Link to the US Trustee’s
position on legal issues arising under Chapter 7 means test:
http://www.justice.gov/ust/eo/bapcpa/docs/ch7_line_by_line.pdf
Dated 4/23/2010.
Link to their position regarding
Chapter 13 means test:
http://www.justice.gov/ust/eo/bapcpa/docs/chapter13_analysis.pdf
- Dated April 20, 2010
Link to free means test:
http://freechapter7meanstest.com/
Good article explaining the
interplay of Lanning (the means test is
not to be inflexibly applied, but factual circumstances are
legally relevant, such as change in income), and
Ransom (ownership of vehicle: monthly payment and
operation of vehicle: gas, maintenance, etc.
Debtor cannot deduct ownership unless making secured
payments). Lastly, surrendered property - can debt be
deducted on means test - no as clarified in Lanning
and Ransom.
http://www.justice.gov/ust/eo/public_affairs/articles/docs/2011/abi_201104.pdf
HOUSEHOLD SIZE:
UNRELATED PERSONS LIVING ON SAME PREMISES
CONSTITUTE A HOUSEHOLD OF 2
The debtor, who shared a rental house with an unrelated
person who had a separate bedroom and garage space and a
separate lease with the owner, had a household size of two.
Because Code § 101(39A)(A) defines “median family income” as
“the median family income both calculated and reported by
the Bureau of the Census,” it is only fair to use the Census
Bureau's definition of household: “all of the people,
related and unrelated, who occupy a housing unit.” See In re Ellringer, 370 B.R. 905 (Bankr. D. Minn. 2007). Generally, a
single-family home shared by unrelated persons was a single
housing unit whose occupants comprised a single household,
and the residence shared by the debtor and her roommate was
no exception. The relationship among residents was not a
consideration in the Census Bureau's definition, and nothing
in the Bankruptcy Code compelled unique treatment for
households comprised of unrelated members. In re Bostwick, 406 B.R. 867 (Bankr. D. Minn., June 23, 2009)
(case no. 4:08-bk-46026) (Bankruptcy Judge Robert J. Kressel)
Continuing
contributions to college child:
It is 707b2(a)(II) which is line
40 of the Form 22C ... (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.
Vandenbosch,
9:10-bk-06427-ALP District Court, Florida 10/11/11 -
"Refusal to confirm the amended plan because of the failure
to include social security benefits as projected disposable
income was therefore an error of law. Reversed and remanded
back to Bankruptcy Court"
Hamilton v. Lanning, No. 08–998
(US Sup Ct 6/7/10, 10th Circuit) In an objection by a
Chapter 13 bankruptcy trustee to confirmation of debtor's
plan because the proposed payment amount was less than the
full amount of the claims against debtor, and because she
had not committed all of her “projected disposable income”
to repaying creditors, the Tenth Circuit's affirmance of the
bankruptcy court's rejection of the objection is affirmed
where, when a bankruptcy court calculates a debtor’s
projected disposable income, the court may account for
changes in the debtor’s income or expenses that are known or
virtually certain at the time of confirmation.
Read more...
In re Smith aka
American Express Bank vs Smith, WW-08-0311, No. 07-43853
(9th Circuit BAP, Washington 10/5/09) In preparing a means
test may the debtor not deduct secured debts on collateral
they intend on surrendering. This would reduce the return to
the unsecured creditors of the debtor's projected disposable
income as set forth in 1325(b). The Smith court
distinguished the result from Kagenveama, 541 F.3d
868 (9th Cir. 2008) (the court refused to look at
post-petition change in expenses due to scrape off of
secured debts in chapter 13).
In re Rudler, No. 08-9007
U.S. 1st Circuit Court of Appeals, August 05, 2009
Bankruptcy Appellate
Panel judgment is affirmed where, in calculating monthly
income under the means test for identifying an abusive
Chapter 7 petition, the plain language of 11 U.S.C. sec.
707(b)(2) allows debtors to deduct payments due on a secured
debt notwithstanding the debtor's intention to surrender the
collateral.
Read In re Rudler, No. 08-9007
In re Pennington, 348 B.R. 647 (Bkrtcy.D.Del.
2006) MARY F. WALRATH, Bankruptcy Judge COURT COULD
DISMISS CHAPTER 13 FOR "ABUSE" NOTWITHSTANDING THE DEBTOR'S
INCOME WAS BELOW THE STATE MEDIAN
THRESHOLD FOR "ABUSE" WHERE THE MEANS TEST PER SE DOES NOT
APPLY IS 25% OF UNSECURED DEBT. § 707(b)(1)
Debtor's income was below the state median but actual
disposable income at the time of the hearing to dismiss or
convert was sufficient to pay 42% of the unsecured debt over
a 3-year plan. The court noted that the surplus income was
more than enough to pay more than 25% of the unsecured debt,
which was the "threshold were abuse is presumed under the
means test", even though the means test is not applicable.
In
re: SCOTT LEE EGEBJERG, 08-55301 (9TH Cir. Ct
App, CA – CV 07-06850-PA)
We consider whether a debtor’s repayment of a 401(k) loan
constitutes a “monthly payment on account of secured debts”
or an “[o]ther [n]ecessary [e]xpense” that can be deducted
from a debtor’s monthly income for purposes of calculating
the debtor’s disposable monthly income under § 707(b)(2).
Because we conclude it is not, the debtor’s filing in this
case was presumptively abusive under the “means test” of §
707(b)(2). We therefore affirm the bankruptcy court’s
dismissal of his Chapter 7 petition.
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