SUPREME COURT TO HEAR ISSUE: IN CALCULATING DISPOSABLE INCOME FOR CHAPTER 13 SHOULD COURT CONSIDER ACTUAL INCOME/EXPENSES OR LIMIT INQUIRY TO HISTORICAL FIGURES?

ISSUE: IN CALCULATING DISPOSABLE INCOME FOR CHAPTER 13 SHOULD COURT CONSIDER ACTUAL INCOME/EXPENSES OR LIMIT INQUIRY TO HISTORICAL FIGURES?

Hamilton v. Lanning
Argued: 3/22/10
No. 08-998
Court Below: 545 F.3d 1269 (10th Cir. 2008)
[Summarized by: Cameron Soran]

Full Text:
http://www.scotusblog.com/wp-content/uploads/2009/10/08-998_ca10.pdf

BANKRUPTCY (Whether when calculating the debtor’s projected disposable income during the plan period, the bankruptcy court may consider evidence suggesting that the debtor’s income or expenses are different than during
the pre-filing period)

Stephanie Lanning filed a Chapter 13 bankruptcy petition in 2006. Her income was above the median income before filing.

However, her income statement did not accurately reflect her financial situation due to a substantial “buy out” by her employer. If the court considered this aspect, then she was below the median income. The bankruptcy court decided to use the “forward looking” approach to her income since the more mechanical approach was not representative of her future income.

The Court of Appeals affirmed, ruling that the “forward looking” approach was appropriate in this instance since the alternative would call for payments that the debtor could never actually make. The Petitioner (the trustee) now argues that these determinations are contrary to the plain text of the applicable part of the bankruptcy statute and the legislative history.

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