In re Schuldt

527 B.R. 278, 2015 Bankr. LEXIS 801, 2015 WL 1010882
CourtUnited States Bankruptcy Court, W.D. Michigan
DecidedFebruary 13, 2015
DocketCase No. GK 14-07149-jtg
StatusPublished

This text of 527 B.R. 278 (In re Schuldt) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Schuldt, 527 B.R. 278, 2015 Bankr. LEXIS 801, 2015 WL 1010882 (Mich. 2015).

Opinion

MEMORANDUM DECISION REGARDING CONFIRMATION OF CHAPTER 13 PLAN

John T. Gregg, United States Bankruptcy Judge.

This matter comes before the court in connection with the Original Chapter 13 Plan [Dkt. No. 17] (the “Plan”) filed by Diane Marie Schuldt, the debtor in the above-captioned bankruptcy case (the “Debtor”). The court is called upon to determine whether the Debtor’s income must be both earned and received during the applicable six month period in order to constitute “current monthly income” under section 101(10A) of the Bankruptcy Code, or whether it need only be received during that period.

This issue is extremely important to determining the Debtor’s obligations in her Chapter 13 case. If the court concludes that certain compensation received but not earned during the applicable six month period should be included as current monthly income, the “applicable commitment period” under the Plan will be sixty months and the current version of the Plan cannot be confirmed. However, if such compensation should be excluded from her current monthly income because it was not earned within the applicable six month period as the Debtor contends, the applicable commitment period under the Plan will only be thirty-six months and the Plan may be confirmed as currently proposed.

For the following reasons, the court holds that the Debtor’s income need only be received, not both received and earned, during the applicable six month period. The court shall therefore deny confirmation of the Debtor’s Plan.

BACKGROUND1

The Debtor has been employed by Western Michigan University (“WMU”) for approximately thirty-four years. She receives compensation from WMU every two weeks. As with most wage payment schedules, the Debtor does not receive compensation immediately following the conclusion of the pay period during which her wages are earned. Instead, the Debt- or receives compensation one week after the conclusion of the bi-weekly pay period, which the parties characterize as a “one week hold back.”

On November 12, 2014, the Debtor filed a petition for relief under Chapter 13 of the Bankruptcy Code. As discussed below, the Debtor is required to calculate her current monthly income in order to ultimately determine the applicable commitment period of her Plan. The definition of current monthly income directs the Debtor to include all sources of income during the sixth month period ending on the last day of the calendar month preceding the petition date. In this case, the six month [280]*280period began on May 1, 2014 and ended on October 31, 2014.

On May 6, 2014 and during the applicable six month period, the Debtor received a pay check from WMU in the amount of $1,911.78, representing compensation for services she performed from April 14, 2014 through April 27, 2014. Thus, although the Debtor received this compensation during the relevant period, the compensation was actually earned prior to such period.

The Debtor filed her Plan on December 5, 2014. According to the Debtor, her current monthly income excludes the compensation she received on May 6, 2014, and is therefore less than the applicable state median income. As such, the Debtor contends that the applicable commitment period under her Plan should be thirty-six months.

At a hearing on December 3Q, 2014, Brett N. Rodgers, in his capacity as the Chapter 13 trustee (the “Trustee”), through counsel, advised the court that he disputed the means by which the Debtor had calculated her current monthly income because the Debtor failed to include the compensation she received on May 6, 2014.2 The Trustee therefore requested an opportunity for the parties to brief the issue and return for oral argument.3 After the parties timely filed briefs [Dkt. Nos. 22-23], the court conducted a final hearing on January 27, 2014.

JURISDICTION

The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(a) and 157(a). This is a core proceeding under 28 U.S.C. § 157(b)(2)(L).

DISCUSSION

As noted by numerous courts and commentators, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) has given rise to many challenging issues of statutory interpretation. The court’s undertaking in this case presents just such a challenge.

Section 101(10A) provides, in pertinent part, that “current monthly income”:

(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor’s spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on—
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(l)(B)(ii) ...

11 U.S.C. §’ 101(10A) (emphasis added).

Current monthly income plays a role in multiple aspects of a bankruptcy case.4 [281]*281First, as in this case, a debtor’s current monthly income determines how long a debtor must remain in his or her bankruptcy case (his or her applicable commitment period) if the trustee or an unsecured creditor raises an objection to confirmation of the debtor’s plan. See 11 U.S.C. § 1325(b)(1)(B); 11 U.S.C. § 1325(b)(4). If the debtor’s current monthly income, multiplied by twelve, is greater than the median family income for a family of the same size in the state in which the debtor’s case is filed, the debtor’s applicable commitment period is sixty months. See 11 U.S.C. § 1325(b)(4)(A)(ii). However, if the debt- or’s current monthly income, multiplied by twelve, falls below the median family income for the applicable state, the debt- or need only remain in his or her Chapter 13 case for thirty-six months. See 11 U.S.C. § 1325(b)(4)(A)(i).

Second, if the trustee or an unsecured creditor objects to confirmation of a debt- or’s proposed plan, current monthly income is used to determine a debtor’s “projected disposable income,” which is the amount required to be paid during the debtor’s applicable commitment period of thirty-six or sixty months. See 11 U.S.C. § 1325(b)(1)(B); 11 U.S.C. § 1325(b)(2)(A)® and (ii). Disposable income is determined by taking the current monthly income of the debtor and subtracting “amounts reasonably necessary to be expended” for the debtor’s maintenance and support, charitable contributions, and business expenses. 11 U.S.C.

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Bluebook (online)
527 B.R. 278, 2015 Bankr. LEXIS 801, 2015 WL 1010882, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-schuldt-miwb-2015.