Central District Consumer Bankruptcy Attorney's Association

This stuff is really hard.
So in my above-median income debtor, I still need to use the PDI on Form 22C
as the minimum that the unsecureds will get, and my debtor will have to pay
above and beyond that in order to pay down mortgage arrears. In other
words, we are still filling up the champagne glasses from the bottom up, or
no?
Holly Roark
CDCA
holly@roarklawoffices.com
On Mon, Jul 12, 2010 at 12:35 PM, P L wrote:
>
>
> PDI under 1325(b)(2) used in Chapter 11 and for below-median-income
> Chapter 13 debtor follows the preBAPCPA concept of calculating a plan
> payment; defining Disposable Income as reducing income by household/living
> expenses only. 1325(b)(2) does not reduce CMI by administrative, secured
> arrears and priority unsecured claims (other typical plan payment
> recipients). This "Disposable Income" is a measure of what *plan payment a
> debtor can afford*.
>
>
>
> PDI under the Chapter 7 Means Test and under 1325(b)(3) with reference to
> 707(b)(2) defines Disposable Income as reducing CMI by household/living
> expenses (albeit standardized) and also by secured arrears and priority
> unsecured claims. This "Disposable Income" is *a measure of what [general]
> unsecured creditors should receive*.
>
>
>
> Unfortunately, defining Disposable Income in two entirely different ways
> and requiring its use in one 1325(b)(1)(B) formula doesn't work.
>
>
>
> BAPCPA changed 1325(b)(1)(B) by inserting "to unsecured creditors" between
> "will be applied to make payment" and "under the plan" with the obvious
> intention that [general] unsecured creditors receive the PDI; Disposable
> Income being calculated under 1325(b)(3) and 707(b)(2).
>
>
>
> BAPCPA neglected to change the definition of Disposable Income calculated
> under 1325(b)(2) to include reductions of CMI by administrative expenses,
> secured arrears and priority unsecured claims. The absurd result of using
> this PDI in 1325(b)(1)(B) being that below-median-income debtors must pay
> all that they can afford to [general] unsecured creditors *before* any PDI
> can be used for other plan purposes.
>
>
>
> Alternatively, ignoring the addition of "to unsecured creditors" between
> "will be applied to make payment" and "under the plan" and interpreting PDI
> as a measure of what a debtor can afford to pay makes 1325(b)(3) superflous.
>
>
>
>
> Lanning's instructions to adjust PDI by foreseeable changes in income and
> expenses does not resolve the problem that the statute defines Disposable
> Income in two incompatible ways for use in the same test.
>
>
>
> Kagenveama (and the dissent in Lanning) got it right when focusing on
> 1325(b)(1)(B) using 1325(b)(3) as a calculation of what [general] unsecured
> creditors should get, if anything. Kagenveama is still applicable post
> Lanning, if 1325(b)(1)(B) PDI goes to only [general] unsecured creditors.
>
>
>
> The courts using PDI under 1325(b)(1)(B) with Disposable Income being
> calculated under 1325(b)(2) as a measure of what total monthly amount debtor
> can afford to pay also got it right. However, when applying this approach
> and using Disposable Income calculated under 1325(b)(3), these courts must
> ignore that BAPCPA's added the phrase "to unsecured creditors" to
> 1325(b)(1)(B) and must also adjust Disposable Income from a calculation of
> what [general] unsecured creditors should receive, to become a measure of
> ability to pay; this usually means ignoring Form B22C's Disposable Income
> and using Schedule I - J in its place.
>
>
> Peter M. Lively, JD/MBA
> Law Office of Peter M. Lively * Personal Financial Law Center I
> 11268 Washington Blvd, Suite 203, Culver City, CA 90230-4647
> Telephone: (310)391-2400 * (800)307-3328 * Fax: (310)391-2462
> A-Bankruptcy-Attorney.com
> Personal Financial Law Center II - Costa Mesa, CA
>
>
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>
>
>
Holly Roark
holly@roarklawoffices.com
www.roarklawoffices.com
Central District of California
Consumer Bankruptcy Attorney
This stuff is really hard.
So in my above-median income debtor, I still need to use the PDI on Form 22C as the minimum that the unsecureds will get, and my debtor will have to pay above and beyond that in order to pay down mortgage arrears. In other words, we are still filling up the champagne glasses from the bottom up, or no?
Holly Roark
CDCA
holly@roarklawoffices.com
On Mon, Jul 12, 2010 at 12:35 PM, P L
The post was migrated from Yahoo.