In Re Kolb
- Reporters:
- , ,
- Before:
- Walter
DECISION SUSTAINING CHAPTER 13 TRUSTEE’S OBJECTION TO CONFIRMATION AND DENYING CONFIRMATION OF DEBTOR’S PROPOSED PLAN
LAWRENCE S. WALTER, United States Bankruptcy Judge.I. Background
On July 28, 2006, the Debtor, Denise M. Kolb, filed her chapter 13 petition (Doc. 1) and proposed chapter 13 plan (Doc. 2). According to her plan, she would contribute $1,660.00 per month, for approximately 36 months, and her unsecured creditors would receive a 10% dividend (Doc. 2). The proposed plan was consistent with the Debtor’s schedules I and J, which showed monthly net income of $1,660.00. Monthly net income {See Doc. 1 — Schedule J) represents, at the time of filing, the Debtor’s representation, under oath, of her actual income after subtracting her actual expenses. 1 Under prior law, to ascertain that a debtor was devoting all of her disposable income to the plan, the court’s inquiry would be whether a debtor was contributing all her actual income and whether her expenses were reasonably necessary for her and her dependents’ support.
However, this case is governed by the Bankruptcy Code as amended by applica
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ble provisions of Pub.L. No. 109-8, 119 Stat. 23, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”). BAPCPA modified the means by which disposable income is calculated.
Under BAPCPA, once CMI is calculated for an above median family income debt- or,
2
such as this Debtor, a debtor’s expenses are determined by
A debtor is required to make the appropriate calculation of her CMI, allowed expenses, and disposable income on Form B22C, a form that must be completed and filed under the new law.
3
In this case, the Debtor’s Amended Form B22C (Doc. 16) indicated that the Debtor’s CMI is $7,953.00. On an annualized basis, the Debtor’s income is above the median family income in the state of Ohio for her household size.
4
After subtracting expenses, the parties agree that the Debtor’s disposable income [
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Because the Debtor proposes only to pay her actual monthly net income into her plan rather than pay her unsecured creditors the higher disposable income figure, the Chapter 13 Trustee, Jeffrey M. Kell-ner (the “Trustee”), filed an objection‘to confirmation of the proposed plan (Doc. 18). Initially, the Trustee argued that the plan was not filed in good faith pursuant to
This argument is not based on good faith, but, as will be discussed, on a legal interpretation of
Additionally, the proposed plan had a term of approximately three years (Doc. 2). The Trustee argues that, under changes enacted in BAPCPA, a five year “applicable commitment period,” as defined in
The parties agreed that the issues in this case could be resolved as a matter of law. See Order — Doc. 32. They filed a Joint Stipulation of Facts (Doc. 30), and, pursuant to the court’s order, they briefed the applicable legal issues (Docs. 31 and 34).
II. Jurisdiction
The Court has jurisdiction over this matter pursuant to
III. Issues and Summary Conclusions
1) Does the phrase “projected disposable income” in11 U.S.C. § 1325(b)(1)(B) require a debtor to contribute to her unsecured creditors a different amount than her “disposable income” as calculated in11 U.S.C. § 1325(b)(2) ?
Conclusion: While acknowledging divergent judicial views on this issue, the court determines that “projected disposable income” is simply monthly “disposable income” (based on prepet-ition “current monthly income”) applied to each future month of a chapter 13 plan.
1) How does the term “applicable commitment period,” as defined in11 U.S.C. § 1325(b)(4) and included in11 U.S.C. § 1325(b)(1)(B) , impact the amount that an above median income debtor must pay to unsecured creditors?
Conclusion: For above median income debtors, the “applicable commitment period” is a five-year obligation to pay the debtor’s defined disposable income into a chapter 13 plan for the benefit of unsecured creditors unless unsecured creditors would be paid in full in a lesser period of time.
IV. Statutory Interpretation Principles
Because this analysis requires the court to engage in statutory interpre *807 tation of BAPCPA’s modifications, modifications that have already been the subject of divergent judicial interpretations, the court begins with a description of the relevant statutory interpretation principles or “tools” it utilizes for that purpose. BAPC-PA, by enacting substantial changes, additions and deletions throughout the Bankruptcy Code, has raised challenging issues of statutory interpretation. Early reported decisions suggest that the language used throughout BAPCPA has exacerbated these challenges. See, e.g., In re Trejos, 352 B.R. 249, 253-54 (Bankr.D.Nev. 2006) (reviewing various negative comments about the drafting of BAPCPA). Nevertheless, the court’s first obligation when interpreting a statute is to apply its plain meaning. As the United States Supreme Court has instructed with regard to the bankruptcy statutes: “We have stated time and time again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992) (citation omitted). In determining congressional intent, the starting point is always the statutory text. Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438, 119 S.Ct. 755, 760, 142 L.Ed.2d 881 (1999). It is settled that “when the statute’s language is plain, the sole function of the courts-at least where the disposition required by the text is not absurd — is to enforce it according to its terms.” Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A, 530 U.S. 1, 6, 120 S.Ct. 1942, 1947, 147 L.Ed.2d 1 (2000) (citations and internal quotes omitted). The Supreme Court has also reminded the bankruptcy courts that it is significant to recognize that “while pre-Code practice ‘informs our understanding of the language of the Code,’ it cannot overcome that language. It is a tool of construction, not an extratextual supplement.” Id. at 10, 120 S.Ct. at 1949.
As cited in Hartford, absurdity represents an exception to the doctrine of plain meaning. This doctrine is not an exact tool, but instead a guide to statutory interpretation. See generally Karen Cor-dry, One Man’s Absurdity . . ., 12 Norton Bankr.L. Advisor 1 (Dec.2006); Cf. In re TCR of Denver, LLC, 338 B.R. 494 (Bankr. D.Colo.2006) (use of “and” in § 1112(b) is absurd because it would require every factor to exist in order to have cause to dismiss a chapter 11 case); In re McNabb, 326 B.R. 785 (Bankr.D.Ariz.2005) (the conclusion that § 522(p), which restricts the homestead exemption, does not apply to opt-out states cannot be considered absurd because it is consistent with prior bankruptcy law). However, absurdity cannot mean that BAPCPA was awkwardly written, 6 does not reach some of the understood goals of BAPCPA, 7 and/or creates unintended consequences, 8 or fails to embrace the same principles as the prior law. In order for the federal courts to exercise their limited role in interpreting federal statutes such as BAPCPA, none of these factors can rise to the level of absurdity. Without attempting to define the outer *808 limits of absurdity, the court simply concludes that it must be something more than a subjectively flawed statute. 9
Finally, the court notes that, leaving aside the theoretical conflict on the use of legislative history in statutory interpretation, legislative history typically is of very limited practical help in interpreting BAPCPA. The act lacks a conference committee report or an analogous floor manager report that might better represent the viewpoint of the entire Congress. In re Sorrell, 359 B.R. 167, 175 (Bankr. S.D.Ohio 2007). The frequently cited House Judiciary Report adds little useful analysis to explain most of BAPCPA’s provisions. Id. at 175 (“Even assuming it is appropriate to consider the House Judiciary Report (which represents only a view of members of one committee of one house of the federal bicameral legislature) as a source of legislative history, it 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. See H.R. Rep. 109-31(1), 2005 U.S.C.C.A.N. 88”).
Keeping these principles in mind, the court considered the issues in this case.
V. Analysis
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPC-PA”) fundamentally changed many aspects of chapter 7 and chapter 13 practice. The dispute in this case concerns the meaning of certain chapter 13 statutory provisions, as modified by BAPCPA, that govern plan confirmation. More specifically, the parties dispute the meaning of the phrases “projected disposable income” as used in
The court begins with its examination of the meaning of “projected disposable income,” a phrase that existed prior to BAPCPA, but was modified by BAPCPA’s changes to the calculation of “disposable income” in
A. Calculating “Disposable Income” and “Projected Disposable Income” Prior to BAPCPA
Prior to BAPCPA, the process for determining how much a debtor needed to contribute to a chapter 13 plan was relatively
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straightforward. Although confirmation of a chapter 13 plan had, and continues to have, many requirements
10
, arguably the most fundamental of those was that, upon objection by a “holder of an unsecured claim” or the chapter 13 Trustee, a debtor was required to submit all “projected disposable income” to fund a chapter 13 plan.
See
If an objection was filed, the court would evaluate the actual income and expenses of a debtor to determine if the budget was reasonable. This evaluation occurred regardless of the income of the debtor. “Disposable income,” as defined in
B. Calculating Income, Expenses and Disposable Income for a Chapter 13 Debtor Under BAPC-PA
Among other significant changes to chapter 13 created by BAPCPA, the definition of “disposable income” was amended to read as follows:
(b)(2) For purposes of this subsection, “disposable income” means current monthly income received by the debtor (other than child support payments, foster care payments, or disability payments for a dependent child made in accordance with applicable nonbankrupt-cy law to the extent reasonably necessary to be expended for such child) less amounts reasonably necessary to be expended—
(A)(i) for the maintenance or support of the debtor or a dependent of the debtor, or for a domestic support obligation, that first becomes payable after the date the petition is filed; and
(ii) for charitable contributions (that meet the definition of “charitable contribution” under section 548(d)(3)) to a qualified religious or charitable entity or organization (as defined in section 548(d)(4)) in an amount not to exceed 15 percent of gross income of the debtor for the year in which the contributions are made; and
(B) if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business.
*810 (10A) The term “current monthly income”—
(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor’s spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on—
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debt- or files the schedule of current income required by section 521(a)(l)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of this title if the debtor does not file the schedule of current income required by section 521(a)(l)(B)(ii); and
(B) includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor’s spouse), on a regular basis for the household expenses of the debtor or the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity on account of their status as victims of such crimes, and payments to victims of international terrorism (as defined in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status as victims of such terrorism.
The salient characteristic of CMI is that it is derived from an average of the debt- or’s income over the six months prior to the bankruptcy filing. The statute also requires “any amount paid” by anyone other than a debtor “on a regular basis for the household expenses” to be included in the calculation of CMI.
Once a debtor has determined her CMI, a debtor must subtract her expenses to determine disposable income. For debtors below the median income of their state
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(based on their household size), expenses are still determined based on the familiar “reasonably necessary” test that applied prior to BAPCPA.
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C. Although Divergent Approaches Exist, the Court Concludes that the Language and Structure of
The Debtor adhered to the formulas mandated by BAPCPA by completing Form B22C thereby calculating CMI less allowed expense deductions to arrive at the Debtor’s monthly disposable income under
The Trustee argues that the phrase “projected disposable income” in
Although the Debtor concedes that BAPCPA now defines “disposable income” using the rigid formula in
Unfortunately, as with many aspects of BAPCPA, the language of the statute is less than crystal clear leading to divergent case law adopting a variety of approaches to determining the meaning of the phrase “projected disposable income,” including
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both approaches espoused by the parties.
See Brady,
361 B.R. at 770 (providing an excellent overview of the case law and the divergent approaches adopted therein). The court also recognizes that the approach adopted by the Trustee can lead to harsh and, sometimes, unfair results for debtors whose actual net monthly income is less than what they are required to pay using the rigid disposable income calculation on Amended Form B22C. Nonetheless, after reviewing the language of
The court begins with the language of
(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)....
(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, (emphasis added).
Once they reject using the rigid disposable income formula in
To give some meaning to the defined term “disposable income” in
This court respectfully disagrees with the reasoning in this line of cases. Treating “projected disposable income” as a stand-alone term or concept with a separate meaning from the defined term “disposable income” conflicts with the language and structure of
(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—
(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.
*816 (2) For purposes of this subsection, the term “disposable income” means current monthly income received by the debt- or....
This court does not agree that the word “projected” has such a transforming impact. Nor does this court agree that failure to construe the word “projected” in that manner necessarily makes the word superfluous. That the drafters retained the word “projected” in
That Congress has chosen a different calculation for determining disposable income to be projected does not make the superfluous word argument any more compelling than it would have been before BAPCPA.
20
See Hanks,
362 B.R. at 498 (noting that Congress simply chose a different method of projecting a return to unsecured creditors). As noted, BAPCPA considers past income and defined expenses, with some defined adjustments, to determine what an above median family income chapter 13 debtor must pay into his plan for unsecured creditors.
21
Alexander,
344 B.R. at 749 (“The court finds that, in order to arrive at ‘projected disposable income,’ one simply takes the calculation mandated by
It is undeniably true that “disposable income” looks at a debtor’s past income in calculating CMI. Congress apparently determined that basing future payment obligations on a past income average was the exclusive way to “project” a debtor’s financial situation into the future, rather than relying on the income and expenses listed on a debtor’s schedules. It may be that Congress did not trust debtors to provide current information or may have decided that past income, over a six month period, was simply more accurate. Congress may have wanted formulaic certainty over judicial discretion, particularly for above median family income debtors. Regardless of the reason(s), the plain meaning of
In its final analysis, the court concludes that the phrase “projected disposable income” has the same meaning today as it did before the enactment of BAPCPA. Brady, 361 B.R. at 771. Congress simply decided upon a new way to calculate disposable income before projecting that figure into the plan. See id. (determining that the “term ‘projected’ requires the court to ‘project’ forward the debtors’ disposable income, as now defined under the revised Code, to determine the requisite payments to unsecured creditors under the plan”); Hanks, 362 B.R. at 499 (“In ‘projecting’ a return to general unsecured creditors under the BAPCPA for above-median income debtors, this Court’s view is that its new function is solely to multiply the net ‘disposable income’ figure . . . by the applicable commitment period. No more, no less.”).
D. Applicable Commitment Period
After determining the Debtor’s disposable income, the court must next calculate the return to be paid to unsecured creditors over the life of the plan. This calculation requires the court to analyze the impact of another term added to the Bankruptcy Code by BAPCPA, “applicable commitment period.” As revised by Congress,
(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)....
(B) the plan provides that all of the debtor’s projected disposable income to be received in the [three year period] 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.
(4) For purposes of this subsection, the “applicable commitment period”—
(A) subject to subparagraph (B), shall be—
(i) 3 years; or
(ii) not less than 5 years, if the current monthly income of the debt- or and the debtor’s spouse combined, when multiplied by 12, is not less than—
(I) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;
(II) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or
(III) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $525 per month for each individual in excess of 4; and
(B) may be less than 3 or 5 years, whichever is applicable under subpar-agraph (A), but only if the plan pro *819 vides for payment in full of all allowed unsecured claims over a shorter period.
In this case, the Debtor has proposed a three year plan paying unsecured creditors a ten percent (10%) return on their claims. However, as noted previously, the Debtor’s current monthly income is above the medi
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an family income for a household of four in the state of Ohio. Consequently, pursuant to the clear language of
Because the Debtor’s plan proposes to pay unsecured creditors only 10% on their claims, instead of the 100% return required by the court’s calculation of disposable income paid over the applicable commitment period, the plan cannot be confirmed.
The court recognizes that this Debtor may never be able to propose a confirmable plan with a 100% return to unsecured creditors. The reason is simple. The Debtor’s schedules of income and expenses reveal that she may not have the actual income necessary to pay her unsecured creditors in full within five years. This is the unfortunate result of a congres-sionally-created system that uses rigid formulas to calculate a debtor’s chapter 13 plan payments rather than considering a debtor’s present financial reality and ability to pay. Nonetheless, as noted elsewhere in this decision and by other courts interpreting these provisions of BAPCPA, it is not this court’s function to legislate, but to interpret and apply the law as written.
Hanks,
362 B.R. at 502.
VI. Conclusion
For the reasons stated above, confirmation of the Debtor’s proposed chapter 13 plan (Doc. 2) is denied because it fails to satisfy the requirements of
SO ORDERED.
Notes
. The $1,660.00 figure, representing the Debt- or’s monthly net income in this case, includes the monthly amount to be paid on secured debt and administrative expenses through the plan. In other words, $1,660.00 is what the Debtor intends to pay all of her creditors through the plan and not just her unsecured creditors.
.“The term ‘median family income’ means for any year—
(A) the median family income both calculated and reported by the Bureau of the Census in the then most recent year; and
(B) if not so calculated and reported in the then current year, adjusted annually after such most recent year until the next year in which median family income is both calculated and reported by the Bureau of the Census, to reflect the percentage change in the Consumer Price Index for All Urban Consumers during the period of years occurring after such most recent year and before such current year.”
. All chapter 13 debtors are required to complete Official Form B22C. See Interim Bankruptcy Rule 1007(b)(6). In order to provide a practical method to implement these new requirements, the Judicial Conference of the United States prepared, approved, and has subsequently amended Form B22C. Perhaps symbolically or by sheer coincidence, Form B22C resembles a tax form and attempts to track the new statutory requirements of BAPCPA.
. The Debtor is separated and has three minor children (Docs. 16 and 30).
. The parties use the figure $1,283.76 in their stipulations, but this is obviously a typographical error (Doc. 30).
. Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 1030, 157 L.Ed.2d 1024 (2004) (“The statute is awkward, and even ungrammatical; but that does not make it ambiguous on the point at issue.‘‘).
. See In re Sorrell, 359 B.R. 167, 177 (Bankr. S.D.Ohio 2007) (The court provides examples of how BAPCPA does not, in its specific plain language, always embrace the generally accepted concept that debtors should provide a greater return to creditors).
.See, e.g., Union Bank v. Wolas, 502 U.S. 151, 158, 112 S.Ct. 527, 531, 116 L.Ed.2d 514 (1991) (“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.”; citation omitted).
. As stated by the United States Supreme Court:
It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think, perhaps along with some Members of Congress, is the preferred result. See Smith v. United States, 508 U.S. 223, 247, n. 4, 113 S.Ct. 2050, 2063, 124 L.Ed.2d 138 (1993) (SCA-LIA, J., dissenting) (“Stretching language in order to write a more effective statute than Congress devised is not an exercise we should indulge in”); Pavelic & LeFlore v. Marvel Entertainment Group, Div. of Cadence Industries Corp., 493 U.S. 120, 126, 110 S.Ct. 456, 460, 107 L.Ed.2d 438 (1989) (“Our task is to apply the text, not to improve upon it[.]“).
U.S. v. Granderson, 511 U.S. 39, 68-69, 114 S.Ct. 1259, 1275, 127 L.Ed.2d 611 (1994) (Kennedy, J., concurring); See also In re Hanks, 362 B.R. 494, 502 (Bankr.D.Utah 2007) (“Ultimately, it is not within this Court’s power nor is it this Court’s role to change Congress’ intentional policy choices or to save it from its inadvertent drafting errors.”; footnote omitted).
.
See generally
§§ 1322 (Contents of Plan) and 1325 (Confirmation of Plan). The other fundamental requirement for chapter 13 confirmation is found at
.
. Although it has been correctly noted, borrowing from history‘s judgment of the Holy Roman Empire, that CMI is not current, not really monthly, or necessarily income, Congress fell this was how income should be determined.
See
Keith Lundin,
Chapter 13 Bankruptcy 3d Ed.,
§ 468.1, p. 468-2-468-5 (Supp.2006).
But see Fuller,
346 B.R. at 485 (Schedule I, as the actual income of a debtor, should be used to determine income);
But see also In re Pole,
357 B.R. 549, 552 (Bankr. N.D.Cal.2006) (“In determining whether a plan provides all of the debtor‘s ‘projected disposable income,’ a court should attempt to predict what the debtor‘s disposable income during the term of the plan will be, using the definition of ‘current monthly income’ set forth in
.
Amounts reasonably necessary to be expended under paragraph (2), other than subpara-graph (A)(ii) of paragraph (2), shall be determined in accordance with subparagraphs (A) and (B) ofsection 707(b)(2) , if the debtor has current monthly income, when multiplied by 12, greater than—
(A) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $525 per month for each individual in excess of 4.
Since the filing of this case, the statute was amended pursuant to the Religious Liberty and Charitable Donation Clarification Act of 2006 to allow charitable deductions for above median income debtors. The amendment became law on December 20, 2006 as Pub.L. 109-439, 120 Stat. 3285. Although such donations are not at issue in this case, the court notes it is quoting the statute as it reads as of the date of this decision.
.
(2)(A)(i) In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the court shall presume abuse exists if the debt- or‘s current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser of—
(I) 25 percent of the debtor‘s nonpriority unsecured claims in the case, or $6,000, whichever is greater; or
(II) $10,000.
(ii)(I) The debtor‘s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debt- or‘s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides, as in effect on the date of the order for relief, for the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent. Such expenses shall include reasonably necessary health insurance, disability insurance, and health savings account expenses for the debtor, the spouse of the debtor, or the dependents of the debtor. Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts. In addition, the debtor‘s monthly expenses shall include the debtor’s reasonably necessary expenses incurred to maintain the safety of the debtor and the family of the debtor from family violence as identified under section 309 of the Family Violence Prevention and Services Act, or other applicable Federal law. The expenses included in the debtor’s monthly expenses described in the preceding sentence shall be kept confidential by the court. In addition, if it is demonstrated that it is reasonable and necessary, the debtor‘s monthly expenses may also include an additional allowance for food and clothing of up to 5 percent of the food and clothing categories as specified by the National Standards issued by the Internal Revenue Service.
(II) In addition, the debtor‘s monthly expenses may include, if applicable, the continuation of actual expenses paid by the debtor that are reasonable and necessary for care and support of an elderly, chronically ill, or disabled household member or member of the debtor‘s immediate family (including parents, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a dependent) and who is unable to pay for such reasonable and necessary expenses.
(III) In addition, for a debtor eligible for chapter 13, the debtor’s monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 *812 percent of the projected plan payments, as determined under schedules issued by the Executive Office for United States Trustees.
(IV) In addition, the debtor’s monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,500 per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not already accounted for in the National Standards, Local Standards, or Other Necessary Expenses referred to in sub-clause (I).
(V) In addition, the debtor‘s monthly expenses may include an allowance for housing and utilities, in excess of the allowance specified by the Local Standards for housing and utilities issued by the Internal Revenue Service, based on the actual expenses for home energy costs if the debtor provides documentation of such actual expenses and demonstrates that such actual expenses are reasonable and necessary.
(iii) The debtor‘s average monthly payments on account of secured debts shall be calculated as the sum of—
(I) the total of all amounts scheduled as contractually due to secured creditors in each month of the 60 months following the date of the petition; and
(II) any additional payments to secured creditors necessary for the debtor, in filing a plan under chapter 13 of this title, to maintain possession of the debtor’s primary residence, motor vehicle, or other property necessary for the support of the debtor and the debtor’s dependents, that serves as collateral for secured debts; divided by 60.
(iv) The debtor’s expenses for payment of all priority claims (including priority child support and alimony claims) shall be calculated as the total amount of debts entitled to priority, divided by 60.
.
See, e.g.,
. Line 58 is titled “Monthly Disposable Income Under
. See, e.g., Casey,
356 B.R. at 522 (“The word ‘projected’ means to plan, figure, or estimate for the future.
Webster’s II College Dictionary
884 (1995).”);
lass,
340 B.R. at 415-16 (“The word projected’ means ‘[t]o calculate, estimate, or predict (something in the future), based on present data or trends.’
The Am. Heritage College Dictionary
1115 (4th ed.2002).”). While it is hard to quibble with the premise that “projected” is “future-oriented,” it is less clear why these simple definitions would compel a more complex compu-talion than multiplying monthly disposable income (as formulaically determined under the
. It may or may not be significant that Congress apparently did not distinguish between “disposable income” and “projected disposable income” in
. It has also been argued that the phrase “to be received” in
. The phrase “projected disposable income” in
. In addition,
. Currently, bankruptcy courts across the nation are wrestling with the precise nature of the term “applicable commitment period” and whether it represents a multiplier as well as a temporal length of time that a debtor must remain in a chapter 13 plan or is instead only a multiplier to be used to calculate the total amount of disposable income (the “pot”) that must be submitted by a debtor over the life of a plan. The controversy appears to arise in one of two situations in which a debtor attempts to exit his chapter 13 plan earlier than the applicable commitment period would appear to allow without paying unsecured creditors in full. The first situation is a result of the new formula calculating disposable income that leaves some fortunate debtors with excess funds each month that they are no longer required to submit to a chapter 13 plan. Some of these debtors have proposed early “cash out” plans requesting to use the excess funds to pay unsecured creditors their required return, something less than payment in full, over a shorter period of time than the applicable commitment period. See, e.g., In re Slusher, 359 B.R. 290 (Bankr. D.Nev. 2007); Casey, 356 B.R. 519; In re Zirtzman, 2006 WL 3000103 (Bankr.N.D.Iowa Oct.4, 2006); In re Cushman, 350 B.R. 207 (Bankr.D.S.C.2006); Girodes, 350 B.R. 31; In re Davis, 348 B.R. 449 (Bankr.E.D.Mich. 2006); In re Fuger, 347 B.R. 94 (Bankr. D.Utah 2006); In re McGuire, 342 B.R. 608 (Bankr.W.D.Mo.2006). With respect to the “cash out” situation, a few courts have suggested that it makes little sense for a trustee or unsecured creditor to object to confirmation in order to hold a debtor hostage for the full applicable commitment period; unsecured creditors will receive the same monetary return either way and most creditors would prefer to receive their return sooner rather than later. Zirtzman, 2006 WL 3000103, at *3; Fuger, 347 B.R. at 101. See also Miller v. Lone Star Mortgage, Inc. (In re Miller), 325 B.R. 539, 542 (Bankr.W.D.Pa. 2005) (pre-BAPCPA case recognizing that a voluntary early payoff by a debtor using refinancing to accomplish it hurts no one and actually increases the economic worth or present value of the distribution to unsecured creditors).
The other situation in which the dispute over the meaning of “applicable commitment period” arises is in zero percent plans — i.e. plans in which the debtors have no disposable income leftover each month to pay general unsecured creditors resulting in no return on these creditors’ claims. Several courts have concluded that the term “applicable commitment period” as used in
Based on her disposable income calculation, the Debtor in this particular case must pay her unsecured creditors in full so neither the early cash out nor the zero percent plan scenarios apply. As such, the issue of whether the applicable commitment period is temporal and/or a multiplier is not a matter that must be determined in this case. The issue will remain for another day.