March 14, 2010
Further Thoughts on Hamilton v. Lanning
Just to put the whole thing in context, I went to the Marrama oral argument a few years ago. One of the justices asked whether or not there are trustees in chapter 13 cases – I’m not kidding.
I’m surprised the briefs don’t have more “big picture” arguments. Congress makes the law, we do what Congress says – let Congress fix the problem if it isn’t working the way they intended and leave it at that. In fact, if Congress were to meet tomorrow and pass a resolution something like “we intended the mechanical test,” there would be no discussion about whether it reaches an absurd result. It reaches an absurd result only because it makes no sense in cases like Kagenveama to permit someone to pay less than they can afford. But it makes no sense because we have this view of how it should work. Pay as much as you can afford – that it the way it has worked since it was invented. The briefs, even the amici briefs, jump right into the textual arguments and don’t seem to give the Supreme Court a way out. That is what they will be asking the parties at oral argument.
People are always surprised when I tell them that Congress can get rid of bankruptcy any time they want, or chapter 7, or the discharge, or require repayment of 50% of debts to get the discharge, or require 10 year plans, or 25% of the debtor’s income. Bankruptcy is not a constitutional right (see In re Kras). So Congress defined chapter 13 and defined the computation of the plan payment – “So what’s the problem?” (quoting Mona Lisa Vito in My Cousin Vinny). Ms. Lanning does not qualify – I feel bad for the lady but she needs to tell her Congressman about her problem, not the Supreme Court.
Requiring a debtor to “project” income by looking back 6 months is silly I think but that’s what Congress did. And permitting the plan to be modified the next day is silly. At oral argument in Milavetz, one attorney said the DRA rules are silly – Scalia responded, “where does it say it’s unconstitutional for Congress to make stupid laws.” (That’s a direct quote)
I think that for the court to affirm Lanning they are going to have to ignore the plain language Congress wrote and try to fix the mess it created. The only possible way they affirm is to say that the mechanical test is the way it works except in weird cases. Stevens will write that Congress knew how it worked before and since the code (forget legislative history) specifies the mechanical test which doesn’t always fit right, Congress must have intended the old way to continue in the weird cases.
Milavetz teaches us that the Court hates to say Congress blew it. Everyone – all the briefs except Hamilton's - seem to agree that the mechanical test is the way it works except in weird cases. So it’s a matter of what do we do about the weird cases. I say let Congress fix it. The “projected,” the “as of the effective date of the plan,” the “in the future” are problematic but everyone agrees that they are not problematic except in weird cases. So let Congress fix it.
For whatever its worth, I file about one chapter 13 a year and have not had a chapter 13 plan confirmed in probably twenty years. It may be easier for me since I am not in the trenches in chapter 13 world.
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Why file a 13 that won't be confirmed? I know something like half to three-fourths of 13's either fail to get a discharge, or convert to a 7, but there doesn't seem to be any reason, other than delay of a foreclosure sale that con be accomplished with a filing under Chapter 7, to file a 13 that's doomed to failure.
Posted by: Greg Jones | Mar 23, 2010 8:26:41 AM