1 EL ECTRONI C CI TATI ON: 2008 FE D App. 0017P (6th Cir.)

File Na me: 08b0017p.06
BA NK RU P TC Y A P P ELLA TE P AN EL OF THE SI XT H C IR CU IT
I n re: GORDON TH OMAS, J R. and DO RI S AN

N T HO MA S,
De bto rs
.

______________________________________ HENRY E. HI L DEB RAND, I I I , TRUSTEE,

Ap pe lla nt,

v. GOR DON TH OMAS, J R. and DORI S ANN THOMAS, Ap pe lle e s.

______________________________________ I n r e : ANTHO NY SH AN E J ONES and SHA NAL EE JONE S,
De bto rs
.

______________________________________ HENRY E. HI L DEB RAND, I I I , TRUSTEE,

Ap pe lla nt,

v. ANTH O N Y SH A

N E JO N E S a

n d SH A N A L EE J ONES, Ap pe lle e s.

______________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )
) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. 08-8014

No. 08-80152 Appea l from the United States B ankruptc y Court for the Middle D istrict of Tenne ssee. Ba nkruptcy Case Nos. 07-07019; 07- 06686. Argued: August 12, 2008
Dec ided and F iled: October 31, 2008
B e fo re : G REG G, Mc I VO R, a nd SHE A- STO NU M, B ank ru ptc y Ap pe llate Pane l Judg e s.

____________________ CO UN SEL
ARG UED: Henr

y E. Hildebra

nd, I I I , CHAPTER 13 TRUSTEE, Nashville, Tenn es s ee , for Appellant. J. R obert Ha

rlan, ATT ORNEY AT LAW, Columbi a, Tennessee , for Appellees. Micha el E. Ridgwa

y , E XE C UTI VE OF FI CE FOR UNI TED STATES TRUSTEE, DEPARTMENT OF J USTI CE, Washington, D.C., for Amicus Curia e. O N B RI E F: H e n r y E

. H i l d e b r a n d , III , CHAPTER 13 TRUSTEE, Nashville, Tenne s s ee, T rac y L . Schweitzer, COUNSEL TO THE T RU ST E E , N a s h v il le , T e n n e s s e e , f o r Ap p e ll a n t. J. Ro b e rt H arl an , A T T O RN E Y A T L A W, Columbi a, Tennessee , for Appellees. Be th Roberts Der rick, OFF I CE OF THE UNI TED STATES TRUSTEE, DEPARTMENT OF J USTI CE, Nashville, Tenne ssee, f or Amicus Curiae

.

____________________ OP IN ION

____________________ MA RCI B . M c I VO R, B ank

ru ptc y Ap pe llate Pane l Judg e . In th e se c on so li dat ed a pp e a ls, Henr y E. Hildebra

nd, the cha

pter 13 Tr

ustee (the “Truste e”) , appea ls the order s co nfirming the Debtors’ chapte r 1 3 p lans on the g rounds that the De btors did not commit all of their projecte d disposable income to unsecur ed cr editors under their plans. F or the re asons stated be low, the Panel aff irms in part and re verse s in part the judg ment of the ba nkruptcy court. The Panel re mands the

case s for findings of fac t on the i ssue of projec ted di sposable income consistent with this ruling and the re cent r

uling in Hi lde bran d v . P e tro ( In rePe tro ), 2008 WL4601471 (B .A.P. 6th Ci r. Oc t. 17, 2008).3 I. ISS UE ON AP P EAL The issue ra ised in this consolidated appea l is whether the bankruptcy court e rre d in holding that above- median income Debtors may claim sec ured de bt expense deductions for c ollatera l they int e nd to s ur re nd e r t hr ou g h th e ir

c ha pte r 1 3 p lans
.

II. JU RI SDI CT ION AND STANDARD OF RE VI EW Th e B ank ru ptc y Ap pe llate Pane l of the Sixth Cir c uit ha s jur isd ic tio n to dec ide thi s a pp e a l. The United States District Court for the Middle District of Te nnessee has authorized appea ls to the Pane l, a nd a fi na l or de r o f t

he ba nk ru ptc y c ourt may be a

pp e a le d a s o f r ig ht p ur su ant t o 2 8 U .S. C. § 158(a) (1). F or purpose s of appe al, a f inal order “ends t h e l i t i gat i o n on the merits and lea ves nothing for the court to do but e x ecute the judgme nt.” Mi dla nd As ph alt Cor p. v . U nite d S tates, 489 U.S. 794, 798, 109 S.Ct

. 1494, 1497 (1989) (citations and internal quotation ma rks omitted). A bankruptc y

court’s or der c onfirming a cha pter 13 plan i s a final, appea lable orde r. Tidewater Fin. Co. v . Cu rry

( In reCur ry ), 347 B.R. 596, 598 (B .A.P. 6th Ci r. 2006), aff’d , 509 F.3d 735 ( 6th Cir. 2007).

The a

ppeal of the orde rs confirming the chapte r 13 plans prese nts a question of law w hich is reviewe d de novo. First Union Mortgage Corp. v. Eubank s ( In re Eubank

s ), 219 B .R. 468, 469 (B .A.P. 6th Ci r. 1998). “ ‘De novo revie w re quires the Pane l to review que stions of law independe nt
o f th e b a nk r u p tc y court' s determination.’” Id. (c i t at i o no m i t t ed ). A b an krup t cy co u rt ’s d et erm ination of whe ther a

debtor a cted in g ood faith is a findingof fa ct which is re viewed on a ppeal f or cle ar
err or. Al t v . U

nite d S tates ( In re Al t), 30 5 F .3 d 4 13 , 4 20 (6 th C ir . 2 00 2) . F ind ing s o f f a c t “ ‘w ill on ly be cle arly

err oneous whe n, althoug h there may be some e v i d en ce to support the f inding, the revie wing court on the entire evidenc e is le ft with the definite a nd firm conviction that a mistake has been c ommitt ed.’” Id

. at 4 2 2 (q u o t i n g United States v. Latouf , 132 F.3d 320, 331 ( 6th Cir. 1997)) (additional citation and inter nal quotation marks omitted).$1,344.10 is the sum of the monthly car pay ments on the vehicle s to be surre ndere d. 1 The most rec ent ver sion of For m 22C became available in J anuar y 2008. On the update d 2 Offic ial For

m 22C, mont hly

disposable income is stated on line 59 r ather than on line 58. 4 III . F AC TS Hildebrand v. Thom as (

In re Thom as ) Debtors Go r d o nT h o ma s , Jr

. an d D o r is A n n

T h o ma s f

il e d a jo int p e ti ti o nf

o r r e li e f under chapter 1 3 o f the B ankruptc y Code on September 26, 2007. Sche dules Iand J show a combined

a ve ra g e monthl y

inc ome of

$3 ,8 86 , ave ra g e mon thl y

e xpe ns e s o f $ 2, 80 3, and

a mon thl y ne t in c ome of $1,083. The Debtors’ Schedule D lists the following sec ured c laims: 1) $28,311 held by GMAC on a 2004 Chevrole t Sil vera do; 2) $ 2 4 , 3 1 1 h el d b y GMAC on a 2005 Pontiac Gr and Am; and 3) $2 7, 00 0 h e ld b y

Natio na l Ca

r C re dit I nc . o n a 20 06 Mo nte Carlo. Th e De bto rs ind ic a te d th e ir intent to surrende r the thre e vehic les on Schedule D and in their c hapter 13 plan.

The De btors filed F orm 22C, “Chapter 13 Stateme nt of Current Mon t hly I ncome a

nd Calculation of Commitm ent Period and D isposable Income,” in acc ordanc e with 11 U.S.C. § 521

and F e d. R. B ank

r. P. 100 7( b) (6 ). B e c a

us e the ir y e arl y inc ome e xce e de d the state me dia n in c ome fo r a fam il y of fou r t

he y we re re qu ir e d, purs ua

nt t o 1 1 U .S. C. § 13 25 (b )( 2) and (3 ), to c a lc ulate disposable income in ac corda nce w ith § 707(b)(2)( A) a nd (B ). On line 47 of For

m 22C, the Debtors took de du c tio ns tot a lin g $1 ,3 44 .1 0 f or mon thl y pa y me nts on the thr e e ve hic le s th e y

int e nd e d to

surre nder. After deducting all of their expenses, the monthly disposable income a s ref

lected on line 1 58 of F or m 22 C w a s a

ne g a tiv e $468 .3 0. Th e De bto rs ’ c ha pte r 1 3 p lan p ro vid e s f

or we e kly 2 pay ments of $250 for 60 months with g ener al unsec ured c reditors re ceivingnot less than 20%.

Hildebrand v. Jones (

In re Jones ) Debtors Anthony Shane J ones and Shana L ee J ones filed a volunt ary chapte r 13 petition on September 13 , 2 0 0 7

. Sc h e d u le s Ian d

J sh o w a

c o mb in e d

a v e r a g e mo n th ly

in c o me o f

$ 5 , 087,

aver ag e monthly expenses of $3,527, and a monthly net i ncome of $1,560. Schedule D lists a debt to Ame r ic a ’ s Se r

v ic in g Co mp an y o f $ 1 2 6 , 6 8 4 , s e c u r e d b y a h o me an d lo t lo c a te d a t 5 11 Spring5

Va lle y Dr ive in C olumbi a , T e nn e sse e . The De bto rs ind ic a te d th e ir int e nt t o s ur

re nd e r t he Col umb ia proper ty on Schedule D a

nd in their cha

pter 13 plan.

The De btors’ Statement of Curr ent Monthly I ncome and Calculation of C ommitm ent Period and Disposable I

ncome, Form 22C , established that the Debtors’ annualized hous ehold income wa s above the applicable median fa mily income for

a fa mily of three in Tennesse e. On line 47 of For m 22C, the Debtors listed a $1,007 de duction for monthly mortg ag e pay

ments made to Amer ica’ s ServicingCompany

on the C olumbia proper

ty

. Their monthl y disposable i ncome reflec ted on line 58 of F orm 22C was $168.41. The D ebtors’ c hapter 13 plan provides that Mr. Jones will pay to the Trustee $200 wee kly

and Mrs. Jones will pay $321 bi-wee kly

over 60 m o n t hs (totaling approximately

$1,442 per month) with unsecur ed creditors receiving not less than a 20% dividend

on the ir c la ims

.

The Tr ustee objec ted to confirmation of both plans on the grounds that the De btors wer e not
com mittin g a ll o f t

he ir pr oje c te d d isp os a

ble inc ome to t

he pla ns a s r e qu ir e d und e r 1 1 U .S. C. § 1325(b)( 1)(B). T h e T ru s tee a rgued that the De btors should not be permitted to claim a se cure d debt expense deduction for collater al the Debtors intend to surrende r. In addition, the Trustee argued in In re J ones that the plan wa s not proposed in g ood faith. A sing le benc h decision over ruling the Tr us te e ’s ob je c tio ns wa s is su e d in

the tw o c a se s. Th e c ourt fo un d th a t th e me ans te st s e t f or th i n § 7 07 (b )( 2) (A )( iii ) w a s a me c han ica l fo rm

ula tha t c omp e lle d th e De bto rs to d e du c t amou nts schedule d as contra ctually due on secur ed debt pay ments owed as of the date the petition wa s filed, reg ardle ss of whethe r the De btors intend to surrende r the c ollater al i n the future . Confirmation

or de rs we re e nte re d in

bo th c a se s.
On appe al, the Truste e contends that the bankruptcy court erre d by finding that the Debtor s h a d a r ig h t to c la im e xp e n s e s f o r s e c u r e d d e b t p ay

me n ts w h e n th e D e b to r s w e r e s urre ndering the collater al which se cure d the debts. I t is the positi on o f t h e Trustee that a f orwa rd projec tion of expenses is r equire d when calc ulating disposable income under § 1325(b)( 2) and that only ac t ual

e xpe ns e s sh ou ld b e de du c te d. With out th e de du c tio ns fo r se c ur e d de bt pa y me nts the De bto rs wi llTh e br oa de r i ssu e of ho w p ro je c te d d isp os a

ble inc ome is c a lc ulate d und e r 1 1 U .S. C. 3 § 1325(b)( 1)(B ) is bey ond the scope of this opinion but i s the subject of a companion ca se, In re Pe tro , 2 00 8 WL

46 01 47 1 ( B .A .P. 6th

Cir . O c t. 1 7, 20 08 ) r e c e ntl y iss ue d b y the B AP. Most of the BA PCP A provisions took effe ct on Octobe r 17, 2005. 4
6 not make, the Tr

ustee c ontends that the Thomase s’ could pay u n s ec u re d cre ditors in full and the J oneses’ could pay

unsecur ed cr edit ors a dividend of 51%. I t is unclear f

rom the re cord howthe Trustee calc ulated this dividend.

IV . D ISC USS ION A. Di s p o s a b l e I n co me Th e na rr owiss ue in t

his a pp e a l re qu ir e s the Pane l to c on sid e r ho w dis po sa ble inc ome sh ou ld be ca lculated unde r 11 U.S.C. § 1325(b)(2)

. The languag e of the statute is the starting point for the 3 court’s inter

pretation. Robiner v. Danny ’s Marke ts, Inc. ( I n re Danny ’s Marke ts, Inc. ), 266 F .3d 523, 52 5 ( 6th Cir . 2 00 1) . Wh e re the statut e ’s langua g e is c le ar, “ ‘t he so le fu nc tio n o f t

he cou rts is to enfor ce it a ccor ding to its terms.’” United States v. Ron Pair Enter., I nc., 489 U.S. 235, 241, 109 S

. C t

. 1 0 2 6 , 1 0 3 0 (1 9 8 9 ) ( qu o t i n g Caminetti v. United States , 242 U.S. 470, 485, 37 S.Ct. 192, 194 (1917)) . The c ourt may

look bey ond the text of the statute only when the lang uag e is ambig uous or when, “ a litera l interpretation would lead to internal inconsistenc ies, an a bsurd result, or a

n interpre tation inconsistent with the intent of Congre ss.” Vergos v

. G r e g g ’ s E nter., Inc. , 159 F.3d 989, 990 (6th Cir. 1998). With t hese principles of st atutory construction in mind, this P anel must discer n the intent of Cong ress a s it re lates to the calc ulation of disposable income under § 1325(b)( 2) and the Debtor s’ ability

to deduct sec ured de bt pay ments for c ollatera l the Debtors intend to surr ender

.

Whil e the tw o c a se s b e fo re thi s Pa ne l are c ha

pte r 1 3 b ank

ru ptc ie s, it is im po rtant t o
un de rs tand

that th e statut e wh ic h g ive s r ise to t he surr e nd e r i ssu e is 11 U. S.C. § 70 7( b)

. On Ap ri l 20, 2005, Congr ess ena cte d t h e Bankruptcy Abuse Preve ntion and Consumer Protection Act (“B APCP A”)

. One of the primary purposes of the act wa s to create a “ means test” or mecha nical 4 fo rm u l a b y

wh i ch co u rt s co u l d

d et erm i n e w h et h er

a f i l i n g wa s p re s u m p t i v el y

an ab u s i v e f

i l i n g. Schultz v. U.S. , 529 F.3d 343, 347 (6th Cir. 2008) (“The centerpie ce of the Act is the impositi on of7

a ‘me ans test’ for

Chapter 7 f

ilers, which r equire s would-be de btors to demonstrate f inancial elig ibilit y to avoid the pre sumption t hat their b an k ru p t cy filing is an a

buse of the ba

nkruptcy proce eding s.”). The methodology of the mea

ns test i s co dified in 11 U.S.C. § 707(b)(2), which requires the debtor to de duct from c urre nt monthly income desig nated e x penses includingthe debtor’s a

vera g e monthl y p ay

ments on acc ount of secur ed debts, for purposes of de termining whether a pre sumpt i o n o f ab u se ar ises. The de btor’s ave rag e monthly secur ed debt pa

y ments are
c a lc ulate d in

a c c or da nc e wi th 1 1 U .S. C. § 70 7( b) (2 )( A) (i ii) a s f oll ow s: (iii) The de btor’s ave rag e monthly pay ments on acc ount of secur ed debts shall be c alculate d as the sum of - (I ) t he tot a l of

a ll amou nts sc he du le d a s c on tr a c tua lly du e to se c ur e d c re dit or s in

e a c h mo nth

of the 60 months fo llo wi ngthe date of the pe tition; and (I I ) any additional pay

ments to secure d cre ditors nece ssary for the de bto r, in fi lin g a pla

n un de r c ha

pte r 13 of thi s ti tle , to ma int a in possession of the debtor’s primary residenc e, motor vehic le, or other proper ty nece ssary

for the suppor

t of the debtor a

nd the debtor’ s de pe nd e nts , th a t se rv e s a s c oll a te ra l f or se c ur e d d e bts ; divided by

60.
Sho rt ly a ft e r t he e na c tme nt o f B APC PA, the iss ue of wh e the r § 70 7( b) (2 )( A) (i ii) pe rm its

c ha pte r 7 de bto rs to de du c t pay me nts fo r co llate ra l the y int e nd to s ur re nd e r c a me be fo re the c ourt s. The majority

of the c ases whic h have a ddresse d the issue in the cha pter 7 context have found that the means te st calculation under § 707(b)( 2)(A) is a mecha nical for mula that provides a sna

pshot of the de bto r’ s f

ina nc e s o n th e date the pe tit ion wa s file d. Se c ur e d de bt pay me nts may

be de du c te d if the y are ow e d o n th e pe tit ion date wi tho ut r e g ard

to t he futur e int e nt o f t he deb tor. Court s addre ssing the surrende r i ssue under chapte r 7 have overwhelmingly held that the plain languag e of the statute compe ls a conc lusion that the pos tpetition surre nder of secur ed collateral does not prevent the debtor fr om deducting the sec ured de bt expense on the means test. Se e In reBe ne de tti , 3 72 B .R. 90 (B ank r. S.D . F la . 2 00 7) ; In re Kogler , 368 B .R. 78 5 ( B ank r. W.D . Wis . 2 00 7) ; In re Hay es , 376 B .R. 55 (B ank

r. D. Ma ss. 20 07 ); In re Ke lv ie , 3 72 B .R. 56 (B ank r. D. I da ho 20 07 ); In re W

ilkins , 37 0 B .R. 81 5 ( B ank

r. C.D . Ca l. 2 00 7) ; In re Ra nd le , 3 58 B .R. 36 0 ( B ank

r. N. D. I ll . 200 6) ; In re8

Noc k e rts , 3 57 B .R. 497 (Bank r. E .D . Wis . 2 00 6) ; In re Simmons , 3 57 B R 48 0 ( B ank r. N. D. Oh io 2006).

The mea

ns test as set forth in § 707(b) (1) a nd (b)( 2) looks at i n co m e (six months of prepe tition i ncome) less expenses (fixed by ref ere nce to the I

nterna l Revenue Ser

vic e g u id e li n e s ) a

nd

arr ive s at a “d isp os a

ble inc ome ” fi g ur e fo r pur po se s of de te rm ini ngwh e the r a fi lin g is p re sumpt ive ly abusive. The case s cited above hold that the plain meaning of § 707(b)( 2)(A) (iii) compels a f inding that a c ha pte r 7 de bto r, fo r purp os e s of de te rm ini ng

wh e the r a fi lin g is a bu siv e , ma

y de du c t pa y me nts for c ollatera l a debtor intends to surr ender

.

Un fo rt un a te ly , th e qu e sti on

of wh e the r a

de bto r i n a

c ha pte r 1 3 c a se sh ou ld b e pe rm itt e d to claim a de duction for c ollatera l the debtor intends to surre nder is not so ea s i l y resolved. T he dif fi c u l t y ar i s e s b e c a

u s e t h e r e qu i r e m e n tt h a ta d e b t o r c a l c u l a t e t h e d e b t o r ’ s “ a v e r a g e m o n t h ly pay ments on acc ount of secur ed debts” applies only in the calc ulation of disposable income under the me ans te st and Con g re ss g ave no ins tr uc tio n a s to ho w to int e g rate the c ha pte r 7 “ mea ns te st” into the calculation of projected disposable incom e as set for th in § 1325(b)(1).

11 U. S.C. § 1 32 5( b) (1 ) p ro vid e s a s f oll ow s: (b)( 1) I f th e tr u s te e o r th e h o ld e r

o f ana ll o w e d

u n s e c ured claim objects to the confirmation of the plan, then the cour t may not approve the plan unless, as of the ef fec tive date of

the plan - (A) the value of

the prope rty

to be distributed un der t he plan o n a c c ount o f s uc h c la im i s n ot l e ss than the amount of suc h claim; or (B ) the plan pr ovides that all of the de btor’s p r o je c te d dis p o s a b lein come to be re ceive d in the a pp lic a ble c omm itm e nt p e ri od be g inn ingon the date that the first pay

ment i s due under

the plan will be applied to make pa

y ments to u nsecur ed cr editors under the plan. (e mphasis added)

.9

Thus, wher e the Trustee objects t o confirmation of a plan t hat proposes less than a 100% dividend to u ns e c ur e d c re dit or s, the pla n may no t be c on fi rm e d un le ss a ll o f t he de bto r’ s pr oje c te d d

isp os ab le income to b e re c e ive d o ve r t he lif e of the pla n w ill be pa id t o uns e c ur e d c re dit or s.
The phra se “pr ojected disposable income” is not explicitl y define d in the B ankruptc y Code. B e fo re the e na c tme nt o f B APC PA, “ pr oje c te d d isp os a ble inc ome ” wa s und e rs too d to be t he same
a s “ dis po sab le inc ome ” a s d e fi ne d in § 1 32 5( b) (2 ). Pr ior

to t he a me ndme nt o f 1 1 U .S. C. § 1325(b)( 2), the statute r ead:

(2) F or purpose s of thi s s ubsection, “disposable income” means income wh i ch is rece ived by the debtor a

nd which is not rea sonably

nece ssary

to be expended - (A) f or the maintena

nce or support of the de btor or a depende nt of the debtor.
Pre-B APCP A, cour

ts looked to the debtor’s sc hedules, primar ily Schedules Iand J, t o deter mine the amount available afte r deduc ting e x penses on Schedule J “re asonably nece ssary” for

the support of debtor a nd debtor’s de pendents, and arr ived at a “disposable income” fig ure which was c onsistent with “proje cted disposable income” in § 1325( b)(1) (B ). In re Lanning , 3 80 B .R. 17 , 2 0 ( B .A .P. 10 th Cir. 2007).

Th e e na c tme nt of B APC PA thr e w a lar g e monke y wr e nc h in to t

he we ll e sta

bli sh e d a nd we ll understood proc ess of deter mining projected dispos able income. BA PCP A l eft the term “pr ojected dis po sa ble inc ome ” in § 13 25 (b)( 1) (B ) b ut c re a te d a ne w d e fi nit ion

fo r “ dis po sa

ble inc ome ” in § 1325(b)( 2), which r equire s “disposable income ” to be calc ulated based on the backw ard looking

me ans te st s e t f

or th i n § 70 7( b) (2 ). 11 U. S.C. § 1 32 5( b) (2 ) a nd (3 ) a s ame nd e d und e r B APC PA state: (2 ) F or purp os e s of this su

bs e c tio n, the te rm

“ dis po sa ble income” me ans cur

rent monthly

income re ceive d by the debtor (othe r tha n c hil d s up po rt

pa y me nts , f os ter car e pa

y me nts , o r d isa

bil ity pa y me nts fo r a

de pe nd e nt ch ild ma de in ac c or da nc e wi th a

pp lic a ble nonbankruptc y law to the extent re asonably nece ssary to be expended for suc h child) less amounts re asonably nece ssary

to be expended -10 (A)( i) for the maintenanc e or suppor t of the de bto r o r a de pe nd e nt o f t he de bto r, or

fo r a do me sti c support obligation, that

f ir s t becomes pa

y able a fter the date the pe tition i s filed; and (ii) for char itable contributions (that mee t the definition of “c haritable contribution” un d er se ction 54 8( d) (3 ) t o a

qu a lif ie d r e lig iou s o r c ha

ri ta ble e nt ity or org anization (as define d in se ction 548(d)( 4)) in an amount n ot to ex cee d 15 perc ent of g ross income of the debtor for the y ear in which the contributions are made; and (B ) if the de btor is eng ag ed in business, for the pay ment of expenditures nec essary fo r the continuation, prese rvation, and ope ration of suc h bu sin e ss. (3) Amounts re asonably

nece ssary

to be expended under para g raph (2) shall be deter mined in a ccor dance with subparagraphs (A ) a nd (B ) o f s e c tio n 7 07 (b )( 2) , i f th e debtor ha s c ur re nt m on thl y income, whe n multipl ied by 12, g reater than - (A) in the c ase of a debtor in a household of 1 pe rs on , th e me dia

n f a mil y in c ome of

the a pp lic a ble State for 1 e arne r; (B ) in the ca se of a debtor in a household of 2, 3, or 4 ind ivi du a ls, the highe st m e dia n f a mil y inc ome of th e a pp lic a ble State fo r a

fa mil y of the same number or f

ewe r individuals; or (C ) in the c a se of a de bto r in a h ou se ho ld e xce e din g 4 in div idu a ls, the highe st m edi an f a mil y income of the applicable State for a fa m i l y of 4 or few er individuals, plus $52 5 p er month for ea ch individual in ex cess of

4.
Af te r B APC PA, dis po sa

ble inc ome is d e fi ne d w ithre fe re nc e to t he ba c kw ard

lo ok in g m ean s te st under § 707( b)(2) (A) a

nd (B ), while “ projec ted disposable income” clea rly contemplates a

forwa rd loo kin g ana ly sis of

the de bto r’ s in c ome and

e xpe ns e s.11

The cas e law r efle cts the diffic ulty courts have had in re concilingthe ca lculation of

“ dis po sa ble inc ome ,” wh ic h r e lie s o n th e me ans te st, wi th t he c a lc ula tio n o f “ pr oje c te d d isp os a ble income,” which re quires a forwa rd l ooking analy sis. Howeve r, recent cases have conc luded that at least for purposes of c alculating

“disposable income” under § 1325(b)( 2), there is no logica l rea son why disposable income should be c alculate d differ ently in a chapte r 13 case than it is i n a cha pter 7 case

. See e .g., In re Quigley , 391 B.R. 294 (B ankr. N .D. W. Va. 2008) (§ 1325(b)(3) does not alter the langua g e or

the a pp lic a tio n of § 7 07 (b )( 2) ); In re Rie s , 377 B.R. 777, 783-84 ( Ba nkr. D. N.H

. 2007) (Cong ress ha s directe d the bankruptcy courts to use t he same methodology under the means test to compute the disposable income for a bove median inc ome debtors in b o t h ch ap t er 7 a nd

c ha pte r 1 3 p ro c e e din g s) ; In re Burme ister , 378 B.R. 227 (B ankr. N.D. I ll. 2007) (there is no reason why the means te st should be applied diffe rently in chapter

7 and cha

pter 13 c ases)

.

Th is Pa ne l con c ur s with the de c isi on s cit e d ab ov e to the e xten t th e y fi nd that th e me ans te st is a mecha

nical, for mulaic appr oach that as applied is no diffe rent in cha pter 7 than it i s in chapter 13. The Pane l has not located a ny clea rly expressed leg islative intention that secur ed debt expenses deducte d from the mea

ns test in c hapter

7 should be diffe rent fr om secure d debt expenses deduc ted from the disposable inc ome test in chapte r 13. Ther efor e, a c hapter 13 debtor may

ded u ct, for p u rp o s es o f d et erm i n i n g disposable income under § 1325( b)(2) , pay ments for c ollatera l the debtor intends to surrende r.

Ho we ve r, thi s h old ingdo e s n ot r e so lve a ll of the iss ue s in thi s c a se
. Th e surr e nd e r i ssu e is only rele vant to a dete rmination of the De btors’ disposable income under § 1325( b)(2) . This Panel finds that disposable income must then be c ompare d to the Debtors’ projected disposable incom e , as re flec ted in Debtors’ income and e x penses a s of the ef fec tive date of

the plan, as r equire d by § 1325(b)( 1)(B ). This view is consistent wit h a grow ing body of ca se law holdingthat “proje cted disposable income” is forwa rd l ooking and m ust be base d on anticipated inc ome over the life of the plan. Se e In re Pe tro , 2 00 8 WL 46 01 47 1 ( B .A .P. 6th

Cir . O c t. 1 7, 20 08 ) (“ pr oje c te d d isp os a ble income” should be calc ulated base d on the re alities of the debtor ’s circumstances a s of conf irmation

and a s r e a so na

bly anti c ipate d to be duri ngthe le ng th o f t he pla n) ; Kib bev . S

um sk i ( In re Kibbe ), 36112

B .R. 30 2 ( B .A .P. 1s t Cir . 2 00 7) (t he te rm “ pr oje c te d dis po sa ble inc ome ” fo r be low -m e dia n in c ome de bto rs is f

or wa rd loo kin g and

re a lity ba se d) ; In re Lanning , 380 B.R. 17 (B .A.P. 10th Cir. 2007) (h old ingthe same fo r a

bo ve -m e dia

n in c ome de bto rs ); In re Liverm an , 3 8 3 B

. R

. 6 0 4 ( B an kr
. D

. N

. J. 20 08 ); In re De Tha mp le , 390 B.R. 716 (B ankr. D . Kan. 2008) ; In re Briscoe , 374 B.R. 1 (B ankr. D

. Di st. Col . 2 00 7) ; In reMc Car ty , 3 76 B .R. 81 9 ( B ank r. N. D. Oh io 2 00 7) ; In re Fuller , 346 B.R. 472 (B ank r. S.D . I ll. 20 06 ); In re Ha rd ac re , 3 38 B .R. 71 8, 72 2 ( B ank r. N. D. Te x. 20 06 ); In re Casey , 35 6 B. R. 5 19 (B ank

r. E. D. Was h. 20 06 ); but see Mane y v. Kage nveam a (

In re Kagenv eama ), 2008 WL 2485570 (9th Cir. J une 23, 2008) ( the term “ proj ec t ed disposable income” is not a forwa rd loo kin g c on c e pt) . Wh e the r a de bto r m ay

de du ct pay

me nts fo r c oll a te ra l th e de bto r i nte nd s to
surre nder is an issue that affe cts only the ca lculation of disposable income under § 1325( b)(2)

. This Panel notes that projec ted disposable in co m e under § 1325(b)( 1)(B ) will match disposable income unde r § 1325(b)(2) if the debtor’s income and expenses rema in consistent from a date six months prior

to filing throug h the ef

fec tive date of

the plan. In those ca ses, the amount of money available for unse cure d cre ditors will correl at e wi t h “monthly disposable income” as ref lected on line 58 of the For m 22C. Howeve r, whe re de btor’s income a nd expe nses have c hang ed,

as re flec ted by

debtor’s Sche dules I an d J , the amount ava ilable for unse cure d cre ditors from

“ pr oje c te d d isp os a

ble inc om e” may

be mor e or

le ss t ha n th a t r e fl e c te d in

lin e 58 of

F or m 22 C, dependingon the cha

ng ed cir cumstance s of the debtor . For exam p l e, i f t h e d ebtor’s Sche dule J ref lects a re n t al ex pense r ather than a mortg ag e pay

ment, and the plan makes no provision for pay ment of a mortg ag e, the c alculation of projected disposable incom e will not include a deduc tion for a house the de bt o r i n t en d s t o surre nder, e ven thoug h the debtor took the de duction under the means test set for

th in § 1325(b)(2).

I nt h e p re s en tco n s o l i d at edap p ea l , t h e b an krup t cy co u rt confirme d the Debtor s’ plans without an explanation as to whethe r the c ourt had consider ed b o th disposable income and projec ted disposable income . Whil e the ba nkruptcy court stated that “income a n d ex penses c alculate d for

a bo ve me dia

n d e bto rs un der §§ 1325 and 70 7( b) are larg e ly

me c ha nic a l in natur e , th ank s to Congr ess’ B APCP A amendme nts,” the dividend to unse cure d cre ditors in the Thomases’ c onfirmed13

plan does not m atch the dividend unsecure d cre ditors would rec eive if the court ha d only considere d “disposable incom e” b as ed o n t he mea ns test. Had the De btors in Thomas be e n b ound by the ir dis po sa ble inc ome sh ow n on Fo rm 22 C (a ne g a tiv e $4 68 .3 8 pe r mon th) , th e ir pla n p ay me nts wo uld have g ener ated a

0% distribution to unsecured c reditors. In fac t, the plan con fi rm ed by the bankruptc y court paid at l east a 20% di vidend to unsecur ed cr editors. In Jones , d isp os a ble inc ome ref lected on line 58 of De btors’ mea ns test would ge nerate a total dividend to unsec ured c reditors of $1 0, 10 4. 60 ($ 16 8. 40 x 60) . Sinc e the De bto rs lis te d uns e c ur e d d e bt o f $ 50 ,2 48 , th is f ig ur e is consistent with the proposed 20% dividend in the pl an confirmed by the bankruptcy court. How ever , it is uncle ar f

r o m th e r e c o r d w h e th e r th e b an kr u p tc y c o u rt c o n f

ir me d th e p la

n b a s e d s o le ly on the disposable income c alculation of § 1325(b)( 2), or whe ther the pla n was c onfirmed be cause the cour t
c on c lud e d th a t di sp os a

ble inc ome wa s c on sis te nt wi th pr oje c te d dis po sa ble inc ome a s r e fl e c te d in S c h e d u l e s Ian d J.

Th is Pa ne l hold s tha t if a tru ste e or un se c ur e d c re dit or ob je c ts t o th e pla

n, the c ourt may not confirm the pla

n if the cour

t fi n d s that debtor’s sc hedules or othe r cr edible evide nce r equire a
rea ssessment of disposable income as deter mined by the means test under § 1325(b)( 2) and ( b)(3)

. Be cause the re cord be low does not state the g rounds on which De btors’ plans we re c onfirmed a nd whether the bankr

uptcy court c onsidered pr ojected disposable income, the Pa n el i s vacating the confirmation orders a

nd rema nding the case s for the court to a ddress the Tr ustee’s obje ctions in a

manner consistent with this opi nion and In rePe tro

.

B. Good F aith Th e Tr us te e c on te nd s th a t th e De bto rs have no t pr op os e d the ir pla ns in g oo d f

a ithbe c a us e they are able to pay

their cr editors more tha

n what they are proposing

. The bankruptc y court made no specific finding s of fa ct on thi s i s s u e. I n light of our ruling with respec t to the calculation of disposable income a s it relates to the de termination of projected disposable inc ome, we w ill not

rea ch the mer its of the Trustee ’s appe al on the issue of g ood faith.14 V. CO NC LU SION For the rea sons stated in this opi nion, the decision of the ba nkruptcy court is af

firmed in par

t and re verse d in part. The or ders c onfirming the cha pter 13 plans in these consol i d ated cases a re
vacated and the c ases a

re r ema n d ed fo r p roce eding s consistent with this opi nion and with In re Pe tro

.