will be entered on this date.
Notes
. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”).
. The definition in
. As one court has noted, the scanty legislative history of BAPCPA has limited value as a tool of interpretation due to the lack of a conference committee report or similar report representing the full membership of Congress. Kolb, 366 B.R. at 808-09. The only available report, the House Judiciary Report ” ‘represents only a view of members of one committee of one house of the federal bicameral legislature’ ” and does little more than paraphrase or recite the statutory text. Id. (quoting In re Sorrell, 359 B.R. 167, 176 (Bankr. S.D.Ohio 2007)). The report ” ‘often contains a mere recitation of the eventually enacted statutory text and adds little, if any, assistance to the court’s efforts in determining Congress‘s intent.’ ” Id. (quoting Sorrell, 359 B.R. at 176).
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