FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: LAURA F. KAGENVEAMA, 

Debtor.

No. 06-17083

EDWARD J. MANEY, CHAPTER 13 Bankruptcy Ct. No.

TRUSTEE,  05-28079-PHXTrustee-Appellant, CGC

v. OPINION*

LAURA F. KAGENVEAMA,

Debtor-Appellee. 

Appeal from the United States Bankruptcy Court

for the District of Arizona

Charles G. Case II, Bankruptcy Judge, Presiding

Argued and Submitted

August 17, 2007—San Francisco, California

Filed June 5, 2008

Before: Harry Pregerson, Eugene E. Siler, Jr.,** and

Carlos T. Bea, Circuit Judges.

Opinion by Judge Siler;

Partial Concurrence and Partial Dissent by Judge Bea

*This disposition is published pursuant to Ninth Circuit Rule 36-2(g),

at the request of the panel. 

**The Honorable Eugene E. Siler, Jr., Senior United States Circuit

Judge for the Sixth Circuit, sitting by designation. 

6363
COUNSEL

Ronald L. Hoffbauer, Phoenix, Arizona, for the appellant. 

Andrew S. Nemeth, Phillips & Associates, Phoenix, Arizona,

for the appellee. 

Edward Himmelfarb, Department of Justice, Washington, DC,

amicus in support of the appellant. 

M. Jonathon Hayes, Woodland Hills, California, and Tara

Twomey, National Association of Consumer Bankruptcy

Attorneys, Washington, DC, amicus in support of the appellee. 

6366 IN RE: KAGENVEAMA
OPINION

SILER, Circuit Judge:

Edward Maney, as Chapter 13 Trustee, appeals the bankruptcy court’s order confirming the plan of the debtor, Laura

Kagenveama. He argues that the bankruptcy court erred by (1)

calculating Kagenveama’s “projected disposable income” by

multiplying her “disposable income” over the “applicable

commitment period” and (2) finding the five-year “applicable

commitment period” inapplicable because Kagenveama’s

resulting “projected disposable income” was a negative number. We affirm. 

I. Background

In 2005, Kagenveama filed a petition for Chapter 13 protection in the bankruptcy court. In her filing she included the

required Schedules A through J, a Statement of Financial

Affairs, a Master Mailing List, and a Form B22C Statement

of Current Monthly Income and Calculation of Commitment

Period and Disposable Income. Schedules I and J listed

Kagenveama’s projected monthly income and expenses. Her

Schedule I listed a monthly gross income of $6,168.21, with

a monthly net income of $4,096.26. Her Schedule J listed

monthly expenses of $2,572.37. Subtracting total monthly

expenses from total monthly net income left Kagenveama

with $1,523.89 in monthly income available to pay creditors.

Kagenveama filed an amended Form B22C listing an average monthly gross income of $6,168.21 for the six months

prior to her bankruptcy petition, yielding an annual income of

$74,018.52. Because she was an above-median income

debtor, § 1325(b)(3) required her to recalculate her expenses

pursuant to § 707(b)(2). This recalculation produced a revised

Form B22C listing her “disposable income” as a negative

number: -$4.04. 

IN RE: KAGENVEAMA 6367
Kagenveama determined that her “projected disposable

income” was a negative number because her “disposable

income” was a negative number. Because her “projected disposable income” was a negative number, she would not be

subject to the “applicable commitment period.” However, she

voluntarily proposed a plan in which she would pay $1,000

per month with a commitment period of three years. This plan

yielded an estimated dividend of $9,444.38 to her unsecured

creditors. The Trustee objected because the plan extended

only three years, not the five-year “applicable commitment

period” under § 1325(b)(4)(A)(ii). The bankruptcy court held

that because Kagenveama had no “projected disposable

income,” she was not required to propose a plan with an “applicable commitment period” of five years. The Trustee

appealed, and the bankruptcy court entered an order certifying

this case for direct appeal to this court. 

II. Analysis

The parties dispute the meaning of two phrases contained

in § 1325 of the Bankruptcy Code, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of

2005 (“BAPCPA”), Pub. L. No. 109-8, 119 Stat. 23: “projected disposable income” and “applicable commitment period.” This case raises solely questions of law, which we review

de novo. In re Alsberg, 68 F.3d 312, 314 (9th Cir. 1995). 

A. “Projected Disposable Income”

The parties dispute whether “projected disposable income”

means “disposable income,” as defined by § 1325(b)(2), projected over the “applicable commitment period,” as Kagenveama contends, or whether that phrase connotes a forwardlooking concept that only uses the “disposable income” calculation as a starting point, as the Trustee contends. Based on

the plain meaning of the statute, we hold that the debtor’s

interpretation is correct. 

6368 IN RE: KAGENVEAMA
The starting point for resolving a dispute over the meaning

of a statute begins with the language of the statute itself.

United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241

(1989). Where statutory 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.”

Lamie v. United States Tr., 540 U.S. 526, 534 (2004). 

Here, each party claims that the plain text of the statute

supports its respective interpretation of projected disposable

income. Kagenveama argues that the term “disposable

income,” as used in § 1325(b)(1)(B), is specifically defined in

§ 1325(b)(2). She asserts that the word “projected” is a modifier of “disposable income” that requires multiplying “disposable income” out over the “applicable commitment period.”

The Trustee argues that “disposable income” and “projected

disposable income” are not directly linked concepts. Under

the Trustee’s approach, “projected” necessarily implies a

forward-looking concept of “disposable income,” which

would allow a court to depart from the § 1325(b)(2) “disposable income” calculation and consider other evidence to

derive “projected disposable income.” 

[1] We begin our analysis with the statute. If a trustee or

holder of an allowed unsecured claim objects to the confirmation of a plan that does not propose to pay unsecured claims

in full, the court may confirm the plan only if the plan provides that all of the debtor’s “projected disposable income”

received during the “applicable commitment period” is

applied to make payments under the plan. 11 U.S.C.

§ 1325(b)(1). “Projected disposable income” is not a defined

term in the Bankruptcy Code. However, “disposable income”

is defined in § 1325(b)(2).1 Reading the statute as requiring

1Disposable income is defined as “current monthly income received by

the debtor . . . less amounts reasonably necessary to be expended . . . .”

11 U.S.C. § 1325(b)(2). Current monthly income, as used here, is a new

term under BAPCPA defined as “the average monthly income from all

IN RE: KAGENVEAMA 6369
“disposable income,” as defined in subsection (b)(2), to be

projected out over the “applicable commitment period” to

derive the “projected disposable income” amount is the most

natural reading of the statute, and it is the one we adopt. 

[2] Courts must give meaning to every clause and word of

a statute. Negonsott v. Samuels, 507 U.S. 99, 106 (1993). Section 1325 uses the term “disposable income” in only two

places—§ 1325(b)(1)(B) (“projected disposable income”) and

§ 1325(b)(2) (defining “disposable income”). The substitution

of any data not covered by the § 1325(b)(2) definition in the

“projected disposable income” calculation would render as

surplusage the definition of “disposable income” found in

§ 1325(b)(2). There can be no reason for § 1325(b)(2) to exist

other than to define the term “disposable income” as used in

§ 1325(b)(1)(B). “If ‘disposable income’ is not linked to ‘projected disposable income’ then it is just a floating definition

with no apparent purpose.” In re Alexander, 344 B.R. 742,

749 (Bankr. E.D.N.C. 2006). The plain meaning of the word

“projected,” in and of itself, does not provide a basis for

including other data in the calculation because “projected” is

simply a modifier of the defined term “disposable income.”

Therefore, to give meaning to every word of § 1325(b), “disposable income,” as defined in § 1325(b)(2), must be “projected” in order to derive “projected disposable income.” 

[3] Furthermore, “projected disposable income” has been

linked to the “disposable income” calculation before BAPsources that the debtor receives” during the 6-month period preceding the

commencement of the case or a date upon which the current income is

determined by the court. 11 U.S.C. § 101(10A)(A). Rule 1007(b)(6) of the

Federal Rules of Bankruptcy Procedure requires a debtor to file a statement of current monthly income on Form B22C. Section 1325(b)(3)

requires that if a debtor’s annualized current monthly income is greater

than the median family income of similarly-sized households, then

“amounts reasonably necessary to be expended” are determined in accordance with § 707(b)(2). 

6370 IN RE: KAGENVEAMA
CPA. Any change in how “projected disposable income” is

calculated only reflects the changes dictated by the new “disposable income” calculation; it does not change the relationship of “projected disposable income” to “disposable income.”

2

Pre-BAPCPA, “projected disposable income” was determined

by taking the debtor’s “disposable income,” under

§ 1325(b)(2)(A) & (B), and projecting that amount over the

“applicable commitment period.” In re Anderson, 21 F.3d

355, 357 (9th Cir. 1994). 

In Anderson, a pre-BAPCPA case, the trustee objected to

the confirmation of the debtors’ Chapter 13 bankruptcy plan

because the debtors proposed to pay only their “projected disposable income” as calculated at the time of the filing of their

plan. 21 F.3d at 356. The trustee demanded that the debtors

sign a certification that they would devote to the plan all of

their actual “disposable income,” as determined by the

trustee, as a prerequisite for plan confirmation. Id. at 356-57.

The bankruptcy court denied plan confirmation because the

debtors refused to sign the certification. Id. at 357. We

reversed, holding that § 1325(b)(1)(B) requires payment of

“projected disposable income” as calculated at the time of

confirmation. Id. at 357-58. Anderson shows that, prior to the

2BAPCPA significantly changed the definition of “disposable income.”

Before BAPCPA, “disposable income” was defined as income “received

by the debtor and which is not reasonably necessary to be expended for

the maintenance or support of the debtor . . . .” 11 U.S.C. § 1325(b)(2)

(2000), amended by Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, § 102(h)(2), 119 Stat. 23. Determining what was “reasonably necessary” for the maintenance or support of the

debtor was dependent on each debtor’s individual facts and circumstances.

This amorphous standard produced determinations of a debtor’s “disposable income” that varied widely among debtors in similar circumstances.

BAPCPA replaced the old definition of what was “reasonably necessary”

with a formulaic approach for above-median debtors. 11 U.S.C.

§ 1325(b)(3). This formula significantly changed the way in which “disposable income” is calculated. However, as demonstrated in Anderson,

“disposable income” has always been linked to “projected disposable

income.” 

IN RE: KAGENVEAMA 6371
enactment of BAPCPA, courts determined the debtor’s “disposable income” and then “projected” that sum into the future

for the required duration of the plan when considering

whether to confirm the plan. Id. at 357. 

The Trustee presents two lines of authority to support his

argument that § 1325(b)(1)(B) requires a forward-looking

determination of “projected disposable income.” The first line

holds that the calculation of “ ‘projected disposable income’

must be based upon the debtor’s anticipated income during

the term of the plan, not merely an average of [the debtor’s]

prepetition income” as computed on Form B22C. In re Hardacre, 338 B.R. 718, 722 (Bankr. N.D. Tex. 2006). This

authority reasons that “projected disposable income” is not

related to “disposable income”; therefore courts are free to

arrive at a calculation of “projected disposable income” that

ignores the § 1325(b)(2) definition of “disposable income.”

Id. at 723. 

We reject this position because the plain language of

§ 1325(b) links “disposable income” to “projected disposable

income,” and we are bound by the definition of “disposable

income” provided in § 1325(b)(2)(B). Even before the enactment of BAPCPA, we held that “projected” modified “disposable income,” thus foreclosing the argument that “projected

disposable income” has no relationship to “disposable

income.” Anderson, 21 F.3d at 357. In light of Anderson, we

cannot read the word “projected” to be synonymous with the

word “anticipated” in this context. See id. “Those courts that

argue Congress intended something more when it referred to

‘projected disposable income’ in § 1325(b)(1)(B) fail to

address the fact that Congress defined ‘disposable income’

subsequently in § 1325(b)(2).” In re Miller, 361 B.R. 224,

235 (Bankr. N.D. Ala. 2007) (citing In re Rotunda, 348 B.R.

324, 331 (Bankr. N.D.N.Y. 2006)). To get from the statutorily

defined “disposable income” to “projected disposable

income,” “one simply takes the calculation . . . and does the

math.” In re Alexander, 344 B.R. at 749. 

6372 IN RE: KAGENVEAMA
The second line of cases that the Trustee urges us to follow

holds that calculation of “disposable income” under

§ 1325(b)(2) is merely a starting point for deriving “projected

disposable income.” In re Jass, 340 B.R. 411, 415 (Bankr. D.

Utah 2006). Under this line of cases, the data from Form

B22C creates a presumptively correct definition of or a rebuttable presumption of “disposable income.” Id. at 418. The

presumptively correct calculation can be rebutted or supplemented by other evidence to arrive at “projected disposable

income.” Id. Courts may consider both the future and historical finances of the debtor to make the calculation. Id. at 416.

This line of authority is unpersuasive because no text in the

Bankruptcy Code creates a presumptively correct definition of

“disposable income” subject to modification based on anticipated changes in income or expenses. In fact, the textual

changes enacted by BAPCPA compel the opposite conclusion. The revised “disposable income” test uses a formula to

determine what expenses are reasonably necessary. See 11

U.S.C. § 1325(b)(2)-(3). This approach represents a deliberate

departure from the old “disposable income” calculation,

which was bound up with the facts and circumstances of the

debtor’s financial affairs. In re Winokur, 364 B.R. 204, 206

(Bankr. E.D. Va. 2007); In re Farrar-Johnson, 353 B.R. 224,

231 (Bankr. N.D. Ill. 2006) (stating that “[e]liminating flexibility was the point: the obligations of [C]hapter 13 debtors

would be subject to clear, defined standards, no longer left to

the whim of a judicial proceeding”) (internal quotations omitted). 

Moreover, BAPCPA’s changes to the Bankruptcy Code

made it clear that Congress knows how to create a presumption. See 11 U.S.C. § 707(b)(2) (stating when the court shall

presume abuse exists). Congress could have included a presumption in § 1325(b)(1)-(2), but it did not. When Congress

includes language in one part of a statute and excludes it from

another part of the same statute, it is presumed that Congress

acted purposely in the disparate inclusion or exclusion. BarnIN RE: KAGENVEAMA 6373
hart v. Sigmon Coal Co., Inc., 534 U.S. 438, 439-40 (2002)

(citing Russello v. United States, 464 U.S. 16, 23 (1983));

Camacho v. Bridgeport Fin. Inc., 430 F.3d 1078, 1081 (9th

Cir. 2005). We decline to follow the line of cases holding that

Form B22C creates a presumptively correct definition of “disposable income.” 

[4] Finally, the disposition required by the plain text of

§ 1325(b) is not absurd. Section 1325(b)’s new approach to

calculating “disposable income” for above-median debtors

produces a less favorable result for unsecured creditors when

“disposable income” is plugged into the “projected disposable

income” calculation. We “will not override the definition and

process for calculating disposable income under § 1325(b)(2)-

(3) as being absurd simply because it leads to results that are

not aligned with the old law.” In re Alexander, 344 B.R. at

747. Furthermore, we will not de-couple “disposable income”

from the “projected disposable income” calculation simply to

arrive at a more favorable result for unsecured creditors, especially when the plain text and precedent dictate the linkage of

the two terms. See Anderson, 21 F.3d at 358 (stating that

“§ 1325(b)(1)(B) requires provision for ‘payment of all projected disposable income’ as calculated at the time of confirmation, and we reject the Trustee’s attempt to impose a

different, more burdensome requirement on the debtors’ plan

as a prerequisite to confirmation”). If the changes imposed by

BAPCPA arose from poor policy choices that produced undesirable results, it is up to Congress, not the courts, to amend

the statute. See Lamie, 540 U.S. at 542. 

[5] Furthermore, Chapter 13 trustees were aware of the

change in the law and notified Congress of their concerns

before BAPCPA was passed, but Congress failed to act. In re

Alexander, 344 B.R. at 747-48; Marianne B. Culhane &

Michaela M. White, Catching Can-Pay Debtors: Is the Means

Test the Only Way, 13 Am. Bankr. Inst. L. Rev. 665, 682

(2005). Absent any revision by Congress, we presume that it

was aware of the new result, and the decision not to amend

6374 IN RE: KAGENVEAMA
the statute was intentional. Lamie, 540 U.S. at 541. While the

new law may produce less favorable results for unsecured

creditors when applied to above-median income Chapter 13

debtors, it is far from absurd to hold that debtors with no “disposable income” have no “projected disposable income.” See

In re Alexander, 344 B.R. at 750. Furthermore, if the debtor’s

income increases after the plan is confirmed, the trustee may

seek plan modification under § 1329. 

B. “Applicable Commitment Period”

The Trustee argues that “applicable commitment period”

mandates a temporal measurement, i.e., it denotes the time by

which a debtor is obligated to pay unsecured creditors, while

Kagenveama argues that it mandates a monetary multiplier,

i.e., it is merely useful in calculating the total amount to be

repaid by a debtor. Based on the plain language of the statute,

we conclude that the Trustee’s interpretation is correct, but

that the “applicable commitment period” requirement is inapplicable to a plan submitted voluntarily by a debtor with no

“projected disposable income.” 

[6] Prior to BAPCPA, the Bankruptcy Code provided for a

three-year period. However, BAPCPA changed “three year”

to “applicable commitment,” but left the word “period”

unchanged. Based on widely accepted temporal connotation

of “period,” the bankruptcy court noted that § 1329(c) “makes

clear that ‘applicable commitment period’ has a temporal

meaning . . . .” However, the bankruptcy court went on to

observe that in this case the “applicable commitment period”

is irrelevant because it is applicable only to the payment of

“projected disposable income,” and, in this case, there is no

“projected disposable income.” The bankruptcy court also

noted that the plain language of the Code compels the conclusion that the “applicable commitment period” is not the minimum plan duration, but instead “represents the period over

which payments of projected disposable income must be

devoted to unsecured creditors.” 

IN RE: KAGENVEAMA 6375
[7] If the trustee or the holder of an allowed unsecured

claim objects to confirmation of the plan and the debtor is

unable to provide for full payment of allowed unsecured

claims, the debtor must propose a plan in which all “projected

disposable income” is submitted to make payments for the

“applicable commitment period” in order for the plan to be

confirmed. 11 U.S.C. § 1325(b)(1). The plain meaning of the

word “period” indicates a period of time. In re Alexander, 344

B.R. at 750 (citing Webster’s New World Dictionary 1004

(3d College ed. 1994)). However, “applicable commitment

period” is exclusively linked to § 1325(b)(1)(B) and the “projected disposable income” calculation. In re Alexander, 344

B.R. at 751. Thus, only “projected disposable income” is subject to the “applicable commitment period” requirement. Id.

Any money other than “projected disposable income” that the

debtor proposes to pay does not have to be paid out over the

“applicable commitment period.” Id. 

[8] There is no language in the Bankruptcy Code that

requires all plans to be held open for the “applicable commitment period.” Section 1325(b)(4) does not contain a freestanding plan length requirement; rather, its exclusive purpose

is to define “applicable commitment period” for purposes of

the § 1325(b)(1)(B) calculation. Subsection (b)(4) states “For

purposes of this subsection, the ‘applicable commitment

period’ . . . shall be . . . not less than 5 years” for abovemedian debtors. Subsection (b)(1)(B) states that “the debtor’s

‘projected disposable income’ to be received in the ‘applicable commitment period’ . . . will be applied to make payments

under the plan.” When read together, only “projected disposable income” has to be paid out over the “applicable commitment period.” When there is no “projected disposable

income,” there is no “applicable commitment period.” 

[9] Subsections (b)(2) (“disposable income”) and (b)(3)

(“amounts reasonably necessary to be expended”) exist only

to define terms relevant to the subsection (b)(1)(B) calculation. Subsection (b)(4), which defines “applicable commit6376 IN RE: KAGENVEAMA
ment period,” is no different. Aside from the definitional

subsection (b)(4), the term “applicable commitment period” is

used only once in § 1325: the court may approve the plan over

objection if all of the debtor’s “projected disposable income”

received during the “applicable commitment period” is

applied to plan payments. Thus, the “applicable commitment

period” applies only to plans that feature “projected disposable income.”

3

 Here there is none. 

A recent decision by the Eighth Circuit Bankruptcy Appellate Panel (“BAP”) supports limiting the application of the

“applicable commitment period” to plans that have “projected

disposable income.” In re Frederickson, 375 B.R. 829, 835

(2007). In Frederickson, the BAP held that “applicable commitment period” does not refer to a minimum plan duration,

but rather it refers to the time in which the debtor must pay

“projected disposable income” to the trustee. Id. Another statutory provision, § 1322(d), governs plan duration for above

median income debtors. Id. The BAP concluded that “[§]

1322(d) would be superfluous if § 1325(b)(4) set the length of

the plan.” Id. We find this reasoning persuasive. 

The Trustee suggests that we should require a five-year

plan for confirmation under § 1325 to allow an extended

period for unsecured creditors to seek modification under

§ 1329. If a debtor proposes a three-year plan, receives a discharge, and experiences an increase in income in year four,

then the debtor receives a windfall at the expense of creditors.

While this approach would promote the sound policy of

3The only other mention of the “applicable commitment period” in

Chapter 13 lends support to this position. Section 1329 references the “applicable commitment period under section 1325(b)(1)(B)” when discussing plan modification requirements. This reference shows that the

“applicable commitment period” only has meaning when applied to the

§ 1325(b)(1)(B) calculation. While reading subsection (b)(4) in isolation

may lend support to the Trustee’s position, reading it in conjunction with

subsection (b)(1)(B) shows that subsection (b)(4) governs the length of the

plan only where there is “projected disposable income.” 

IN RE: KAGENVEAMA 6377
requiring debtors to repay more of their debts, there is nothing

in the Bankruptcy Code that requires a debtor with no “projected disposable income” to propose a five-year plan. We

must enforce the plain language of the Bankruptcy Code as

written. We may not make changes to the plain language of

the Bankruptcy Code based on policy concerns because that

is the job of Congress. Nothing in the Bankruptcy Code states

that the “applicable commitment period” applies to all Chapter 13 plans. 

We stress that nothing in our opinion prevents the debtor,

the trustee, or the holder of an allowed unsecured claim to

request modification of the plan after confirmation pursuant

to § 1329. Here, we are dealing with the plan confirmation

requirements of § 1325, not plan modification under § 1329.

Another section of the Bankruptcy Code governs modification

of the plan before confirmation. 11 U.S.C. § 1323. Because

Congress directly addressed the modification of plans in other

sections, we need not transform § 1325 into a plan modification tool. 

[10] Here, the “applicable commitment period” is irrelevant

because it applies only to the payment of “projected disposable income,” and, in this case, there is no “projected disposable income.” Kagenveama’s voluntary payments come from

money other than “projected disposable income”; therefore,

there is no requirement that these payments occur for five

years. Because her “projected disposable income” was zero or

less and, therefore, the “applicable commitment period” did

not apply, the bankruptcy court properly confirmed her plan.

If her income changes in the future before completion of the

plan, the Trustee or the holder of an unallowed secured claim

may seek modification of the plan under § 1329. 

III. Conclusion

For the foregoing reasons, we AFFIRM the order of the

bankruptcy court. 

6378 IN RE: KAGENVEAMA
BEA, Circuit Judge, concurring in part and dissenting in part:

This case deals with how long a Chapter 13, “wage-earner”

debtor in bankruptcy proceedings will have to worry about

whether his unpaid creditors can bring up any good changes

in his fortunes, to get paid his debts to them. The majority

lays down a rule: So long as the debtor can calculate no “disposable income” at the time his creditor plan is confirmed, he

can rest easy. The debtor can propose as short a time period

as he wants: a day, a week or a month. I dissent because Congress pretty clearly stated his creditors should have up to five

years to keep an eye on the debtor to perhaps share in any of

his new good times. Respectfully to the majority, I think the

rule they adopt creates an incentive for the picaresque, by

encouraging a debtor to fiddle with his expenses and income

just before he presents his creditor plan for confirmation. So

long as he can push up his expenses and delay receipt of

income so as to show no “disposable income” at the time of

plan confirmation, he can propose such a short period of time

that he can save any postponed income from the creditors’

clutches. The majority’s result is not required by a close reading of the Bankruptcy Code; indeed, quite the opposite is the

correct reading. For this reason, I partially dissent from the

majority opinion. 

I concur in the majority opinion’s holding as to the calculation of “projected disposable income.” I agree projected disposable income in 11 U.S.C. § 1325(b)(1)(B) is calculated

according to § 1325(b)(2)’s statutory definition of “disposable

income”, using Form B22C—regardless the debtor’s actual

disposable income on the date of plan confirmation—and then

projected out over the “applicable commitment period.” Opinion at 6368-75. 

I also concur in the majority opinion’s holding that “applicable commitment period,” as defined in § 1325(b)(4) and

used in § 1325(b)(1)(B) provides a temporal requirement for

the length of a Chapter 13 Plan. Opinion at 6374-75. I part

IN RE: KAGENVEAMA 6379
company with the majority, however, in its determination the

applicable commitment period is mandatory only when the

debtor has projected disposable income at the time of plan

confirmation. Opinion at 6375-77. 

Section 1325(b)(1)(B) provides:

If the trustee or the holder of an allowed unsecured

claim objects to the confirmation of the plan, then

the court may not approve the plan unless, as of the

effective date of the plan . . . the plan provides that

all of the debtor’s projected disposable income to be

received in the applicable commitment period beginning on the date that the first payment is due under

the plan will be applied to make payments to unsecured creditors under the plan. 

11 U.S.C. § 1325(b)(1) & (b)(1)(B). 

The applicable commitment period—not less than 5 years

for an above median debtor, § 1325(b)(4)(A)(ii), and 3 years

for a below median debtor, § 1325(b)(4)(A)(i)—can be shortened “only if the plan provides for payment in full of all

allowed unsecured claims over a shorter period.” 11 U.S.C.

§ 1325(b)(4)(B). The majority agrees the applicable commitment provides a temporal requirement, but holds this temporal

requirement should not apply to a debtor who has no projected disposable income at the commencement of the commitment period. The language of the statute provides no such

exception. The statute requires a plan to “provide that all of

the debtor’s projected disposable income to be received in the

applicable commitment period . . . will be applied to make

payments to unsecured creditors.” 11 U.S.C. § 1325(b)(1)(B)

(emphasis added). Thus, even if a debtor’s projected disposable income is zero at the time he seeks plan confirmation, he

must commit to pay such disposable income as he receives it

—should he receive it—during the applicable commitment

period. He can make such a commitment only by proposing

6380 IN RE: KAGENVEAMA
a plan that will be in existence at that later date (or otherwise

commit to pay all he owed to unsecured creditors in a shorter

period of time). 

Although the purpose of Chapter 13 bankruptcy is to provide debtors a second chance, it is not a pardon of debt or, at

least, a pardon right away. Chapter 13 bankruptcy is a statutorily constructed second chance for debtors that, through the

plan modification procedures in § 1329, also provides a second chance for creditors to be repaid by a bankrupt debtor

whose financial situation has improved. Section 1329 specifically allows for periodic adjustments to § 1325’s disposable

income calculation. 11 U.S.C. § 1329(b) (stating § 1325’s

requirements “apply to any modification under subsection (a)

of [§ 1329].”). The applicable commitment period allows

unsecured creditors who are otherwise not receiving payment

from a debtor five years to monitor the debtor’s finances and,

in the event the debtor’s disposable income increases during

that time, file for plan modification under § 1329. Plan modification may occur only “after confirmation of the plan but

before the completion of payments under such plan,” and a

modified plan “may not provide for payments over a period

that expires after the applicable commitment period under

section 1325(b)(1)(B).” 11 U.S.C. § 1329(a), (c). 

The majority agrees that § 1329’s provision for plan modification after confirmation is the proper way for a creditor to

deal with a possible change in the debtor’s income. Opinion

at 6378. It then states that, because different sections of the

Bankruptcy Code provide for plan modification,1“we need

not transform § 1325 into a plan modification tool.” Id. The

five-year requirement of § 1325, however, is a necessary

component of plan modification. If the plan is not continued

1The majority also cites 11 U.S.C. § 1323’s provision for plan modification before plan confirmation. Opinion at 6378. Of course, this preconfirmation modification provision has no bearing on an analysis of why

Congress required a confirmed plan to last for a certain period of years.

IN RE: KAGENVEAMA 6381
for a five-year period (post-confirmation), an unsecured creditor who discovers the debtor’s finances have dramatically

improved will find that there is no extant plan to modify. 11

U.S.C. § 1329(a), (c). 

Section 1325 governs plan confirmation by providing the

requirements a plan must meet before it may be confirmed

(when an unsecured creditor or the plan trustee has objected

to confirmation of the plan). One of those plan confirmation

requirements is that a plan propose an applicable commitment

period of a certain length—for an above median income

debtor, five years—or pay all owed to unsecured creditors in

a shorter period. 11 U.S.C. § 1325(b)(4). 

The majority states the duration of an above-median debtor’s plan is governed only by § 1322(d);2

 it incorrectly states

that to hold that § 1325(b)(4)’s applicable commitment period

requirement sets the length of the plan would render

§ 1322(d) superfluous. Opinion at 6377. First, § 1322(d) sets

the maximum length of all plans and says nothing of a minimum duration. Section 1325(b)(4)’s applicable commitment

period is congruous, rather than superfluous, to § 1322(d);

section 1325(b)(4) mirrors § 1322(d)’s maximum plan length

of five years for above-median debtors, but applies only to

those plans where the plan trustee or an unsecured creditor

has objected to the plan’s confirmation, and allows for a

shorter plan period than § 1322(d)’s maximum period for

above-median debtors who propose to pay all they owe to

unsecured creditors in a shorter period of time. Further, the

majority statement that § 1325’s applicable commitment

period provides a temporal requirement for a debtor with pro2Under § 1322(d), if the debtor is an above-median debtor, “the plan

may not provide for payments over a period that is longer than 5 years.”

11 U.S.C. § 1322(d)(1). If the debtor is a below-median debtor, “the plan

may not provide for payments over a period that is longer than 3 years,

unless the court, for cause, approves a longer period, but the court may not

approve a period that is longer than 5 years.” 11 U.S.C. § 1322(d)(2). 

6382 IN RE: KAGENVEAMA
jected disposable income at the time of plan confirmation is

inconsistent with its later statement that reading § 1325 to

require a plan length would render § 1322(d)’s maximum plan

length provisions superfluous. 

Under the majority’s rule, a debtor could mischievously

“game the system” and avoid repaying debt to his unsecured

creditors by inflating his pre-plan confirmation expenses3 and

deferring income until after plan confirmation.4 That debtor

could gain confirmation of his plan with a short commitment

period and then reduce his actual expenses and accept his

deferred income. Unsecured creditors who discover the debtor’s improved financial situation would be limited to seek

3A debtor could inflate the expenses used to calculate his disposable

income. Although the IRS National Standards and Local Standards—

instead of the debtor’s actual expenditures—sets the amount for many of

an above-median income debtor’s expenses (e.g., food, clothing, housing,

and transportation), 11 U.S.C. § 707(b)(2)(A)(ii)(I), some expenses are not

fixed by such IRS standards. Specifically, the disposable income calculation deducts from the debtor’s “current monthly income” (i.e., the average

monthly income from all sources the debtor received during the 6-month

period before filing for bankruptcy, 11 U.S.C. § 101(10A)) his actual

expenditures for, among other things: charitable contributions, childcare,

dependent care, life insurance, optional telephone and telephone services,

internet service. See Form B22C, http://www.uscourts.gov/rules/

BK_Forms_08_Official/B_022C_0108v2.pdf (Every debtor files “Form

B22C” with his Chapter 13 Plan to determine whether he is an above or

below median income debtor. An above median income debtor must complete additional sections on the form to calculate his “disposable income”

based on his “current monthly income” and the expenses provided for in

11 U.S.C. § 707(b)(2). 11 U.S.C. § 1325(b)(2)-(3)). 

4Although Chapter 13 bankruptcy may be sought only by an “individual

with regular income” (i.e., an “individual whose income is sufficiently stable and regular to enable such individual to make payments under a

[Chapter 13] plan . . . .”, 11 U.S.C. § 101(30)), a debtor could defer

income until after plan confirmation the following ways: (1) the debtor

could ask his employer to defer payment of some of his expected income

until after plan confirmation, perhaps receiving such payment through a

post-confirmation bonus; or (2) the debtor could continue working at his

current job and defer accepting a higher paying job opportunity until after

plan confirmation. 

IN RE: KAGENVEAMA 6383
modification of the debtor’s plan only within the short commitment period; indeed, a short commitment period might

prevent unsecured creditors ever from receiving payment

from a crafty debtor of his unsecured debt. There are many

imaginable instances where a debtor’s financial situation will

dramatically improve after plan confirmation—either through

good fortune or clever planning. In such instances, only if a

debtor is required to keep his plan active for some period of

time (i.e., an “applicable commitment period,” which Congress set at five years for an above-median income debtor),

will unsecured creditors receive repayment of monies the

debtor owes them. 

Accordingly, I would hold that regardless whether an

above-median debtor’s projected disposable income is zero,

the debtor whose income is above-median is required to propose a five-year plan,5

 unless his plan otherwise proposes to

pay all he owes to unsecured creditors in a shorter period of

time. In the case of an above-median debtor who has no projected disposable income, at the moment of plan confirmation,

pursuant to the statutory definition of disposable income, this

temporal requirement would allow unsecured creditors to

monitor the debtor’s finances and, in the event the debtor’s

disposable income increases during the five-year period, file

for plan modification under § 1329, seek a recalculation of

projected disposable income per Form B22C, and seek to

obtain some repayment from the debtor. In the event a debtor

wished to pay 100% of his unsecured debt in less than five

years, there is no justification for requiring him to drag out the

payment process. Obviously, creditors entitled to payment in

full under the plan would rather receive such payment sooner

than later. 

In Kagenveama’s case, the fact the six-month period used

5The debtor is required to provide a plant even if the plan were to show

no payments planned to be made to unsecured creditors over the five-year

period. 

6384 IN RE: KAGENVEAMA
in calculating the original projected disposable income

yielded a zero does not mean that a different six-month

period, some time down the five-year line, will also yield a

zero. Accordingly, I would reverse the bankruptcy judge’s

order rejecting the Trustee’s objection to Kagenveama’s failure to propose a plan that either adheres to the five-year applicable commitment period or pays all she owes to unsecured

creditors in a shorter period of time.

IN RE: KAGENVEAMA 6385