Reconciling the Irreconcilable: Calculating a Debtor’s Projected Monthly Income Under § 1325(b) in Light of the BAPCPA Amendments

With unemployment levels soaring to record levels, bankruptcy is becoming an increasingly common occurrence, placing even more emphasis on fairness in bankruptcy proceedings. This Note addresses a provision of chapter 13 of the Bankruptcy Code that requires debt-ors to contrib-ute all of their disposable income to the chapter 13 plan. Specifically, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act added a definition of disposable income that appears to require an income calculation based on average income for the six months prior to the bankruptcy filing, which contradicts language in the rest of that section that appears to require a consideration of what the debtor’s income will actually be during the three-or-five-year partial repayment plan. Some courts ignore debtors’ actual income during the plan and require a strict adherence to the six month historical average, which has the effect of either making the plan unconfirmable or forcing debtors to pay based on income they may no longer receive. This Note ex-plores the efficacy of various treatments of the section of the Bankruptcy Code which requires such contribution of disposable income under a partial repayment plan. The author ultimately recommends that courts adopt a hybrid approach, considering the debtor’s actual income to be received during the plan period while also using the Code’s definition of current monthly income to calculate income for plan purposes.

The full text of this Note is available to download as a PDF.