United States Court of Appeals

For the First Circuit

No. 08-9007

IN RE GLEN H. RUDLER,

Debtor.

_____________________

PHOEBE MORSE, United States Trustee,

Appellant,

v.

GLEN H. RUDLER,

Appellee.

APPEAL FROM THE BANKRUPTCY APPELLATE PANEL

OF THE FIRST CIRCUIT

Before

 Lynch, Chief Judge,

 Boudin and Lipez, Circuit Judges.

Teal Luthy Miller, with whom Phoebe Morse, United States

Trustee for the Districts of Maine, Massachusetts, New Hampshire

and Rhode Island; Ramona D. Elliott and P. Matthew Sutko, Executive

Office for United States Trustees, U.S. Department of Justice;

Geraldine Karonis and Ann Marie Dirsa, Office of the United States

Trustee, District of New Hampshire; Gregory G. Katsas, Assistant

Attorney General; and William Kanter, Attorney, Appellate Staff,

Civil Division, were on brief, for appellant.

Scott W. LaPointe, with whom Brown & LaPointe, P.A. was on

brief, for appellee. 

August 5, 2009
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LIPEZ, Circuit Judge. This bankruptcy appeal requires us

to resolve a question of statutory construction that has divided

bankruptcy courts and has not yet been addressed by any other

circuit: whether the means test for identifying an abusive Chapter

7 petition allows a debtor to deduct from his income the

installment payments due for property he plans to surrender in the

bankruptcy. See 11 U.S.C. § 707(b)(2). Both the bankruptcy court

and the Bankruptcy Appellate Panel ("BAP") held that such a

deduction is permitted because, at the time the disposable income

calculation is performed, such payments remain – in the words of

the statute – "scheduled as contractually due." We agree, and

therefore affirm.

I.

A. Applicable Law

The Bankruptcy Abuse Prevention and Consumer Protection

Act of 2005 ("BAPCPA") was enacted in response to an upward trend

in consumer bankruptcy filings and concerns that bankruptcy relief

was "too readily available" and "sometimes used as a first resort,

rather than a last resort." H.R. Rep. No. 109-31(I), at 4 (2005),

reprinted in 2005 U.S.C.C.A.N. 88, 90. Of particular concern was

the pursuit of Chapter 7 liquidations instead of Chapter 13 debt

repayment plans by consumer debtors who could afford to repay some

of their debts. See 151 Cong. Rec. S2459, 2468-70 (daily ed. Mar.
Chapter 13 debtors commit their projected disposable income 1

to repaying creditors and receive a less comprehensive discharge of

their debts than would be granted under Chapter 7. See Marrama v.

Citizens Bank of Mass. (In re Marrama), 430 F.3d 474, 481 (1st Cir.

2005) (contrasting "chapter 7 debt-liquidation cases" with "the

less debtor-friendly, debt restructuring chapter 13 regime"); see

also 11 U.S.C. §§ 1325(b)(1), (b)(4)(A)(ii)(I).

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10, 2005) (Statement of Sen. Hatch); In re Hardacre, 338 B.R. 718,

720 (Bankr. N.D. Tex. 2006) (citing 151 Cong. Rec. at 2469-70).1

The BAPCA was designed to lessen the resort to Chapter 7

filings by, among other measures, amending section 707(b) of the

Bankruptcy Code to relax the standard for dismissing a Chapter 7

case as abusive. See, e.g., In re King, No. 08-41975, 2009 WL

62252, at *3 (Bankr. E.D. Tex. Jan. 6, 2009). Previously, a

showing of "substantial abuse" was required, and "[t]here was a

presumption in favor of granting the relief sought by the debtor."

Id. As amended by the BAPCA, section 707(b) drops the qualifying

word "substantial," permitting a bankruptcy court to dismiss a

Chapter 7 proceeding brought by an individual debtor who has mostly

consumer debts "if [the court] finds that the granting of relief

would be an abuse." 11 U.S.C. § 707(b)(1). In order to "ensure

that debtors repay creditors the maximum they can afford," the

BAPCPA established a mathematical formula, known as a "means test,"

by which some Chapter 7 cases are deemed presumptively abusive.

See H.R. Rep. No. 109-31(I), at 1, reprinted in 2005 U.S.C.C.A.N.

at 89 (describing the "income/expense screening mechanism" as

"[t]he heart of the bill's consumer bankruptcy reforms"); 11 U.S.C.
 Abuse also may be shown under subsection (b)(3)(B) based on 2

the totality of the debtor's financial circumstances. See 11

U.S.C. § 707(b)(3). Only the means test is at issue here.

 The five-year time period "corresponds to the maximum term 3

of a case under Chapter 13 of the Bankruptcy Code." In re Randle,

358 B.R. 360, 361 (Bankr. N.D. Ill. 2006), aff'd, Randle v. Neary

(In re Randle), No. 07 C 631, 2007 WL 2668727 (N.D. Ill. Jul. 20,

2007).

 The debtor is given the opportunity to rebut the presumption 4

of abuse by showing that "special circumstances," such as a serious

medical condition or active duty military service, justify an

income adjustment or additional expenses. 11 U.S.C.

§ 707(b)(2)(B)(i). The possibility of special circumstances has

not been raised in this case.

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§ 707(b)(1), (2); see also Ross-Tousey v. Neary (In re RossTousey), 549 F.3d 1148, 1151 (7th Cir. 2008) ("The purpose of the

means test is to distinguish between debtors who can repay a

portion of their debts and debtors who cannot."). 

2

Only those debtors whose monthly income exceeds the state

median for their family size are subject to means testing. 11

U.S.C. § 707(b)(7). The formula calculates the debtor's average

monthly disposable income, over a sixty-month period, by deducting 3

statutorily prescribed expenses from current monthly income. See

id. at § 702(b)(2)(A)(ii)-(iv). If the resulting income figure

exceeds a threshold amount specified in the statute – $167 per

month at the time relevant here – the bankruptcy case is

presumptively abusive. 11 U.S.C. § 707(b)(2)(A)(i). Upon motion 4

by the United States Trustee, the bankruptcy court may either
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dismiss such a case or, with the debtor's consent, convert it into

a Chapter 13 proceeding. 11 U.S.C. § 707(b)(1).

The deductible expenses under the means test include

standard living expenses prescribed by the Internal Revenue

Service, see, e.g., id. at § 707(b)(2)(A)(ii)(I); certain

"reasonably necessary" actual expenses (such as for health and

disability insurance), id.; and other actual expenses up to a

maximum allowable deduction (for example, expenses for the

education of a minor child "not to exceed" $1650 per year), id. at

§ 707(b)(2)(A)(ii)(IV). At issue here is the allowable deduction

"on account of secured debts," such as mortgage or car payments.

Id. at § 707(b)(2)(A)(iii)(I). The critical language describes the

deductible amount of such debts to be "the total of all amounts

scheduled as contractually due to secured creditors in each month

of the 60 months following the date of the petition," divided by
 Section 707(b)(2)(A)(iii) states in full: 5

(iii) The debtor's average monthly payments on account of

secured debts shall be calculated as the sum of–

(I) the total of all amounts scheduled as

contractually due to secured creditors in each month of

the 60 months following the date of the petition; and

(II) any additional payments to secured creditors

necessary for the debtor, in filing a plan under chapter

13 of this title, to maintain possession of the debtor's

primary residence, motor vehicle, or other property

necessary for the support of the debtor and the debtor's

dependents, that serves as collateral for secured debts;

divided by 60. 

 Form B22A is a six-page form that asks the debtor to 6

calculate, inter alia, his current monthly income and the total

deductions allowed under section 707(b)(2). Subpart C of the

Deductions section inquires about future payments on secured debts

and states, in relevant part:

Future payments on secured claims. For each of your

debts that is secured by an interest in property that you

own, list the name of [the] creditor, identify the

property securing the debt, and state the Average Monthly

Payment. The Average Monthly Payment is the total of all

amounts contractually due to each Secured Creditor in the

60 months following the filing of the bankruptcy case,

divided by 60. Mortgage debts should include payments of

taxes and insurance required by the mortgage.

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60. Id. The resulting amount is the debtor's average monthly 5

expense for secured debt.

Debtors submit their calculations under the means test on

Form B22A ("Chapter 7 Statement of Current Monthly Income and

Means-Test Calculation"), one of the documents a debtor must file

with a Chapter 7 bankruptcy petition. See 11 U.S.C.

§ 707(b)(2)(C); Fed. R. Bankr. P. 1007(b)(4). Debtors also must 6
Part VI of the form, labeled "Determination of § 707(b)(2)

Presumption," asks the debtor to subtract his total of allowable

deductions from his calculation of "Current monthly income for §

707(b)(2)." After completing that "means test" calculation, the

debtor is directed to check the appropriate box on the front of the

form indicating whether the presumption of abuse does, or does not,

arise.

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file "a schedule of current income and current expenditures," known

as Schedules I and J, respectively, and a Statement of Intention

that discloses plans to retain or surrender the properties that are

securing the debts listed on a separate schedule of assets and

liabilities. See 11 U.S.C. § 521(a)(1)(B)(ii); id. at §

521(a)(2)(A); Fed. R. Bankr. P. 1007(b)(1), (2).

The type of dispute that underlies this case arises when

a debtor announces an intention to surrender certain property –

here, a house that secures two mortgages – but includes future

mortgage payments in calculating the amount of secured debt to be

deducted from monthly income on Form B22A. Given that the property

will be surrendered and the mortgage will no longer be paid, the

question is whether such payments are "scheduled as contractually

due . . . in each month of the 60 months following the date of the

petition."

B. Factual Background

Appellee Glen H. Rudler filed a Chapter 7 bankruptcy

petition in August 2006. Since his monthly income at the time of

the filing exceeded the applicable state median for his family

size, Rudler was subject to the means test to determine if his
 Rudler actually deducted both the housing allowance and his 7

mortgage debt, which is clearly impermissible. Accordingly, his

disposable income amount needs to be revised regardless of the

treatment of his mortgage debt.

 This calculation, which is undisputed by the parties, 8

reflects a $162 deduction for Chapter 13 administrative expenses,

which would be allowed as an offset if Rudler were required to file

under Chapter 13 rather than Chapter 7. 

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bankruptcy case should be categorized as presumptively abusive. In

a Statement of Intention, Rudler reported that he intended to

surrender his home, which was secured by two mortgages with a

combined monthly payment of approximately $4,000. Despite his

plans to give up the house, Rudler deducted the $4,000 in mortgage

payments when calculating his monthly disposable income on Form

B22A. That calculation produced a monthly disposable income of

negative $2,376, avoiding the presumption of abuse.

If Rudler were unable to deduct the mortgages, he instead

could claim a statutorily prescribed housing allowance of $1,439.7

In that event, his monthly disposable income under the formula

would be $1,461, far in excess of the $167 monthly amount that

triggers the presumption of abuse. Based on these figures, the 8

United States Trustee moved under section 707(b)(1) to dismiss

Rudler's Chapter 7 case as abusive, arguing that Rudler should not

have included the mortgage debt in his calculation of secured debt

because he intended to surrender the property and, consequently,

would not be making payments on the mortgages.
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The bankruptcy court denied the motion to dismiss,

concluding that Rudler was entitled to deduct the mortgage payments

under the means test notwithstanding his intention to surrender the

property. The Trustee appealed the decision to the Bankruptcy

Appellate Panel ("BAP") for the First Circuit, which affirmed. The

BAP held that the means test calculation is meant to be "a 'snapshot' of the debtor's situation as of the petition date," rather

than a "'forward-looking'" consideration of "only those payments

that will actually be made." In re Rudler, 388 B.R. 433, 438

(B.A.P. 1st Cir. 2008). On appeal to this court, the Trustee

reiterates her contention that section 707(b)(2) does not permit a

debtor to deduct payments on debts secured by property the debtor

intends to surrender.

II.

We briefly address the threshold issue of whether we have

jurisdiction to review the BAP's decision. Circuit courts have

jurisdiction over "all final decisions, judgments, orders, and

decrees" issued by a bankruptcy appellate panel on appeal from a

bankruptcy court. 28 U.S.C. § 158(d)(1). To be final, "a

bankruptcy order need not resolve all of the issues in the

proceeding, but it must finally dispose of all the issues

pertaining to a discrete dispute within the larger proceeding."

Perry v. First Citizens Fed. Credit Union (In re Perry), 391 F.3d

282, 285 (1st Cir. 2004). "'Finality' is given a flexible
 The Eighth and Third Circuits explicitly held that orders 9

denying trustee motions to dismiss are sufficiently final to permit

review by the court of appeals, while the Seventh and Fifth Circuit

cases involved appeals of district court reversals of bankruptcy

courts' denials of such a motion (i.e., district court judgments

that would result in conversion to Chapter 13 or dismissals for

abuse). In Ross-Tousey, however, the Seventh Circuit additionally

characterized the bankruptcy court's denial of the motion to

dismiss as final because that "decision resolved all of the

contested issues on the merits and left only the [ministerial act

of] distribution of estate assets to be completed." 549 F.3d at

1153. 

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interpretation in bankruptcy" because "bankruptcy cases typically

involve numerous controversies bearing only a slight relationship

to each other." In re Northwood Props., LLC, 509 F.3d 15, 21 (1st

Cir. 2007) (quotation marks and citation omitted); see also RossTousey, 549 F.3d at 1152 ("Finality does not require the

termination of the entire bankruptcy proceeding; rather, an

adjudication by the bankruptcy court 'is definitive because it

cannot be affected by the resolution of any other issue in the

proceeding, and therefore no purpose would be served by postponing

the appeal to the proceeding's conclusion.'") (quoting In re

Oakley, 344 F.3d 709, 711 (7th Cir. 2003)).

Four circuits, addressing an earlier version of section

707(b), have characterized orders on motions to dismiss for abuse

as final. See Ross-Tousey, 549 F.3d at 1153; In re Cortez, 457

F.3d 448, 453-54 (5th Cir. 2006); Stuart v. Koch (In re Koch), 109

F.3d 1285, 1288 (8th Cir. 1997); Matter of Christian, 804 F.2d 46,

47-48 (3d Cir. 1986). We also are persuaded that, at least where 9
 The Eleventh Circuit in Donovan concluded that a bankruptcy 10

court's order denying a motion to dismiss, which was affirmed by

the district court, was not final because the court's action "did

not conclusively resolve the bankruptcy case as a whole, nor did

the court resolve any adversary proceeding or claim." 532 F.3d at

1137.

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the dispute at issue turns on a question of law, it is appropriate

to treat such orders as final under the amended version of section

707(b)(2). But see Barben v. Donovan (In re Donovan), 532 F.3d

1134, 1137 (11th Cir. 2008) (holding that an order denying a motion

to dismiss a Chapter 7 case for substantial abuse, under the

earlier version of section 707(b), was not appealable).10

This case involves only the purely legal question of

whether secured debts may be deducted under section 707(b) if the

secured property will be surrendered as part of the bankruptcy

proceedings. Further development of the case will shed no new

light on that issue. Delaying consideration of the question,

however, may frustrate both principles of judicial economy and

Congress's goal of ensuring that debtors allocate as much of their

resources as possible toward repaying their debts. See Koch, 109

F.3d at 1288 ("Requiring trustees to complete Chapter 7 proceedings

before appealing denial of their § 707(b) motions wastes debtor

resources that should be used to pay creditors, and forces trustees

and bankruptcy courts to expend their scarce institutional

resources on abusive Chapter 7 petitioners."); see also id. (noting

that, if such an order cannot be appealed, "bankruptcy proceedings
 Under section 704(b)(2), the United States trustee's motion 11

to dismiss must be made within thirty days from the time the

trustee files an initial statement on whether the case is presumed

abusive, see 11 U.S.C. § 704(b)(1)(A), and the initial statement

must be submitted within ten days of the meeting of the creditors.

Id. The creditors' meeting ordinarily must be held "no fewer than

20 and no more than 40 days" after the date of a voluntary Chapter

7 petition. See Fed. R. Bankr. P. 2003 (specifying that twenty-day

period, but allowing the trustee to set a later date "if there is

a motion to dismiss the case"); 11 U.S.C. § 301(b). Similarly,

Bankruptcy Rule 1017(e)(1), which applies to "any party in

interest" as well as the trustee, see 11 U.S.C. § 707(b)(1),

provides that a motion to dismiss for abuse may be filed "only

within 60 days after the first date set for the meeting of

creditors," unless the bankruptcy court extends that period for

cause. Fed. R. Bankr. P. 1017(e)(1). These various provisions

ensure that motions under section 707(b) are made early in the

bankruptcy case and mean that, as here, the issue of abuse will be

finally resolved by the bankruptcy court's order on those motions.

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must 'be completed before it can be determined whether they were

proper in the first place.'" (quoting Christian, 804 F.2d at 48)).

Moreover, motions to dismiss for abuse under section

707(b) are subject to statutory deadlines, presumably foreclosing

renewed requests for dismissal as the Chapter 7 case proceeds.11

Thus, from a pragmatic standpoint, the "discrete dispute" over a

debtor's abuse of Chapter 7 will be finally resolved when a court

denies a motion to dismiss under section 707(b) and, consequently,

an immediate appeal of the ruling will not interfere with further

action on the issue by the lower courts.

We therefore proceed to address the deductibility of

secured debts on property that will be surrendered. Our review is

de novo. Marrama, 430 F.3d at 477 (holding that, on an appeal from
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a BAP decision, the appeals court reviews the bankruptcy court's

legal rulings de novo).

III.

In arguing her view of section 707(b)(2)(A)(iii)(I), the

Trustee relies heavily on Congress's purpose in enacting the

BAPCPA, i.e., to ensure that individuals who are able to repay a

portion of their debts do so. However, we must defer our

consideration of Congressional intent because our examination of

the statute must begin "where all such inquiries must begin: with

the language of the statute itself." United States v. Ron Pair

Enters., Inc., 489 U.S. 235, 241 (1989); Stornawaye Fin. Corp. v.

Hill (In re Hill), 562 F.3d 29, 32 (1st Cir. 2009). If the

statute's 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,

540 U.S. 526, 534 (2004) (quoting Hartford Underwriters Ins. Co. v.

Union Planters Bank, N.A., 530 U.S. 1, 6 (2000)); Ron Pair, 489

U.S. at 242. We thus look first to the specific language at issue,

which defines deductible secured debt as amounts that are

"scheduled as contractually due to secured creditors in each of the

60 months following the date of the petition." Unless that

language is ambiguous, we consider Congress's intent only to be

certain that the statute's plain meaning does not lead to "absurd"

results. Lamie, 540 U.S. at 534.
 We do not address here the construction of section 12

707(b)(2)(A)(iii)(I) in the context of a Chapter 13 case. See

Norwood-Hill, 403 B.R. at 910 (explaining that "a distinct

analysis" of the provision must be undertaken in Chapter 7 and 13

cases because "there are different considerations with respect to

how issues arising under these respective chapters are handled");

see also 11 U.S.C. § 1325(b)(3) (referencing section 707(b)(2) for

the calculation of disposable income for above-median debtors in a

Chapter 13 case). Thus, the Seventh Circuit's recent decision

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A. Statutory Language

Although the precedent runs both ways, the vast majority

of bankruptcy courts to consider the issue have concluded that the

plain language of section 707(b)(2) permits a Chapter 7 debtor to

deduct payments on a secured debt even when the debtor plans to

surrender the collateral underlying that debt. See, e.g., In re

Norwood-Hill, 403 B.R. 905, 910 (Bankr. M.D. Fla. 2009); In re

Crawley, No. 08-14419-SSM, 2009 WL 902359, at *3 (Bankr. E.D. Va.

Feb. 23, 2009); In re Hayes, 376 B.R. 55, 63 (Bankr. D. Mass.

2007); In re Hartwick, 359 B.R. 16, 19-20 (Bankr. D.N.H. 2007);

Randle, 358 B.R. at 363-64; In re Sorrell, 359 B.R. 167, 186

(Bankr. S.D. Ohio 2007); In re Haar, 360 B.R. 759, 766-67 (Bankr.

N.D. Ohio 2007); In re Chang, No. 07-50484-ASW, 2007 WL 3034679, at

*3 (Bankr. N.D. Cal. Oct. 16, 2007); In re Walker, No. 05-15010-

WHD, 2006 WL 1314125, at *4 (Bankr. N.D. Ga. May 1, 2006). But

see, e.g., In re Naut, No. 07-20280REF, 2008 WL 191297, at *8

(Bankr. E.D. Pa. Jan. 22, 2008); In re Harris, 353 B.R. 304, 309-

310 (Bankr. E.D. Okla. 2006); In re Skaggs, 349 B.R. 594, 599-600

(Bankr. E.D. Mo. 2006). The courts have focused in particular on 12
briefly discussing the provision's language in the context of a

Chapter 13 proceeding, see In re Turner, No. 08-2163, 2009 WL

2136867 (7th Cir. Jul. 20, 2009), which was called to our attention

by counsel for the Trustee, is not directly applicable here. 

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two aspects of the text: the significance of the phrase "scheduled

as contractually due" and the forward-looking nature of the

reference to the period "following the date of the petition." See,

e.g., Hayes, 376 B.R. at 61-64; Haar, 360 B.R. at 764-66.

The Trustee asserts that, read in combination, the two

phrases call for a projection of the actual payments the debtor

will make on secured debts after the bankruptcy proceedings have

ended. She emphasizes that, in many cases, nothing remains

"contractually due" after a debtor surrenders the collateral

securing a debt and points out that, even if a deficiency payment

is owed, "the remaining liability is not 'contractually due to [a]

secured creditor,' as required by the statute." We turn to an

evaluation of these arguments.

1. "Scheduled as Contractually Due"

At the time a debtor files a bankruptcy petition and

completes Form B22A, which includes the means test calculation and

the inquiry about secured debts that are "scheduled as

contractually due," see supra note 6, the debtor will not yet have

given up any secured property identified for surrender in his or

her Statement of Intention. Thus, even if the debtor plans to

surrender a house on which he is paying a mortgage, he will at that
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point still have "contractually due" payments that are "scheduled"

to be paid during the upcoming months. This is so whether or not

the debtor has already defaulted on the mortgage by failing to make

such payments in previous months because the fact of default does

not release him from the ongoing obligation. See Randle, 358 B.R.

at 365 ("[T]he debtor must fill out Form B22A as of the petition

date, and on that date her mortgage payments were 'due' under the

contract whether the debtor planned to make them in the future or

not.").

The instructions on Form B22A confirm that the debtor is

expected to provide current information for all secured debt. It

identifies the "Future payments on secured claims" that must be

listed on Line 42, pursuant to section 707(b)(2)(A)(iii), as

follows:

For each of your debts that is secured by an

interest in property that you own, list the

name of [the] creditor, identify the property

securing the debt, and state the Average

Monthly Payment. The Average Monthly Payment

is the total of all amounts contractually due

to each Secured Creditor in the 60 months

following the filing of the bankruptcy case,

divided by 60.

(Emphasis added.) The form, like the statute itself, asks in the

present tense for a list of debts secured by property. The list is

not limited to debts on property the debtor plans to retain, nor

does it exclude debts that recently have gone unpaid. The

statutory provision is stated comprehensively, asking for the total
 The court in Randle emphatically observed: 13

Here, the plain language of § 707(b)(2)(A)(iii) says that

the debtor "shall" deduct the amounts "scheduled as

contractually due in each month of the 60 months

following the date of the petition." It does not say

that the debtor can deduct this amount only if she

intends to keep the collateral post-petition. It does

not say that the debtor can deduct this amount only if

she intends to continue making the payments due postpetition. And it does not refer to the debtor's

Statement of Intention with respect to the collateral.

The provision requires the court to consider only the

amounts due under the contract itself.

358 B.R. at 362-63.

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of all payments scheduled during the five-year period, without

reference to whether other documents filed in connection with the

bankruptcy show that the payments are likely to stop during that

period. See, e.g., Hartwick, 359 B.R. at 19; Randle, 358 B.R. at

363. In sum, any debt that "is secured" is covered by the 13

statute's inquiry.

The Trustee argues that "reading the phrase 'scheduled as

contractually due' to include all current contractual obligations

fails to give independent meaning to the words 'scheduled as.'" If

that is what Congress meant, she asserts, it could simply have

defined the relevant payments as those "contractually due . . .

following the date of the petition." To give effect to the

separate term "scheduled as," she maintains that the statute must

be read as asking for a forward-looking assessment of whether the

payments actually will be made.
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The word "scheduled," however, does not connote the

confirmation of payments to be made that the Trustee ascribes to

it. Indeed, it implies the contrary recognition that such

payments, although "scheduled," may in fact not be made; otherwise,

the request would more logically have been for information about

all payments that will be made to creditors during the targeted

sixty-month period, or all payments the debtor expects or intends

to make during that time frame. See Walker, 2006 WL 1314125, at *4

(noting that the word "scheduled" "implies the possibility that the

payments may not be made as required under the contract"). As

other courts have observed, if Congress had sought to exclude

secured debt on properties the debtor has stated an intention to

surrender, "it could easily have said so." Randle, 358 B.R. at

363; see also, e.g., Hartwick, 359 B.R. at 19; Walker, 2006 WL

1314125, at *4 (noting that "Congress could have specified that the

payments to be deducted are only those payments to be made on

secured debts that the debtor intends to reaffirm"). Congress's

"choice of language shows a clear intent not to impose any such

limit on debtors." Randle, 358 B.R. at 363.

The Trustee points out fairly that, under this

interpretation, the term "scheduled as" appears to play no role in

defining the payments covered by section 707(b)(2)(A)(iii)(I). The

same result would be achieved by referring only to payments that

were, at the time of the bankruptcy filing, "contractually due."
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Still, we fail to see how that apparent surplusage warrants

limiting the words "scheduled as" – which are stated in the present

tense – to only those payments that will be made in the future.

See Lamie, 540 U.S. at 536 ("Surplusage does not always produce

ambiguity and our preference for avoiding surplusage constructions

is not absolute."). Although our construction of the statutory

language cannot turn on the language of Form B22A – the official

document on which debtors must report their means test calculations

– we think it worth noting that the phrase "scheduled as" is

omitted from the form's instructions for calculating secured debt.

See supra note 6 & p. 17. The absence of that language may reflect

a recognition by those tasked with creating the document that the

term adds nothing to the inquiry.

The Trustee alternatively argues that "scheduled as"

must be construed in the specific context of the Bankruptcy Code,

where the word "schedule" and the phrase "scheduled as" are used as

terms of art. This argument invokes a debate in the cases that

address section 707(b)(2)(A)(iii)(I) between "two main interpretive

camps" – one concluding that the word "scheduled" refers to a debt

being listed on the debtor's formal bankruptcy "schedules," and the

other adopting "the common, dictionary-defined meaning of

'scheduled' as 'planned for a certain date.'" Hayes, 376 B.R. at

61; see also Haar, 360 B.R. at 764-65; Skaggs, 349 B.R. at 599.

The Trustee argues here that the Code refers to claims or debts
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being "scheduled as" due if the debt is properly listed on a

debtor's bankruptcy schedules, and she asserts that "scheduled as

contractually due" should thus be limited to those contractual

obligations "properly listed on a bankruptcy schedule because the

debtor intends to honor them."

The primary problem with this argument, as recognized in

Hayes and other cases cited therein, see 376 B.R. at 62, is that

section 707(b)(2)(A)(iii)(I) does not refer directly to any

bankruptcy schedules, and there is no schedule that asks a debtor

to identify obligations that are "contractually due" at the time of

the petition, but that may be resolved through surrender of the

collateral. See id.; see also Sorrell, 359 B.R. at 185 ("[A]

debtor's statement of intention is not a schedule."); Randle, 358

B.R. at 365; In re Nockerts, 357 B.R. 497, 502 (Bankr. E.D. Wis.

2006) (noting that, when describing the bankruptcy schedules,

Congress "include[s] in the statute a reference to the schedules,

either directly by name or indirectly by reference to § 521, the

provision that requires the debtor to file bankruptcy schedules").

Moreover, to the extent that appearance on a "schedule" is a

prerequisite for including a debt in the means test calculation,

Schedule J, which lists the debtor's expenses as of the petition

date, could be expected – as in this case – to include any mortgage

payments due at that time, without regard for the debtor's future

intentions with respect to the underlying property. See Randle,
 In Naut, however, the court relied on the fact that the 14

debtor had not included the disputed mortgage debt on his Schedule

J, concluding that "debts must be included on a debtor's Schedule

J to be deducted from income through the means test." 2008 WL

191297, at *8. We need not address whether listing a debt on

Schedule J is a statutory prerequisite for the deduction. Rudler's

mortgage debts were listed on both Schedule D ("Creditors Holding

Secured Claims") and Schedule J ("Current Expenditures of

Individual Debtor").

In another variation, the court in In re Singletary, 354 B.R.

455, 467 (Bankr. S.D. Tex. 2006), concluded that "scheduled" refers

to a debt being listed on the debtors' official schedules, but

rejected the Trustee's argument that declaring an intent to

surrender collateral was enough to make the debt no longer

scheduled for purposes of section 707(b)(2)(A)(iii)(I). The court

instead held that debts were "scheduled as contractually due"

unless, by the time a motion to dismiss for abuse was filed, the

debtor already had surrendered the collateral, id. at 469-70,

triggering an obligation to amend the debtors' schedules to reflect

the change, id. at 467. 

-21-

358 B.R. at 365 (noting that Schedule J "normally includes mortgage

and car payments due" at the time the bankruptcy petition is

filed). 

14

In addition, the Code uses the word "scheduled" in two

places in the dictionary-definition sense to refer to "scheduled

payments," making an ordinary construction of the term a

possibility in this context as well. See Hayes, 376 B.R. at 61-62

(citing, as an example, 11 U.S.C. § 1326(a)(1)(B), which provides

that a debtor "shall make pre-confirmation payments 'scheduled in

a lease of personal property directly to the lessor'"). Hence, the

Code's other uses of "scheduled" or "scheduled as" fail to

illuminate the meaning of the term here, giving us no reason to
-22-

depart from the provision's plain meaning, i.e., that the debtor

may deduct all payments owed at the time of the bankruptcy filing.

The "scheduled as" language may not be construed in

isolation, however, Hayes, 376 B.R. at 63, and we therefore

consider whether the other critical statutory language points to a

different outcome.

2. "[F]ollowing the date of the petition"

The Trustee argues that Congress, in using the word

"following," contemplated a projection of future expenses – i.e.,

expenses that will exist "following" the bankruptcy proceedings –

rather than a snapshot of current expenses. Again, however, that

interpretation is not supported by the words themselves, which are

forward-looking only in the sense that the required current

calculation is for debts that are scheduled into the future. See

Hayes, 376 B.R. at 63 (noting that the provision is "'forwardlooking' in the sense that it takes into account payments" required

in the future, but that "it is clear from the plain language of the

provision that this determination is to be made at the time the

petition is filed"); Haar, 360 B.R. at 766. The Trustee attempts

to change this plain meaning by analogy, asserting that other

deductions allowed by the means test are forward-looking and that

the deduction for secured debts should be treated consistently with

the treatment of such other expenses.
-23-

As the Trustee acknowledges, however, the statute sets

allowable expenses by means of several different methods, and,

"[l]ike section 707(b)(2)(A)(iii), many other provisions of the

means test appear to operate contrary to the goal of accurately

determining the amount of income that would actually be available

for payments to unsecured creditors in a Chapter 13 case." Walker,

2006 WL 1314125, at *6. For example, the starting point for the

means test, current monthly income, is calculated as the average

income earned by the debtor in the six months preceding the

bankruptcy filing. See 11 U.S.C. § 101(10A)(A); Crawley, 2009 WL

902359, at *4; Walker, 2006 WL 1314125, at *5. By the time of the

filing, the amount of actual income could be dramatically different

from the previous six-month average – for example, if the debtor

has just lost his job or secured a new one. See Hayes, 376 B.R. at

65; Walker, 2006 WL 1314123, at *5. 

Even on the expense side of the calculation, the means

test relies on standard deduction amounts for certain types of

expenses that may be "either significantly less than or greatly in

excess of the debtor's actual expenses." Walker, 2006 WL 1314123,

at *7; see also Hayes, 376 B.R. at 65; Randle, 358 B.R. at 364.

For example, the IRS has prescribed standard amounts to be used in

the means test calculation, instead of the individual debtor's

actual costs, for certain categories of expenses (food,

housekeeping supplies, and transportation). See 11 U.S.C. §
-24-

707(b)(2)(A)(ii)(I); Eugene R. Wedoff, Means Testing in the New

§ 707(B), 79 Am. Bankr. L.J. 231, 251-261 (2005). Thus, the future

inaccuracy of the snapshot-in-time approach to the expense for

secured debt does not help the Trustee's argument. See Hayes, 376

B.R. at 65 ("It cannot be fairly said, therefore, that Congress was

overly-concerned with capturing an accurate, precise financial

picture to determine whether the case would be presumed abusive.");

Randle, 358 B.R. at 364 ("Congress adopted a test for the

presumption of abuse that relies primarily on standardized

estimates of expenses, not the debtor's actual expenses."); Walker,

2006 WL 1314125, at *6 ("[M]any other provisions of the means test

appear to operate contrary to the goal of accurately determining

the amount of income that would actually be available for payments

to unsecured creditors . . . .").

3. "[O]n account of secured debt"

The Trustee also invokes a third phrase from section

707(b)(2)(A) in support of her position, arguing that the

requirement that payments be made "on account of secured debts"

excludes debts that will remain after the property serving as

collateral for them has been surrendered. She reasons that, after

title has transferred following surrender, the debtor's obligation

either will be eliminated entirely or changed into an unsecured

debt – meaning that any future payments will not be "on account of

secured debts." The Trustee asserts that the transformation of
-25-

such debts is "relevant to the debtor's monthly expenses, and thus

relevant to whether granting the debtor a chapter 7 discharge would

be an abuse." Indeed, she points out, the purpose of surrendering

collateral is to reduce monthly living expenses. See Harris, 353

B.R. at 309; In re Love, 350 B.R. 611, 614-15 (Bankr. M.D. Ala.

2006).

Other courts have closely examined the impact of a

debtor's surrender of property and whether the original contractual

obligation remains even after the debtor has defaulted on a loan.

See, e.g., Randle, 358 B.R. at 362-63; see also Rudler, 388 B.R. at

438 ("[T]hose amounts remain contractually due, regardless of

whether said payments will actually be made, whether the debtor

will reaffirm the debt, or whether the debtor will surrender the

property to the secured party."); Walker, 2006 WL 1314125, at *4,

*7. In our view, this issue is largely beside the point. The

pertinent question is not the debtor's status vis-a-vis the loan

after it is renounced, but whether the means test calculation is to

be performed coincident with the bankruptcy filing, based on thencurrent information. As we have explained, the statute as written

plainly requires such a pre-surrender calculation.

Our conclusion that the language of the statute is

unambiguous allows us to consider Congressional intent only if

literal application of the statute would lead to absurd results.

Lamie, 540 U.S. at 534; see also Ron Pair, 489 U.S. at 242
-26-

(describing the inquiry as whether "literal application . . . will

produce a result demonstrably at odds with the intentions of its

drafters") (quotation marks and citation omitted). That exception

is not triggered here. As we shall explain, a "snapshot" approach

to the deduction for secured debts fits rationally within the

statutory scheme.

B. Congressional Intent

The Trustee argues that allowing debtors to deduct only

payments they will actually make, rather than all payments

scheduled at the time of the bankruptcy filing, better serves the

purpose behind the means test because it more accurately reflects

the debtor's resources following the bankruptcy proceedings. This

argument has force – but it misses the point. There are a number

of ways Congress could have effectuated its goal of increased

debtor responsibility, and calculating projected income based on

actual anticipated expenses is unquestionably one of them.

However, based on the plain language of the statute, that is not

the approach Congress enacted into law, and we cannot rewrite the

statute simply because we think a different method of assessing

abuse would be more effective.

A test that relies on a snapshot of the debtors'

circumstances at the time of the bankruptcy filing is not an

"absurd" alternative. To the contrary, a fixed approach to the

secured debt deduction makes sense because the actual amount the
-27-

debtor will pay on secured debts in the relevant sixty-month period

is subject to a number of variables:

[A] debtor might state an intention to

reaffirm but the creditor might refuse to

agree, preferring to take the collateral back

because of the debtor's bad payment history.

Or the debtor might be able to reaffirm the

debt at a more favorable interest rate or

lower monthly payment. Or the debtor might

state an intention to redeem but later be

unable to obtain redemption financing.

Randle, 358 B.R. at 364; see also Haar, 360 B.R. at 767; Walker,

2006 WL 1314125, at *4 (noting that, after filing the statement of

intention, the debtor may decide to amend it and to reaffirm the

debt or redeem the property). Although Congress could have chosen

to give bankruptcy judges the discretion to address such

uncertainties on a case-by-case basis, there is nothing absurd

about Congress's choice to adopt a rigid formula.

A number of courts have in fact concluded that a specific

intent to limit the bankruptcy court's discretion underlies the

means test and accounts for Congress's adoption of a "'mechanical

formula' for presuming abuse of Chapter 7." Randle, 358 B.R. at

363 (citing Report of the Committee on the Judiciary, House of

Representatives, to Accompany S. 256, H.R. Rep. No. 109-31, pt. 1,

at 553, 109th Cong., 1st Sess. (2005) ("[T]he formula remains

inflexible and divorced from the debtor's actual circumstances."

(dissenting views))); see also Hayes, 376 B.R. at 65 (noting that

"the intent of Congress in creating the specific mechanics of the
-28-

means test under § 707(b)(2) appears more to have been a plan to

reduce judicial discretion on the question of whether a particular

case is presumed 'abusive'"); Hartwick, 359 B.R. at 21 ("The major

objective of Congress in adding the means test in § 707(b)(2) was

to limit judicial discretion from the process of determining abuse

by providing an objective standard for establishing a presumption

of abuse."); In re Barr, 341 B.R. 181, 185 (Bankr. M.D.N.C. 2006)

("[I]t appears that Congress intended to adopt a specific test to

be rigidly applied rather than a standard to be applied according

to the facts and circumstances of the case."); Walker, 2006 WL

1314125, at *6 ("The means test is . . . a mechanical estimate of

the debtor's abilities to fund a Chapter 13 plan and was not

intended to be a perfect indicator of ability to pay.").

Indeed, choosing the certainty of a mechanical approach

over an "actual circumstances" evaluation under section 707(b)(2)

complements the totality-of-the-circumstances inquiry prescribed by

section 707(b)(3)(B), which remains a backup option when the

Trustee is dissatisfied by the results of the means test. See,

e.g., Rudler, 388 B.R. at 439; Hartwick, 359 B.R. at 21; id. at 20

("Under the totality of the circumstances test, courts may take

into account both current and foreseeable circumstances, including

a debtor's ability to repay his debts under a chapter 13 plan.");

Singletary, 354 B.R. at 465 ("To allow a movant to include the

outcome of future events as part of the means test would eliminate
-29-

the distinction between the presumption of abuse test and the

totality of the circumstances test."). If a review of all of a

debtor's bankruptcy documents shows that the means test is too

generous, a finding of abuse may be appropriate under that

subsection. Norwood-Hill, 403 B.R. at 911 ("[A] determination that

the presumption of abuse does not arise pursuant to the means

test[] does not close the door on conversion or dismissal.");

Crawley, 2009 WL 902359, at *5 ("The fact that the debtors 'pass'

the means test does not, however, end the inquiry. . . . [T]he

case may nevertheless be dismissed as an abuse if 'the totality of

the circumstances . . . demonstrates abuse.'" (quoting 11 U.S.C. §

707(b)(3))); Hartwick, 359 B.R. at 21-22; see also Singletary, 354

B.R. at 465.

The court in Walker also observed that the BAPCPA's goals

extend beyond increasing debtors' accountability for their debts.

Still part of the Code is the longstanding objective to "provid[e]

honest debtors with a fresh start, as well as encouraging

financially responsible behavior and rehabilitation." 2006 WL

1314125, at *7; see also Susan Jensen, A Legislative History of the

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, 79

Am. Bankr. L.J. 485, 566-67 (2005) (quoting President Bush's

remarks upon signing the Act, stating that bankruptcy laws "give

those who cannot pay their debts a fresh start" and that the new

law will require those with ability to "pay back at least a portion
Indeed, the policy considerations emphasized in the 15

concurrence reinforce this outcome.

-30-

of their debts"). If section 707(b)(2)(A)(iii)(I) were interpreted

as the Trustee urges – excluding debts on property that will be

surrendered – debtors might be inclined to unwisely reaffirm such

debts to avoid triggering the presumption of abuse. Walker, 2006

WL 1314125, at *8. Although other provisions of the Code may

defeat such a strategy, see, e.g., 11 U.S.C. § 524(m) (giving the

court authority to disapprove reaffirmation agreements), the

possibility of manipulation – and the other uncertainties, noted

above, surrounding the decision to reaffirm or surrender – further

support a plain-language reading of the secured-debt deduction. A

calculation that is more generous to the debtor, but has the

advantage of certainty, is not inevitably at odds with Congress's

intent.15

IV.

We thus conclude that, in calculating monthly income

under the means test, the plain language of section

707(b)(2)(A)(iii)(I) allows debtors to deduct payments due on a

secured debt notwithstanding the debtor's intention to surrender

the collateral. That plain language is consistent with other

provisions that rely on standardized estimates of expenses rather

than the debtor's actual circumstances. The mechanical approach

avoids the uncertainties that surround a debtor's announced, but
-31-

not yet executed, plan to surrender property or reaffirm secured

debts. Hence, allowing the deduction does not produce an "absurd"

result and the plain language of section 707(b)(2)(A)(iii)(I) must

govern.

Accordingly, the judgment of the bankruptcy court is

affirmed.

So ordered.

– Concurring Opinion Follows –
-31-

LYNCH, Chief Judge, concurring in the judgment. I join

the judgment of the court affirming the bankruptcy court's

application of the means test.

The underlying problem concerns whether a bankruptcy

petition filed under chapter 7 should be converted to a chapter 13

petition (with the debtor's consent), or be dismissed, because it

is abusive. See 11 U.S.C. § 707(b)(1). Chapter 7, which

discharges the debtor's debts, is more favorable to the debtor than

chapter 13, which commits the debtor's projected disposable income

toward paying his creditors.

In the structure of the bankruptcy act, Congress provided

two different mechanisms for determining whether a chapter 7

petition is abusive. The first test, which presumes abuse if the

debtor's monthly income as calculated under the statute exceeds a

certain threshold -- here, $167 per month -- is the means test

under 11 U.S.C. § 707(b)(2)(A)(i). The second test allows the

court to consider whether the petition was filed in bad faith and

whether the "totality of the circumstances . . . of the debtor's

financial situation demonstrates abuse." Id. § 707(b)(3). Here,

the trustee argued that the chapter 7 petition was presumptively

abusive under the means test; she did not seek a finding of abuse

under the totality of the circumstances test.

The question before us is the meaning of the statutory

phrase "scheduled as contractually due," id.
-32-

§ 707(b)(2)(A)(iii)(I), as it applies to collateral which the

debtor intends to surrender at the time he files his schedules and

statement of intentions. Although the language of the statute

tends to support the debtor's position, I do not think the plain

text resolves the issue one way or the other. The word

"scheduled," even standing alone, is ambiguous. If Congress had

wanted to include all future payments regardless of the debtor's

intentions to make those payments, it could have used explicit

language to that effect. Conversely, if only those debts the

debtor intends to repay were meant to be counted, Congress could

have used language to that effect, including by referencing the

debtor's statement of intentions in the statute.

The textual ambiguity is not resolved by the rule of

construction that no statutory term should be read to be surplusage

or unnecessary. The trustee's surplusage argument does not compel

adoption of her view. The term "scheduled as" is certainly not

surplusage under the trustee's reading because the term indicates

where a court should look to determine whether a particular debt

should be counted under the means test. Likewise, the term

"scheduled as" is not necessarily surplusage under the debtor's

reading, which uses the term colloquially.

Nor is the interpretive issue resolved, for several

reasons, by the fact that the means test uses rough approximations

of certain inputs into the calculation, such as the debtor's
-33-

current monthly income or expenses for food, housekeeping supplies,

and transportation. This does not tell us whether a similar

approximation should be made for the debtor's future payments on

certain secured debts. For example, a debtor's future income may

be hard to predict for various reasons, making an approximation

based upon the debtor's recent income history the most accurate and

convenient indicator of the debtor's future income from the

information available to the bankruptcy court. But the same

accuracy and convenience factors that justify a rough approximation

of income are not present for the debtor's future payments to

secured creditors, especially because the analysis could easily be

refined by looking to the debtor's statement of intentions to

determine whether he plans to surrender the collateral securing a

particular debt. Moreover, the fact that the means test allows the

debtor to use standard deduction amounts for some expenses, such as

expenses for food, housekeeping supplies, and transportation, see

id. § 707(b)(2)(A)(ii)(I), does not mean that other inputs into the

means test should disregard the debtor's actual expenses. Indeed,

other inputs into the means test, such as the debtor's expenses in

caring for a family member, include only the debtor's actual

expenses paid. See id. § 707(b)(2)(A)(ii)(II). 

All that one can conclude with certainty is that

Congress, after balancing the occasionally competing concerns of

accuracy and convenience, intended some inputs into the means test
-34-

to be generalized approximations and others to be derived more

closely from the debtor's actual financial situation. Because

Congress's treatment of the other inputs may well have been driven

by policy considerations unique to those factors, one cannot draw

a conclusion about how Congress intended to account for a debtor's

future payments to secured creditors from the ways in which

Congress treated those other inputs.

The combination of the text, the structure of the

statute, and considerations of administrative ease of enforcement,

to my mind, provides more guidance. See Pierce v. Underwood, 487

U.S. 552, 558-60 (1988) (reviewing the language, structure, and

practical considerations to determine the meaning of the statutory

phrase "substantially justified"); In re Hannaford Bros. Co.

Customer Data Sec. Breach Litig., 564 F.3d 75, 79 n.6 (1st Cir.

2009) (rejecting an interpretation of a statute where, in addition

to the direction of the plain text, the proposed reading would have

created "serious administrability problems"); Stonawaye Fin. Corp.

v. Hill (In re Hill), 562 F.3d 29, 34-35 (1st Cir. 2009) (using the

"language, structure, and evident purpose" to understand the

meaning of the bankruptcy act). The means test -- if applied

without regard to the debtor's intentions -- becomes more

complementary to the totality of the circumstances test, which

requires more of an inquiry into a number of facts. That is,

Congress may have designed the means test as an efficient way to
-35-

weed out those for whom a quick look at their filing reveals an

ability to repay their creditors, making treatment of their

petitions under chapter 13 more appropriate. At the same time,

Congress may have intended the totality of the circumstances test

to function as a backstop to catch those whose petitions are not

presumptively abusive under the means test but for whom a closer

look at their actual financial situation shows that they have the

means to repay their creditors under chapter 13 and that they have

tried to avoid that repayment.

Moreover, this view of the means test has certain

advantages. The means test as described by the debtor may be

easier to administer than the alternative proposed by the trustee

because it requires no consideration of the debtor's intentions.

Whatever the loss in accuracy which results under this view of the

means test (usually favoring the debtor), that accuracy may be

recaptured or approximated under the alternative totality of the

circumstances test.

It is not clear that Congress focused on the problem of

how to treat secured debts under the means test where the debtor

intends to surrender the collateral. If Congress had focused on

this precise problem, it may well have adopted a different

solution. But until Congress gives us a clearer indication of its

intentions, it best fits the structure of the statute to use the

means test as a quick screening test to identify those who should
-36-

not proceed under chapter 7, reserving the totality of the

circumstances test for a more thorough consideration of the

debtor's financial situation. From the structure of the statute,

the general tendency of the language to support the debtor's

position, and the ease of administration of the means test as

described by the debtor, I conclude that Congress's intention was

that courts apply the means test without regard for the debtor's

intentions, even though many of the other interpretative guides are

inconclusive. Nothing in the legislative history leads to a

different conclusion.

I join the judgment of the court.