Consumer debtors, ably represented by NACBA member Andrew Nemeth (Phoenix, AZ), scored an important victory in the Ninth Circuit Court of Appeals.

In Maney v. Kagenveama, the appellate court held that under the plain language of section 1325(b) disposable income for over median income debtors is determined by the section 707(b) formula incorporated in section 1325(b)(3). The court rejected the trustees' arguments that disposable income should be determined by Schedules I and J, that the formula is a "starting point", and that it is a "forward looking concept."

In a second important holding, the court ruled that if a debtor has no disposable income the applicable commitment period is irrelevant and a five year plan is not required.

The opinion in the case was written by Judge Seiler, who was sitting by designation from the 6th Circuit. The Court in its decision adopted a number of arguments contained in NACBA's amicus brief, authored by NACBA Amicus Project Director Tara Twomey and NACBA member M. Johnathan Hayes (Woodland Hills, CA). Kagenveama was brought before the 9th Circuit along with a companion case, Garcia v. Dockery, argued by NACBA member Peter Liveley (Los Angeles). The 9th Circuit has not yet issued an opinion in Garcia v. Dockery.