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MORE LINE BY LINES OF B22C
In re Hays, Case No 07-41285
April, 2008, Judge Karlin
13 Trustee objections to debtor’s attempts to claim living expenses for non-dependent debtors as well as for secured debt on a timeshare. Court followed Law and disallowed adult child expenses. The Court allowed the debt on the timeshare to be deducted. The decision is very thorough and is a recommended read.
Digest by:Â Jan Hamilton, Trustee
B22C CASE, LINE BY LINE…
In re Law, Case No. 07-40863
April 2008, Judge Karlin
Court sustained 13 Trustee’s objection to confirmation as debtor included: adult son in household size, tax levy on Line 33 and duplicated it on Line 49 and unencumbered vehicle on line 28. The decision is a good analysis of the status of B22C case law as of the date of the decision.
Digest by:Â Jan Hamilton, Trustee
OK FOR CHAPTER 13 DEBTORS TO TAKE B22C DEDUCTION FOR FULL PAYMENT
RATHER THAN CRAM DOWN AMOUNT
In re Allen, Case No. 07-41327
February 2008, Judge Karlin
Objected to confirmation on the basis that Debtor’s means test calculations erroneously included the full amount of the pre-petition car payments rather than the reduced or crammed-down amounts. In analyzing 1325(b)(1), the Court found that 707(b)(2)(A)(iii) applies and that Debtors need not only list the amounts they will actually pay through the plan. There is a split of authority on this important issue. This case was not appealed so no appellate decision is in the immediate future for the 10th Circuit. See the Hoss and Arroyo decision by Judge Nugent for the opposite result.
Digest by:Â Jan Hamilton, Trustee
CAR DEDUCTIONS ALLOWED EVEN THOUGH NO LIEN
In re Thomas, Case No 06-21108
In re Camacho, Case No. 06-20729
October 2007, Judge Berger
UST Motion To Dismiss under 707(b) for presumed abuse based upon totality of circumstances was denied. The Court concluded that the debtors are entitled to claim vehicle ownership for expenses, even though debtors did not have liens or leases on the vehicles. (See In Re Howell, 06-11652 for opposing view from Judge Nugent.). Judge Lungstrum subsequently reversed and remanded Thomas, 382 B.R. 793 (D. Kan. 2008).
Digest by:Â Jan Hamilton, Trustee
B22C CONTROLS UNLESS SIGNIFICANT CHANGES IN CIRCUMSTANCES
In re Lanning, Case No. 06-41037
May 2007, Judge Karlin
Over the Chapter 13 Trustee’s objection, the Court confirmed the plan because of significant changes in circumstances at the time of filing that caused Line 58 on B22C to be higher than what the debtor could afford to pay. BAP and 10th Circuit Court of Appeals affirmed, Petition for Cert to U.S. Supreme Court pending. Lanning controls in Judge Karlin’s court, until, if and when, the decision is overturned.
Digest by:Â Jan Hamilton, Trustee
BELOW MEDIAN MUST RUN 36 MONTHS, B22C IS TEMPORAL
In re Daniel, Case No. 06-20714
December 2006, Judge Somers
In a Below Median case, debtor’s income is determined by B22C and expenses by Schedule J and must “run†for 36 months (The Applicable Commitment Period) or pay 100% of all allowed unsecured claims. B22C is temporal, rather than a multiplier. Read carefully.
Digest by:Â Jan Hamilton, Trustee
WHAT GETS PAID OUT OF THE B22C POOL?
In re Puetz, Case No 0620756
June 2007, Judge Berger
B22C presumptively shows debtors projected disposable income, schedules I and J no longer determine plan payment for above median debtor, but, rather, demonstrate feasibility unless there are special circumstances justifying adjustments to B22C. This is not the plan payment but is what goes to “unsecured creditorsâ€, which are general unsecured claims, anticipated attorney fees but not Chapter 13 Trustee fees or priority claims as these are already netted out in the B22C calculations. Contributions and 401(k) loan repayments are not included in calculating disposable income.
Digest by:Â Jan Hamilton, Trustee
NON DEBTOR EXPENSES NOT ALLOWED ON B22C
In re Shahan, Case No. 06-11638
April 2007, Judge Nugent
Above median debtor filed 13; wife did not. Trustee objected to confirmation on basis of various B22C deductions. Debtor was allowed to take a marital deduction on Line 19 from his paycheck, which represented mandatory withholdings from her paycheck and, as such, was not dedicated to household expenses. Debtor sought to deduct future payments on secured debts for wife’s debts on Line 47. Since these were not debtor’s expenses, they were not allowed. Additionally, debtor sought to deduct $415.00 on line 59. This includes wife’s monthly recreational expenses, loan repayment to family, tax prep fees and $200.00 per month to help an adult daughter. These are to be actual expenses. None of these qualified, except for the tax preparation expenses as analyzed by the Court.
Digest By:Â Jan Hamilton, Trustee
BELOW THE LINE DEBTOR MUST RUN 36 MONTHS
In re Pohl, Case No. 06-41236
May 2007, Judge Karlin
The Court determined that a below the line debtor’s case must “run†36 months, unless it pays off all claims in full, citing 1325(b)(4). Below the line disposable income determined by Schedule J, since the bottom half of B22C does not get filled out by a BMI debtor. ACP is temporal and not a multiplier. Judge Karlin cited, with approval, Judge Somers’ decision, In re Daniel and Judge Berger’s decisions, In re Beckerle and In re Anderson on the ACP issue.
Source: Â Jan Hamilton, Trustee
Will you qualify for chapter 7 bankruptcy after Halloween?
Bankruptcy income guidelines will change effective with cases filed on or after November 1, 2009. For one, two and three person households, the amount increases slightly. For four person households the amount decreases.
Here are the new Kansas figures:
The figures are updated by the U.S. Trustee Program using data from the U.S. Census Bureau for median income based upon family size.
The U.S. Census Bureau is delaying release of its updated numbers for family median income which are used to the bankruptcy means test. The new figures are now expected to be released on posted to the U.S. Trustee Program website by October 9, 2009, and will apply to bankruptcy petitions filed on or after November 1, 2009.
Updated family income figures are scheduled to by posted to the U.S. Trustee program website the week of September 28, 2009. The new figures will apply to bankruptcy petitions filed on or after October 12, 2009. The figures are used on the means test to determine the debtor’s projected disposable income.
We will post the new figures as soon as they are available. There is speculation the numbers might decrease due to the economic downturn. Here are the current Kansas numbers.
Here is an income tax calculator from the Internal Revenue Service. Remember, this doesn’t include Social Security (7.65% or 15.3% if self-employed), Medicare, or state income tax. The IRS website includes a section for itemizing deductions.
The allowable deductions for living expenses on the bankruptcy means test adjust for cases filed on or after March 15, 2009. You can view the allowances, some of which are national standards and some of which are local standards, on the website for the U.S. Trustee. See your bankruptcy attorney for application of the allowances to your situation.
The Kansas median income has increased giving debtors a raise on the bankruptcy means test for cases filed on or after March 15, 2009. The new figures by family size are:
* Add $6,900 for each individual in excess of 4.
