Opinion ID: 171422
Heading Depth: 2
Heading Rank: 2

Heading: Courts adopting the forward-looking approach

Text: The first court to address the issue appears to be In re Hardacre, 338 B.R. 718 (Bankr.N.D.Tex.2006). [5] In Hardacre, the court expressed concern about the consequences when current monthly income derived from Form B22C is used as the sole determinant of the income side of the projected disposable income calculation. Id. at 722. The court reasoned that a debtor expecting a significant increase in future income would file as quickly as possible, resulting in the commitment of less money to repay unsecured creditors than the debtor would actually be capable of paying during the commitment period. Id. Conversely, the court observed that a debtor who experiences a decrease in income after filing might not be able to confirm a plan because she would be unable to commit the amount of disposable income calculated on Form B22C. Id. The Hardacre court offered three justifications in support of its conclusion that `projected disposable income' must be based upon the debtor's anticipated income during the term of the plan, not merely an average of her prepetition income. Id. First, noting the rule of statutory construction that requires a court to presume that `Congress acts intentionally when it includes particular language in one section of a statute but omits it in another,' the court reasoned that Congress must have intended `projected disposable income' to be different than `disposable income' when it chose to define only the latter term. Id. at 723 (quoting BFP v. Resolution Trust Corp., 511 U.S. 531, 537, 114 S.Ct. 1757, 128 L.Ed.2d 556 (1994)). Second, the court viewed the phrase to be received in § 1325(b)(1)(B) as an expression of congressional intent to refer to the income actually to be received by the debtor during the commitment period, rather than the prepetition average income; an alternative interpretation, the court said, would render to be received superfluous. Id. And third, the court considered § 1325(b)(1)'s prefatory languageas of the effective date of the planto be an indication that `projected disposable income'... refers to income that a debtor reasonably expects to receive during the term of her plan. Id. A number of other courts, including one circuit court recently, have applied Hardacre 's reasoning in adopting the forward-looking approach. See, e.g., Coop v. Frederickson (In re Frederickson), 545 F.3d 652, 2008 WL 4693132 (8th Cir.2008); Hildebrand v. Petro (In re Petro), 395 B.R. 369 (6th Cir. BAP 2008); Kibbe v. Sumski (In re Kibbe), 361 B.R. 302 (1st Cir.BAP2007) (per curiam); In re Watson, 366 B.R. 523 (Bankr.D.Md.2007); In re Pak, 357 B.R. 549 (Bankr.N.D.Cal.2006), aff'd, 378 B.R. 257 (9th Cir.BAP2007), abrogated by Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir.2008); In re Grady, 343 B.R. 747 (Bankr.N.D.Ga. 2006); and In re Jass, 340 B.R. 411 (Bankr.D.Utah 2006). Most courts applying this approach view Form B22C as presumptively correct regarding income. [6]