In Re Sorrell
DECISION DENYING MOTION OF THE U.S. TRUSTEE TO DISMISS CHAPTER 7 CASE PURSUANT TO
Background
On July 3, 2006, the Debtors, Mark and Michelle Sorrell, filed a chapter 7 petition (Doc. 1). This chapter 7 case is subject to the provisions of Pub.L. No. 109-8, 119 Stat. 23, the Bankruptcy Abuse Prevention and Consumer Protection Act (the “2005 Act”), more specifically, this case requires consideration of issues presented by
As this court has previously noted:
When Congress enacted the Bankruptcy Reform Act of 1978, Pub.L. No. 95-598, 92 Stat. 2549 (the Code), it repealed and completely replaced the prior bankruptcy legislation (the Bankruptcy Act of 1898, Pub.L. No. 55-171, amended by the Chandler Act of 1938, Pub.L. No. 75-696, 52 Stat. 840). When Congress enacted the 2005 Act, Pub.L. No. 109-8, 119 Stat. 23, it did not repeal or replace the prior bankruptcy legislation (the Code). Instead, Congress merely attached a sidecar (the 2005 Act) to the existing bankruptcy vehicle (the Code). The operation of this oddly constructed vehicle is frequently difficult, depending on whether it is controlled solely by the provisions of the Code, solely by the provisions of the 2005 Act, or, as in this case, by some provisions of the 2005 Act and some provisions of the Code.
In re Murray,
On August 9, 2006, within the time requirements of § 704(b)(1)
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, the United States Trustee (the “UST”) determined that this case was presumed to be an abuse under the means test of
As a bankruptcy court recently explained:
Section 707(b)(2) of [the] Bankruptcy Code, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), contains a mechanism called “the means test” for measuring a debtor’s presumed ability to repay her debts in the 60 months following the bankruptcy filing. Under the means test, if the debtor’s “current monthly income” less specified allowable expenses would permit the debtor to pay over the course of 60 months either (1) $10,000, or (2) 25 percent of her non-priority unsecured debt or $6,000 (whichever is greater), then her case is presumed to be an abuse of Chapter 7.11 U.S.C. § 707(b)(2)(A) ®. The means test was designed to determine whether the debtor could pay a significant amount to creditors in a Chapter 13 case. The 60-month period in this provision corresponds to the maximum term of a case under Chapter 13 of the Bankruptcy Codе, and other provisions of§ 707(b)(1) allow a debtor to deduct expenses that would be incurred in a Chapter 13 case from her current monthly income, (footnote omitted)
In re Randle,
On September 6, 2006, within the time
It would appear from these filings that the parties are in agreement that there are no material factual issues in dispute and that the Court can rule on the pending issues as a matter of law. To the extent that either party believes the Court is incorrect in this conclusion, the parties shall, not later than October 12, 2006, complete a filing setting forth the factual disputes which will require an evidentiary hearing.
Neither party suggested any such issues, nor requested an evidentiary hearing. The UST filed a final Reply to Debtor’s Response to Motion of U.S. Trustee to Dismiss (Doc. 25) and the Debtors filed a final Legal Memorandum in support of their position (Doc. 27).
Positions Of the Parties
The UST’s position is that this case is subject to dismissal, since the Debtors failed to correctly calculate certain components of the means test (Form 22A) or have otherwise disposable income sufficient to repay a substantial portion of their debt within a reasonable time. The UST asserts the Debtors erred (1) by excluding, when they should have included, unemployment compensation (Line 9) in caleu-lating current monthly income (CMI) and (2) in including, rather than excluding, payments contractually due (Line 42), and including, rather than excluding, a Local Standard vehicle operating expense (Line 22) in connection with a vehicle the Debtors intend to surrender. The UST further asserts that, even if the presumption of abuse is not established, the issue of the Debtors’ ability to pay can be considered as part of “the totality of the circumstances ... of the [Debtors’] financial situation.” It is the position of the UST that when the correct calculations are completed, the Debtors “would have monthly disposable income of $1,184.28 or $71,056.80 over the course of a five-year chapter 13 plan.” (Doc. 19).
The Debtors’ position is that they have correctly supplied the information required in the means test (Form 22A). The Debtors dispute all of the calculations urged by the UST. The Debtors, whose household consists of three minor children, one employed spouse and one unemployed spouse, assert that their financial situation justifies the relief available in chapter 7. It is the Debtors’ position that “[a]n examination of the Debtors’ Schedules reflects [a total combined] net ... monthly income of $4,515.84 (Schedule I), and current monthly expenses of $6,481.80, including a $507.00 monthly child support obligation, which has been temporarily suspended during Mr. Sorrell’s period of unemployment (Schedule J).... It is clear beyond peradventure that the Debtors in the instant case do not have sufficient income to fund a Chapter 13 plan and repay their debts. Reasonable and necessary expenses exceed current income, and additional vehicle expense is anticipated.” (Doc. 22).
This court has jurisdiction pursuant to
Issues Presented
1. In determining if abuse is presumed to exist under
2. If the Debtors file a statement of intention to surrender a secured motor vehicle, is it correct for the Debtors to include payments contractually due in calculating the Debtors’ average monthly payments under
3. If a chapter 7 case of above median income Debtors is determined not to be subject to the presumption of abuse under
Issues Determined
1. In determining if abuse is presumed to exist under
2. If the Debtors file a statement of intention to surrender a secured motor vehicle, it is correct for the Debtors to include payments contractually due in calculating the Debtors’ average monthly payments under
3.If a chapter 7 case of above median income Debtors is determined not to be subject to the presumption of abuse under
Analysis
Statutory Construction And The 2005 Act Generally
It merely states the obvious to note that the initial court decisions interpreting provisions of the 2005 Act demonstrate that one element legislation should provide— clarity of expression in the choice of language so that interested parties сan have predictability in their proceedings — is frequently lacking in significant portions of the 2005 Act. As an example, one court noted:
This is the first contested motion of its kind considered by this Court under BAPCPA. As a threshold issue, the Court notes that the language in new § 362(c)(3) is very poorly written. It has been noted that the provisions of this new subsection “are, at best, particularly difficult to parse and, at worst, virtually incoherent.” In re Charles,332 B.R. 538 , 541 (Bankr.S.D.Tex.2005). Judge Thomas Small, former chair of the Advisory Committee on Bankruptcy Rules, has stated that “[i]n an Act in which head-scratching opportunities abound for both attorneys and judges alike, § 362(c)(3)(A) stands out.” In rePaschal, [ 337 B.R. 274 , 277 (Bankr.E.D.N.C.2006) ]. This Court likewise finds the provisions of § 362(c)(3) to be neither consistent nor coherent.
In re Baldassaro,
The point is not to criticize provisions of the 2005 Act; but, only to note that the lack of clarity of expression in the choice of language in other significant provisions of the 2005 Act is also present in
In their attempts to properly interpret the provisions of the 2005 Act, courts employ canons of statutory construction:
Statutory interpretation is among the mоst important skills a law student, lawyer, or judge possesses, yet, as Karl Llewellyn pointed out, when it comes to the tools of statutory interpretation, “[tjhere are two opposing canons on almost every point.”
Karl N. Llewellyn, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to Be Construed, 3 Vand. L.Rev. 395, 401 (1950); or as Richard A. Pos-ner wrote, “For every canon one might bring to bear on a point there is an equal and opposite canon. This is an exaggeration; but what is true is that there is a canon to support every possible result.” Richard A Posner, The Federal Courts: Crisis and Reform 276 (1985).
Lance Phillip Timbreza, The Elusive Comma: The Proper Role of Punctuation in Statutory Interpretation, 24 QLR 63, 91, fn. 5 (2005).
It is clear that the cabinet containing established canons of statutory construction holds an array of tools, many appearing capable of completing a given task. The difficult decision is determining which is best suited to yield the appropriate result.
The Mandate To Apply Plain Meaning
Without attempting a complete compilation of the body of authority concerning statutory construction in connection with bankruptcy legislation, it must be recalled that:
As the United States Supreme Court has instructed courts in examining the provisions of the Bankruptсy Code, “[w]e 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 , 253-254,112 S.Ct. 1146 , 1149,117 L.Ed.2d 391 (1992) (citation omitted). That statement is consistent with the United States Supreme Court’s principles that statutory interpretation is a holistic endeavor which must begin with the language of the statute itself. Resort to an examination of legislative history is appropriate only to resolve statutory ambiguity, and in the final analysis, such examination must not produce a result demonstratively at odds with the purpose of the legislation. See Taylor v. Freeland & Kronz,503 U.S. 638 ,112 S.Ct. 1644 ,118 L.Ed.2d 280 (1992); Pennsylvania Dept. of Public Welfare v. Davenport,495 U.S. 552 ,110 S.Ct. 2126 ,109 L.Ed.2d 588 (1990); Kelly v. Robinson,479 U.S. 36 ,107 S.Ct. 353 ,93 L.Ed.2d 216 (1986). The Sixth Circuit has likewise noted that statutes “must be read in a ‘straightforward’ and ‘commonsense’ manner,” and that “[w]hen we can discern an unambiguous and plain meaning from the language of a [statute], our task is at an end.” Rogers v. Laurain (In re Laurain),113 F.3d 595 (6th Cir.1997) (citations omitted); see also Bartlik v. United States Dep’t of Labor, 62 F.3d 163 (6th Cir.1995).
Andersson v. Sec. Fed. Sav. & Loan of Cleveland (In re Andersson),
The Supreme Court has repeatedly held: The starting point in discerning congressional intent is the existing statutory text, see Hughes Aircraft Co. v. Jacobson,525 U.S. 432 , 438,119 S.Ct. 755 ,142 L.Ed.2d 881 (1999), and not the predecessor statutes. It is well established 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 ,147 L.Ed.2d 1 (2000) (internal quotation marks omitted) (quoting United States v. Ron Pair Enterprises, Inc.,489 U.S. 235 , 241,109 S.Ct. 1026 ,103 L.Ed.2d 290 (1989) (in turn quoting Caminetti v. United States,242 U.S. 470 , 485,37 S.Ct. 192 ,61 L.Ed. 442 (1917))).
Lamie v. U.S. Trustee,
The Exceptions To The Plain Meaning Debate
This body of controlling authority concerning statutory construction in connection with bankruptcy legislation requires a trial court to apply the ordinary meaning of the statutory text, unless one of three recognized exceptions is applicable: the scrivener’s error exception, the absurdity doctrine, or the doctrine of constitutional avoidance. These exceptions have been found applicable to various provisions of the 2005 Act.
In applying the scrivener’s error exception to provisions of the 2005 Act’s exemption provision [
In his opinions, Justice Scalia has occasionally set out the high standard that, in his view, a court must meet before it may substitute legislative intent for legislative enactment. In brief, he requires that two conditions be met before such variance is permissible. First, the plain meaning of the statute under consideration must lack any rational purpose— not just what Congress may have intended, but any plausible congressional purpose. In Holloway v. United States, for example, Justice Scalia disagreed with the majority’s willingness to reform an otherwise unambiguous statute because he found a “plausible congressional purpose in enacting this language— not what I necessarily think was the real one.” Holloway v. United States,526 U.S. 1 , 19 n. 2,119 S.Ct. 966 ,143 L.Ed.2d 1 (Scalia, J., dissenting) (1999). Further, he acknowledged, “I search for a plausible purpose because a text without one may represent a ‘scrivener’s error’ that we may properly correct.” Id. So, according to Justice Scalia, if there is no plausible congressional purpose in the text as written, the statute is a candidate for reformation.
But there must be more. A second element for Justice Scalia is that the intended meaning to be used must be obvious. “The sine qua non of any ‘scrivener’s error’ doctrine, it seems to me, is that the meaning genuinely intended but inadequately expressed must be absolutely clear,” he wrote. “[0]th-erwise we might be rewriting the statute rather than correcting a technical mistake.” United States v. X-CitementVideo, Inc., 513 U.S. 64 , 82,115 S.Ct. 464 ,130 L.Ed.2d 372 (Scalia, J., dissenting) (1994).
•!• •i'
This court is, of course, reluctant to say that although Congress enacted X it actually meant Y, and it does not do so lightly. But in this case, the scrivener’s error is obvious from the extensive record and from common sense: The intent of Congress is crystal clear, and there is no feasible rationale or policy for enacting what the text of the statute says. Indeed, strictly applying the words ofSection 522(p) would actually prevent Congress’s goal from being achieved. So it is proper to give the statute the meaning that Congress undeniably intended. (footnotes omitted)
In re Kane,
In applying the absurdity doctrine to the 2005 Act’s provisions governing the dismissal of chapter 11 eases [
This is a case where the language of BAPCPA passed by Congress tends to defy logic and clash with common sense. This is an example of a specific revision to the Bankruptcy Code, if followed by the Court and applied as Congress seems to intend — i.e., by way of strict construction — would result in an absurd decision and totally unworkable legal precedent. These drafting problems have the potential of bringing the bankruptcy system to a halt while debtors, creditors, and the courts try to figure out just exactly what Congress intended. This Court would add that it appears that the largely overlooked changes to the bankruptcy provisions related to non-consumer cases, such as the case presently before the Court, may sometimes equal the poor crafting of the consumer provisions. Moreover, serious and consequential constitutional questions may be looming on the horizon because of inartful drafting, (footnote omitted)
❖ ‡ # % %
The task of resolving the meaning of a statute begins where all such inquiries must begin: with the language of the statute itself. Unfortunately, here, the Plain Meaning Rule is not appropriate as it would lead to an absurd result. First, if this Court were to require that all the elements ofsection 1112(b)(4) had to be fulfilled, the Court would doubt very much that a corporate Chapter 11 could ever be dismissed because, for example, this Court can think of no instance where a corporate debtor would have a domestic support obligation. Thus, dismissal could only occur in a Chapter 11 case involving an individual debtor. Moreover, if every element ofsection 1112(b)(4) was met, the debtor must not only be dismissed, but probably deserves referral to the United States Attorney.
In re TCR of Denver, LLC,
In applying the doctrine of constitutional avoidance to provisions of the 2005 Act governing debt relief agencies [
If lawyers are placed within the ambit of § 101(4A), the placement conflicts with§ 526(d)(2)(A) . The conflict would exist because states would be deprived of their ability “to determine and enforce qualifications for the practice of law.” If BAPCPA’s debt relief agency sections apply to attorneys, it means Congress has taken upon itself the authority to determine the advice attorneys can give their clients and what attorney advertisements must say, thereby infringing on the state’s traditional role of regulating attorneys. See Leis v. Flynt, 439 U.S. 438 , 442,99 S.Ct. 698 ,58 L.Ed.2d 717 (1979) ( “Since the founding of the Republic, the licensing and regulation of lawyers has been left exclusively to the States.”)
This viеw is supported by the doctrine of constitutional avoidance. This doctrine counsels that, in construing a statute for ambiguity, the Court must opt for a construction which avoids grave constitutional questions. Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council,485 U.S. 568 , 575,108 S.Ct. 1392 ,99 L.Ed.2d 645 (1988). The Court perceives a clear ambiguity in this statute-on one hand it appears to regulate a lawyer’s practice; on the other, such regulation is specifically reserved to the states. As outlined above, these sections would be unconstitutional if applied to attorneys. For these reasons, the Court finds§§ 526 , 527 and 528 do not apply to attorneys.
Milavetz, Gallop & Milavetz P.A. v. U.S.,
The compelled conclusion is that, absent one of the above exceptions, a court must apply the ordinary meaning of the language as enacted and, thus, adhere to its proper role as a court in our constitutional scheme.
Legislative History
It is necessary to note that the history of the legislative efforts culminating in the 2005 Act is not the same as the legislative history of the 2005 Act. To the extent legislative history of the 2005 Act can be used to resolve any arguable ambiguity in the statutory language, it is of dubious assistance. First, there is no joint conference statement because the 2005 Act did not have a conference committee. See
In re Green,
As the United States Supreme Court has stated:
As we have repeatedly held, the authoritative statement is the statutory text, not the legislative history or any other extrinsic material. Extrinsic materials have a role in statutory interpretation only to the extent they shed a reliable light on the enacting Legislature’s understanding of otherwise ambiguous terms. Not all extrinsic materials are reliable sources of insight into legislative understandings, however, and legislative history in particular is vulnerable to two serious criticisms. First, legislative history is itself often murky, ambiguous, and contradictory. Judicial investigation of legislative history has a tendency to become, to borrow Judge Leventhal’s memorable phrase, an exercise in “ ‘looking over a crowd and picking out your friends.’ ” See Wald, Some Observations on the Use of Legislative History in the 1981 Supreme Court Term, 68 Iowa L.Rev. 195, 214 (1983). Second, judicial reliance on legislative materials like committee rеports, which are not themselves subject to the requirements of Article I, may give unrepresentative committee members—or, worse yet, unelected staffers and lobbyists—both the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text. We need not comment here on whether these problems are sufficiently prevalent to render legislative history inherently unreliable in all circumstances, a point on which Members of this Court have disagreed.
Exxon Mobil Corp. v. Allapattah Svcs., Inc.,
A brief comment is appropriate about the concept “those who can pay, should pay.” This concept, which appears in the UST’s filings in this case and has found its way into reported decisions, is often offered as evidence of congressional intent to include various funds and exclude various expenses in connection with
First, although it may be correct to recognize the existence of this concept, neither this (nor any similar) phrase appears in the text of the 2005 Act. Second, Congress, in the appropriate exercise of its policy choices in enacting the 2005 Act, determined to exclude or include various funds as a component of what could be paid and what should be paid in a debtor’s bankruptcy. The text of the 2005 Act excludes various retirement funds, which are often one of the significant assets of a debtor. Such assets, if included as part of the property of a debtor’s estate, could be available for payment to creditors. The 2005 Act rejected case law which prohibits a chapter 13 debtor from claiming the repayment of certain loans as an expense in calculating disposable income and has the effect of reducing the funds available from a debtor for payment to creditors.
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The simple point from these examples is to recognize that Congress, of course, can exercise its discretion in determining “those who can pay — should pay”; however, this concept only exists within the confines of the language in the 2005 Act.
As the Supreme Court has held:
If Congress enacted into law something different from what it intended, then it should amend the statute to conform it to its intent. “It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think ... is the preferred result.” United States v. Granderson,511 U.S. 39 , 68,114 S.Ct. 1259 ,127 L.Ed.2d 611 (1994) (concurring opinion). This allows both of our branches to adhere to our respected, and respective, constitutional roles. In the meantime, we must determine intent from the statute before us.
Lamie,
The balance of this decision focuses on the application of these general principles of statutory construction in the context of the specific provisions of the 2005 Act presented for determination in this proceeding.
Overview Of
This provision was completely rewritten by the 2005 Act’s language in current
In addition to these significant changes, perhaps the most significant change is the congressionally determined mathematical formula in
If, as a result of these various calculations, a debtor has $167 per month in disposable income, the case is presumed an abuse [
If the case is presumed to be an abusive filing, a debtor can, nevertheless, rebut the presumption. In order to rebut the presumption, a debtor must show “special circumstances,” which would justify modifications to income and expenses from the
If a debtor’s case is not presumed to be an abuse under
1. Unemployment Compensation Is One of the “Benefits Received Under the Social Security Act” And Is Excluded From Current Monthly Income [§ 101(10A)(B) ]
The initial issue for determination is whether unemployment compensation is one of the “benefits received under the Social Security Act” and, therefore, should be excluded from CMI. It is undisputed the Debtors received unemployment compensation during the applicable period. It is also undisputed that this unemployment compensation was distributed through a program administered by the state of Ohio. The UST argues that unemployment compensation is a benefit of the state of Ohio only.
The court is not aware of any reported decisions on the question, although the issue has been addressed by bankruptcy commentators. See,
e.g., David W. Allard, David E. Grochocinski, Hon. Marci MсIvor, and Susan L. Rhiel, Means
Testing—
Can it Work?,
061506 ABI-CLE 11 (June 15-18 2006) (summarizing arguments concerning whether unemployment compensation is excluded from CMI). The drafters of Form 22A, which was intended to implement
As previously explained, in determining a debtor’s income for purposes of
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 debtor 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 casethe 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, (emphasis added)
This detailed definition of CMI, with its particularized components, contains Congress’s decision to calculate a debtor’s current monthly income based on the inclusion or exclusion of funds received by a debtor in the specified six month period prior to filing bankruptcy. In addition to any earnings from employment, CMI includes and excludes funds from other sources. The exclusions from CMI contain the words “benefits received under the Social Security Act.” There is no dispute that unemployment compensation constitutes a benefit, the analysis focuses on whether this is one of the “benefits received under the Social Security Act.”
A component of this analysis is a brief understanding of unemployment compensation law, which involves both state and federal law, specifically the Social Security Act. States may, but are not required, to enact unemployment compensation law. See
Allard
at Part C (Unemployment Compensation). If, however, a state does enact an unemployment compensation law, it is required to comply with a series of federal mandates. See
The UST recognizes that there is no “definitive guide” to the term “benefits” in the Social Security Act (Doc. 25 — page 3); however, the UST urges this court to draw a distinction between direct and indirect payments. The UST argues that direct payments, such as social security retirement payments, would be one of the “benefits received under the Social Security Act”, but unemployment compensation, as an indirect benefit from the Social Security Act, would not; however, the plain meaning of the words in § 101(10A)(B) do not contain such a distinction. The applicable text does not speak of “payments”, direct, indirect, or otherwise, but instead contains the unambiguously broader term “benefits.” 10
Additionally, the Supreme Court has previously addressed the purpose of the Social Security Act and, in the process, recognized unemployment compensation as one of its benefits:
The purpose of the [Social Security] Act was to give prompt if only partial replacement of wages to the unemployed, to enable workers “to tide themselves over, until they get back to their old work or find other employment, without having to resort to relief.” Unemployment benefits provide cash to a newly unemployed worker “at a time when otherwise he would have nothing to spend,” serving to maintain the recipient at subsistence levels without the necessity of his turning to welfare or private charity, (emphasis added; fоotnotes omitted)
California Dept. of Human Resources Development v. Java,
An examination of the provisions of the 2005 Act contains other references to the Social Security Act, but only to various specific provisions' of the Social Security Act. In § 362(b)(2), the exceptions to the automatic stay in connection with domestic relations issues were expanded:
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay—
(2) under subsection (a) — ■
* * * * *
(D) of the withholding, suspension, or restriction of a driver’s license, a professional or occupational license, or a recreational license, under State law, as specified in section 4-66(a)(16) of the Social Security Act',
(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified, in section 166(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections I6k and 166(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act[.] (emphasis added)
References to specific provisions of the Social Security Act can also be found in § 704(c)(l)(A)(i):
In a case described in subseсtion (a)(10) to which subsection (a)(10) applies, the trustee shall—
(A)(i) provide written notice to the holder of the claim described in subsection (a)(10) of such claim and of the right of such holder to use the services of the State child support enforcement agency established under sections 161 and 166 of the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after the case under this title[.] (emphasis added)
The same reference can also be found in § 1302(d)(1)(A)®.
In all of these examples, Congress did not choose the broad term the “Social Security Act,” which is the language chosen in connection with CMI; but, rather, selected specific provisions of the Social Security Act. The CMI definition does not contain any congressionally limited specific provisions of the Social Security Act. It is appropriate to conclude that when Congress wished to limit the applicability of the Social Security Act, it did so by reference to specific sections. Canons of statutory construction approved by the Supreme Court recognize that congressional enactments which contain particular language in one section of a statute, but omit such particularity in another section, reflect Congress’s intention and purpose in such disparate use.
BFP v. Resolution Trust Corp.,
A comparison of the specificity which Congress chose in referring to limited, specific provisions of the Social Security Act in §§ 362(b)(2)(D), (E), (F) and (G), 704(c)(1)(A)® and 1302(d)(1)(A)® as opposed to Congress’s choice in referring to the unlimited, general provisions of the entire Social Security Act in § 101(10A)(B) provides further support for the conclusion that unemployment compensation is one of the “benefits received under the Social Security Act.”
In summary, in consideration of the text of various relevant portions of the Social Security Act, United States Supreme Court language, and a comparison with other statutory text of the 2005 Act, which reference specific provisions of the Social Security Act, the court holds that unemployment compensation is one of the “benefits under the Social Security Act.” Accordingly, the $1,295.00 listed by the Debtors on line 9 of their Form 22A is correctly excluded from CMI. As a result of this exclusion, and the absence of any further dispute between the parties concerning any other aspect of the CMI calculation, the court determines the Debtors’ CMI, as calculated on the Debtors’ Form 22A (Doc. 1), is $7,606.97.
2.
Once CMI is calculated, the court must subtract the expenses under the
On line 42 of Form 22A, the Debtors deducted a monthly payment of $489.84 as an amount, in accordance with
On September 3, 2006, in the Debtors’
Statement of Intention
(Doc. 4), the Debtors indicated the vehicle was to be surrendered. The court has no evidence in the record of whether the vehicle was ever surrendered; however, Ford Motor Credit was granted relief from stay, by default, on the vehicle on August 24, 2006 (Doc. 18). The parties dispute whether the secured debt on the vehicle are proper deductions under
Although there could be an instinctive assent to the position that there should not be an allowed deduction for a payment which may not be made, this argument rests on the premise that Congress’s choice of language in the applicable sections cannot be accorded its plain meaning. This premise is not supported by any recognized exception to the mandatory cannon of according Congressional enactments their plain meaning. To the contrary, Congress, in its policy choices, is certainly entitled to eliminate the delay and uncertainty of a court determined vehicle-by-vehiele, case-by-case approach to whether a particular vehicle will be reaffirmed, redeemed or surrendered. Congress can choose to eliminate any analysis of a debtor’s initial decisions concerning the monthly payments in connection with any reaffirmation or redemption, total amount due, the interest rate or other aspects of the modification of secured debt and reconsideration of any such determinations, including surrender, at various points in the subsequent progress of the case. Congress eliminated such discretionary determinations by its choice of language in connection with these mandated deductions.
This result is not surprising in that the overall means test of
The parties do not dispute that payments were contractually due under applicable nonbankruptcy law prior to filing. The filing of the chapter 7, by itself, does not change that fact.
Randle,
The UST argues the words “scheduled as” are ambiguous and do not refer to payments scheduled under a contractual agreement, but instead to a secured debt listed on the Debtors’ bankruptcy schedules and other filings. The UST argues that “schеduled as” in
When considering the word “scheduled” as used in the Bankruptcy Code (as amended by the 2005 Act), a similar conclusion can be drawn. An excellent discussion of this issue is contained in
In re Nockerts,
Secondly, even if the court were to adopt the UST’s reasoning concerning the meaning of either “scheduled as” or “scheduled”, a debtor’s statement of intention is not a schedule. See
In re Randle,
Thus, the UST is seeking income and most expenses (National Standards, Local Standards and Other Necessary Expenses) be considered “frozen figures” on the date of the order for relief, but, in the particular case of secured debt payments, urges an opposite position — that the court should look into the future. In an attempt to apply all of the
The court also notes that this result does not render the obligation of the UST under § 704 to reviеw “all materials by the debtor” surplusage. The
Statement of Intention
and other filings beyond a debtor’s
Finally, the UST argues the result reached today damages
Concerning the first argument, this court is obligated to apply
As for a debtor manipulating the means test by purchasing secured collateral simply to avoid the
The court concludes the $489.84 secured debt expense for the Ford Fusion is properly deducted as an amount “scheduled as contractually due secured creditors in each month of the 60 months following the date of the petition])]”
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In addition, since the “date of the order for relief’ is the relevant date for purposes of
3. If A Chapter 7 Case Of Above Median Income Debtors Is Determined Not To Be Subject To The Presumption Of Abuse Under
The court has determined there is no presumption of abuse pursuant
In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter in a case in which the presumption in subparagraph (A)(i) of such paragraph does not arise or is rebutted, the court shall consider—
(A) whether the debtor filed the petition in bad faith; or
(B) the totality of the circumstances (including whether the debtor seeks to reject a personal services contract and the financial need for such rejection as sought by the debtor) of the debtor’s financial situation demonstrates abuse.
The court notes that a recent decision,
In re Mestemaker,
The plain meaning of the phrase “debt- or’s financial situation” must include a debtor’s actual income and expenses, since such information is the starting point for any analysis of an individual’s financial situation. There is no provision in§ 707(b) stating that the means test is the only method through which a court may determine whether there is abuse based on a debtor’s ability to pay. Rather, the plain language of§ 707(b)(3) , read in conjunction with§ 707(b)(1) and (2), is clear and compels a conclusion that a court must consider a debtor’s actual debt-paying ability in ruling on a motion to dismiss based on abuse where the presumption does not arise or is rebutted.
Id. at *4.
It is important to recognize the parties agreed that there are no factual issues and the UST’s Motion (Doc. 19) can be resolved as a matter of law. 18 In the filings of the UST, the only argument given is that the Debtors have the ability tо pay— i.e. fund a chapter 13 plan. The UST raises no other factors in this case such as, but not limited to, bad faith, rejection of a personal services contract, prepetition manipulation of the means test, hiding assets, incorrect schedules, future inheritances or income, future business opportunities, or, significantly for this proceeding, any disagreement with any of the amounts listed on the Debtors’ schedules I and J. The court notes that a review of all filed information also fails to disclose any concern about such factors.
A review of all filed information, specifically, the unchallenged Schedules I & J (Doc. 1), establish, for purposes of this proceeding, the debtors’ actual income and expenses.
The amount of income on Schedule I is $4,515.84, which includes, under the
The amount of expenses on Schedule J is $6,481.80, which excludes, under the
Even using all the amounts urged by the UST and recalling that in this proceeding both parties agreed that this case did not require an evidentiary hearing, and the issue for determination was, as a matter of law, whether the Debtors had the ability to pay, the court determines that the totality of the circumstances of the Debtors’ financial situation, under
Conclusion
All relief requested in the
Motion of the
U.S. Trustee to Dismiss Chapter 7 Case Pursuant to
Notes
. The court recognizes that certain provisions of
. Section 704(b)(1), which was added by the 2005 Act, requires the UST to "review all materials filed by the debtor” and, within 10 days "after the date of the first meeting of creditors, file with the court a statement as to whether the debtor’s case would be presumed an abuse under
. If a debtor's current monthly income [§ 101(10A)] is above the median income for the household size in the state in which she filed, the UST must file the
. See,
e.g., Harshbarger v. Pees (In re Harshbarger),
. §§ 541(b)(5), (6) and (7).
.
. See,
e.g., In re Diagostino,
. Former
. See Line 9 of Form 22A (10/06) (Unemployment Compensation. Enter the amount in the appropriate column(s) of line 9. However, if you contend that unemployment compensation received by you or your spouse was a benefit under the Social Security Act, do not list the amount of such compensation in Column A or B, but instead state the amount in the space below[.])
. The UST attempts to equate the word benefit and payment by a dictionary definition (Doc. 25 — page 3). The use of dictionary definitions has been used by the United State Supreme Court to interpret bankruptcy statutes. See
Rousey v. Jacoway,
. The UST uses $260 for line 22 which was the Local Standard monthly vehicle operation expense for a debtor with one vehicle at the time this chapter 7 case was filed (Doc. 19).
. Indeed, Official Form 22A refers to the website of the United States Trustee to find some of these expense figures. The web site currently instructs that the expense figures apply only to "Cases Filed Between October 1, 2006, and January 31, 2007, Inclusive." This information can be found at http://www. usdoj.gov/us1/eo/bapcpa/2006l00l/ meanstesting.htm.
. Nevertheless, the UST argues an additional example of a "forward looking” expense is
. See footnote 7 — Congressional correction to § 1325(b)(3).
. The court acknowledges the UST’s citations to reported decisions to the contrary and respectfully disagrees with these decisions. See,
e.g., In re Skaggs,
. The Local Standards are found in the Internal Revenue Manual 5.15.1.9 (effective 5-1-2004).
. As noted, the court finds the $7,606.97 is the Debtors’ CMI. The UST included $49.50 that the Debtors failed to claim for the hypothetical chapter 13 administrative fee. Therefore, in subtracting all allowed monthly expenses of $8,290.53, the Debtors' disposable monthly income, for purposes of
. See Order Fixing Date For Filing Final Legal Memoranda (Doc. 24 — October 2, 2006).
. This remains true even if the deduction for the $507.00 monthly child support obligation, which was suspended during the debtor husband's unemployment, is removed as an expense. The Debtors would still have a substantial shortfall in their monthly budget. The monthly income of $4,515.84 minus the adjusted monthly expenses of $5,974.80 equals negative $1,458.96 per month. See Doc. 1. The court notes that a focused examination of a debtor’s income and expenses frequently results in a determination that a debtor lacks sufficient income to pay present expenses, which, not surprisingly, contributes to the decision to file a chapter 7 case.