Source: https://lundinonchapter13.com/Content/Section/95.1
Timestamp: 2019-10-18 21:21:34
Document Index: 212530597

Matched Legal Cases: ['§ 95', '§ 95', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 475', '§ 95', '§ 476', '§ 95', '§ 477', '§ 95', '§ 95', '§ 472', '§ 94', '§ 474', '§ 95', '§ 95', '§ 380', '§ 36', '§ 380', '§ 36', '§ 707', '§ 707', '§ 707', '§ 707', '§ 707', '§ 1325', '§ 707', '§ 1325', '§ 707', '§ 707', '§ 1325', '§ 707', '§ 707', '§ 707', '§ 1325', '§ 707', '§ 1325', '§ 707', '§ 707', '§ 707']

§ 95.1 In General
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 95.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
To determine “amounts reasonably necessary to be expended—” for a Chapter 13 debtor with CMI greater than applicable median family income,1 CMI is “reduced” by the “monthly expenses” described in § 707(b)(2)(A)(ii)(I). Subclause (I) of clause (ii) of § 707(b)(2)(A) contains no less than 10 separate kinds of monthly expenses that are allowed to reduce CMI for a Chapter 13 debtor with CMI greater than applicable median family income. Three of the 10 kinds of allowed monthly expenses are “standard” amounts specified by the IRS.2 One of the IRS Standards contains 16 additional categories of expenses that may be allowed as reductions of CMI.3 Seven other kinds of monthly expenses are separately stated in sentences or subclauses of § 707(b)(2)(A)(ii).4 There are “netting” issues5 and problems accounting for spouses6 throughout the monthly expense allowances in § 707(b)(2)(A)(ii).
The many classes and categories of monthly expenses that are allowable as “amounts reasonably necessary to be expended—” to reduce CMI for a Chapter 13 debtor with CMI greater than applicable median family income are discussed by type and statutory origin below.7 These reductions of CMI are claimed by a Chapter 13 debtor with CMI greater than applicable median family income on Official Form B22C.8 Some of the monthly expenses described in the statute are difficult to find in Official Form B22C; some of the monthly expenses allowed by the statute seem to be missing altogether from Official Form B22C; and other monthly expenses allowed by the statute are altered by the instructions and configuration of Official Form B22C.9 To take full and accurate advantage of the monthly expenses defined to be “amounts reasonably necessary to be expended—” by § 707(b)(2)(A)(ii), debtor’s counsel should consider modifications to Official Form B22C.
2 See the National Standards in § 475.1 [ National Standards ] § 95.2 National Standards; the Local Standards in § 476.1 [ Local Standards: Housing and Transportation ] § 95.3 Local Standards: Housing and Transportation; and the categories of Other Necessary Expenses in § 477.1 [ Other [Necessary] Expenses—In General; All Categories ] § 95.4 Other [Necessary] Expenses—In General; All Categories.
4 See discussion beginning at § 95.21 Health and Disability Insurance.
5 See § 472.1 [ Netting Issues, Including Exclusion of Payments for Debts ] § 94.2 Netting Issues, Including Exclusion of Payments for Debts.
7 See §§ 474.1 [ In General ] § 95.1 In General and 484.1 [ Home Energy Costs ] § 95.27 Home Energy Costs.
8 See Lines 24–59 of Official Form B22C, discussed in § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21 Form 122C-2: Disposable Income Calculation.
9 See § 380.1 [ Form B22C: Disposable Income Calculation ] § 36.21 Form 122C-2: Disposable Income Calculation.
Dow Chem. Employees Credit Union v. Collins, No. 10-14611, 2011 WL 2746210 (E.D. Mich. July 14, 2011) (Ludington) ("Maintenance" and "support" are not defined in Code, but $300 monthly cigarette expense and $300 recreation expense were not per se unreasonable.).
In re Vest, No. 12-42342-JJR13, 2013 WL 3781508, at *1 (Bankr. N.D. Ala. July 18, 2013) (unpublished) (Robinson) (Per se rule in the Eastern Division of the Northern District of Alabama: "expenses for tobacco may never be taken as a deduction on Schedule J.").
In re Chavez, No. 07-60567-13, 2007 WL 3023145 (Bankr. D. Mont. Oct. 11, 2007) (Debtors cannot claim household size that includes child no longer living with debtors; adjusting family size increases monthly disposable income.).
In re Plumb, 373 B.R. 429, 437-38 (Bankr. W.D.N.C. Mar. 16, 2007) (Acknowledging ambiguous and inconsistent use of "family size" and "households" in Code and Forms, to determine amounts allowed by National Standards and Local Standards, "family size" includes expanded definition of family in § 707(b)(2)(A)(ii)(II)—including children, grandchildren and great-grandchildren—but does not include fiancé living in household but not related to debtors. "[W]hat is specifically at issue in this case is what number Congress intends above-median income debtors to use . . . to enter the National Standard allowance for Allowable Living Expenses and the Local Standard allowance for housing and utilities . . . based on the applicable 'family size.' . . . Section 707(b)(2)(A)(ii) . . . limits those deductions to expenses for 'the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent.' . . . In contrast, Lines 24 and 25A of Form B22C specifically instruct debtors to calculate the relevant expense based on applicable 'family size' rather than number of dependents, which clearly conflicts with the language in the statute. However, in this instance, the court defers to Form B22C because of the specificity of the instructions on the form and because it recognizes the actual living situation of many families. . . . [T]o calculate the Allowable Living Expense and housing and utilities . . . based on family size is appropriate given . . . that Form B22C requires debtors to take into consideration regular contributions to their household expense on Line 7 when calculating current monthly income. . . . [I]t is clear from Form B22C that Congress did not intend to limit the 'family size' on Lines 24 and 25A to the dependents of the debtors. Congress specifically so limited the expense deductions on Line 37 of Form B22C. . . . Section 707(b)(2)(A)(ii)(II) refers to household member and family member alternatively. . . . Thus, it appears Congress and the drafters of Form B22C meant two separate things by 'household size' and 'family size.' And Congress essentially defined family in the parenthetical in § 707(b)(2)(A)(ii)(II) as including 'parent, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a dependent.' . . . Consequently, for purposes of this case, the court finds that the debtors are required to calculate the expenses on Lines 24 and 25A for their applicable family size. Based on the definition of family in § 707(b)(2)(A)(ii)(II), the debtors' applicable family size would include themselves and the seven children, grandchildren, and great-grandchildren . . . but would exclude the fiancé.").
In re Napier, No. 06-02464-JW, 2006 WL 4128358, at *1-*2 (Bankr. D.S.C. Sept. 18, 2006) (unpublished) (For purposes of § 707(b)(2)(A)(ii) debtors cannot increase expenses by including boarders who live in the debtor's residence but are not dependents. "Though the language in § 707(b)(2)(A)(ii)(I) is awkwardly worded, it indicates that the expenses must relate to dependents of Debtors in order to allow Debtors to increase their applicable means test deductions. . . . Though § 1325(b)(3) makes reference to members of a debtor's household for purposes of determining whether to apply the means test in a chapter 13, it must be read in conjunction with § 707(b)(2)(A)(ii)(I), which allows expenses only associated with a debtor, his spouse, and dependents. . . . Furthermore, in this Court's view, additional expenses incurred in boarding non-dependents are not 'reasonable' or 'necessary,' as required by § 1325(b)(3).").
In re Farrar-Johnson, 353 B.R. 224, 228-29 (Bankr. N.D. Ill. Sept. 15, 2006) ("BAPCPA ushered in a new calculation of 'disposable income' for some debtors, one designed to make the determination for those debtors 'formulaic.' . . . '[A]mounts reasonably necessary' are determined differently if the debtor's current monthly income exceeds the median income in the debtor's home state. . . . Under section 707(b)(2)(A), . . . the expenses are drawn, not from the debtor's Schedule J, but from certain Internal Revenue Service standards. . . . For an above-median debtor . . . expenses must be calculated under section 707(b)(2); what the debtor lists as expenses on his Schedule J, outrageous or not, is beside the point. . . . Allowing Schedule J back into the disposable income equation, as the trustee urges, would undo what Congress sought to accomplish in section 1325(b)(3). One of the aims of the means test was to limit judicial involvement—and so judicial discretion—by making mechanical the determination of abuse under section 707(b).").
In re Demonica, 345 B.R. 895, 902 (Bankr. N.D. Ill. July 31, 2006) (Because § 707(b)(2)(A) sometimes refers to "actual monthly expenses" and other times to "applicable monthly expenses," the debtor's actual monthly expenses are relevant only for those categories specified as other necessary expenses by the IRS; in contrast, a debtor with CMI greater than applicable median family income is allowed to deduct "the full amounts listed in the National and Local Standards for the categories of expenses that fall within those standards." A debtor can deduct entire housing allowance in Local Standards but cannot claim additional expenses based upon actual mortgage or rent unless actual additional expenses are allowed by some other provision of § 707(b)(2)(A) or (B). Debtor not liable for mortgage on home in which he resides and not liable on note for vehicle that he drives can still deduct housing expense and vehicle ownership expense allowances in Local Standards.).
Baxter v. Johnson (In re Johnson), 346 B.R. 256, 268 (Bankr. S.D. Ga. July 21, 2006) ("Because the Code now defines 'reasonable necessary expenses' mechanically (at least for above-median income debtors), my authority to inquire into a debtor's deductions is limited to those categories of deductions that explicitly require a showing that the expenses are actual, or necessary and reasonable. All deductions defined as Other Necessary Expenses require such a showing.").
In re Fuller, 346 B.R. 472, 484-85 (Bankr. S.D. Ill. June 21, 2006) ("Under new § 1325(b)(3), above-median income debtors may not deduct from their income their actual expenses. Rather, they must use the specific, standardized dollar amounts listed in certain IRS publications. . . . [F]or an above-median income debtor, the allowed expense deductions for purposes of calculating 'projected disposable income' should, in fact, be those expenses deducted on Form B22C—not the actual expected expenses listed on Schedule J.").
In re Renicker, 342 B.R. 304, 309-10 (Bankr. W.D. Mo. May 15, 2006) (When CMI is greater than applicable median family income, expense side of disposable income calculation is based on Schedule J, not Form B22C; debtors can exceed allowances in § 707(b)(2)(A) by showing special circumstances with documentation under § 707(b)(2)(B). Debtors moved from Missouri to Colorado shortly before Chapter 13 petition. Schedules I and J yielded disposable income of $1,158. Form B22C included mortgage expense for a home in Missouri that the debtors no longer owned and showed disposable income of $20.88. "[T]he calculation of projected expenses under § 707(b)(2)(A) and (B) does not directly implicate CMI . . . . Section 1325(b)(2) states that 'disposable income' means current monthly income . . . less amounts reasonably 'to be expended . . . for the maintenance or support of the debtor or a dependent of the debtor.' And this language is repeated in § 1325(b)(3)'s directive to calculate the 'amounts reasonably necessary to be expended under paragraph (2) . . . in accordance with' § 707(b)(2)(A) and (B). Thus, the plain language of § 1325(b)(2) unambiguously indicates that prospective—not historical—expenses are to be used to calculate disposable income. In Schedule J, the Debtors indicate that the amount to be expended for rent in their new home in Colorado is $1,445. However, that expense exceeds the $898 I.R.S. housing allowance, incorporated by reference in § 707(b)(2)(A)(ii)(I). So, before the Debtors' excess rental expense of $547 . . . can be deducted from the Debtors' CMI, the Court must determine the appropriate standard for evaluating expense in excess of the standard deductions in § 707(b)(2)(A) . . . . Under § 707(b)(2)(B), . . . stripped of its references to the presumption of abuse . . . debtors who demonstrate 'special circumstances' may deduct 'additional expenses . . . for which there is no reasonable alternative.' In order to demonstrate special circumstances, a debtor must itemize each additional expense, provide 'documentation' for such expense, and provide 'a detailed explanation of the special circumstances that make such expenses . . . necessary and reasonable.' . . . [T]he Debtors' failure to submit any documentation in support of their extraordinary expenses relieves the Court from having to develop, possibly from whole cloth, a detailed definition of 'special circumstances,' or to distinguish between 'reasonably necessary' and 'necessary and reasonable.'").