Central District Consumer Bankruptcy Attorney's Association

Opinion attached.
Hale
Jon Hayes
Sent: Sunday, January 25, 2009 9:03 AM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] New 9th Circuit Opinion re CMI
Blausey v. U.S. Trustee (In re Blausey), ---- F. 3d ----, 2008 WL ----
Issue: Are receipts from a private disability insurance
policy "income" for CMI purposes?
Holding: Yes, even though the receipts are not income under the
IRC.
Direct appeal from bankruptcy court, Alan Jaroslovsky
Per curiam, dissent from Judge Gorsuch
The debtor was receiving $4,000 per month from a private disability policy
she had previously purchased. "[T]hey did not include these benefits in
their calculation of CMI." The UST moved to dismiss under 707(b)(1) or
(b)(2). Including the income caused the debtors to fail means test. The
bankruptcy judge granted the UST motion and the case was dismissed. The
court then certified the matter for direct appeal to the court of appeals.
The court of appeals affirmed. "The Blauseys' chief argument is that
`income' in the definition of CMI should be interpreted as consistent with
`gross income' as defined in the Internal Revenue Code." "The plain
language of the Bankruptcy Code, however, does not support this
interpretation." "The phrase `without regard to whether such income is
taxable income' in 11 U.S.C. 101(10A)(A) reflects Congress' judgment that
the Internal Revenue Code's method of determining taxable income does not
apply to the Bankruptcy Code's calculation of CMI." "In addition, the
statute specifically excludes certain payments, such as Social Security
payments and payments to victims of war crimes and terrorism, from CMI. 11
U.S.C. 101(10A) (B). The general rule of statutory construction is that
the enumeration of specific exclusions from the operation of a statute is an
indication that the statute should apply to all cases not specifically
excluded." The debtors also argued that various dictionaries established
that income does not include these benefits. The court rejected those
arguments. "The purpose of the means test is to `help the courts determine
who can and who cannot repay their debts and, perhaps most importantly, how
much they can afford to pay."
The dissent dealt with whether the debtors had properly perfected their
direct appeal to the court of appeals. When the bankruptcy judge certified
the direct appeal, the debtors were required to file "a petition requesting
permission to appeal" within 10 days which they did not do but which the
majority was prepared to
ignore.
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Blausey v. U.S. Trustee (In re Blausey), ---- F. 3d ----, 2008 WL ----
Issue: Are receipts from a private disability insurance
policy "income" for CMI purposes?
Holding: Yes, even though the receipts are not income under the
IRC.
Direct appeal from bankruptcy court, Alan Jaroslovsky
Per curiam, dissent from Judge Gorsuch
The debtor was receiving $4,000 per month from a private disability
policy she had previously purchased. "[T]hey did not include these
benefits in their calculation of CMI." The UST moved to dismiss
under 707(b)(1) or (b)(2). Including the income caused the debtors
to fail means test. The bankruptcy judge granted the UST motion and
the case was dismissed. The court then certified the matter for
direct appeal to the court of appeals.
The court of appeals affirmed. "The Blauseys' chief argument is
that `income' in the definition of CMI should be interpreted as
consistent with `gross income' as defined in the Internal Revenue
Code." "The plain language of the Bankruptcy Code, however, does not
support this interpretation." "The phrase `without regard to whether
such income is taxable income' in 11 U.S.C. 101(10A)(A) reflects
Congress' judgment that the Internal Revenue Code's method of
determining taxable income does not apply to the Bankruptcy Code's
calculation of CMI." "In addition, the statute specifically excludes
certain payments, such as Social Security payments and payments to
victims of war crimes and terrorism, from CMI. 11 U.S.C. 101(10A)
(B). The general rule of statutory construction is that the
enumeration of specific exclusions from the operation of a statute is
an indication that the statute should apply to all cases not
specifically excluded." The debtors also argued that various
dictionaries established that income does not include these
benefits. The court rejected those arguments. "The purpose of the
means test is to `help the courts determine who can and who cannot
repay their debts and, perhaps most importantly, how much they can
afford to pay."
The dissent dealt with whether the debtors had properly perfected
their direct appeal to the court of appeals. When the bankruptcy
judge certified the direct appeal, the debtors were required to
file "a petition requesting permission to appeal" within 10 days
which they did not do but which the majority was prepared to
ignore.

The post was migrated from Yahoo.