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December 22, 2007

10th Cir BAP Rules on "Projected Disposable Income"

In re Lanning,  --- B.R. ---, 2007 WL 4348055  (10th Cir. BAP December, 2007 (Kansas))

Issue:   Can an over-median debtor confirm a chapter 13 plan paying less than the B22C net income by showing “special circumstance”?                

Holding:   Yes

Judge Thurman
The debtor is an over-median chapter 13 debtor whose B22C shows a net of $1,114 because of two one-time payments by her employer in the last six months.  Her “I and J” net income is $149.  The bankruptcy court confirmed the chapter 13 plan of $149 (for 60 months apparently).   

The BAP affirmed.  “[W]e agree with the courts that have found ‘disposable income’ to be only the starting point in determining ‘projected disposable income’ under section 1325(b)(1)(B).  Where it is shown that Form B22C disposable income fails accurately to predict a debtor’s actual ability to fund a plan, that figure may be subject to modification.”  The BAP looked for “guidance” in Section 707(b)(2)(B)(i) which “allows debtors to rebut that presumption [of abuse] ‘by demonstrating special circumstances . . . that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.”  “Therefore, parties contending that a debtor’s Form B22C disposable income figure does not accurately project the debtor’s future ability to fund a plan must present documentation similar to that required by section 707(b)(2)(B)(ii) in support of their claim.  However, we emphasize that deviation from the Form B22C determination of disposable income will be the exception rather than the rule.”

Find the case here. 

By the way, the debtor did not participate in the appeal (why should she?).  The court asked the UST to file an amicus brief which it did supporting the debtor and the position.  I guess they don't hate debtors after all. (lol) 

December 22, 2007 in Other Circuit Briefs | Permalink


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