Above-Median Debtor Need Not Use Actual Monthly Rental Expense on Means Test Form to Determine Disposable Income

Above-Median Debtor Need Not Use Actual Monthly Rental Expense on Means Test Form to Determine Disposable Income

As a matter of first impression, the question before this Court is whether an above-median income earner must, on Official Form 122C-2, account for his actual monthly rent expense in calculating his net rent expense for purposes of determining his monthly disposable income.

Debtor filed his chapter 13 petition, along with the petition, Debtor filed his Official Forms 122C-1 and 122C-2, otherwise known as the Means Test. As determined by the Means Test, the applicable commitment period is 5 years and the monthly disposable income was listed as $310.20.  Additionally, Debtor filed his Uniform Plan and Motion for Valuation of Collateral which proposed sixty monthly payments in the amount of $350.00 and an estimated 4.35% dividend to the general unsecured class of creditors or $6,678.91. Finally, Debtor listed a $600.00 rental or home ownership expense on Schedule J and a monthly net income of $353.95.

Debtor amended his Schedule I and J, which indicates an increased net disposable income of $403.95. Additionally, Debtor filed an amended Means Test which lists $678.00 on Line 9a as the local standard for mortgage or rent expenses. However, on Line 9b, Debtor does not list any payments as “total average monthly payment for all mortgages and other debts secured by your home.” Thus, Debtor’s current listed “net mortgage or rent expense” on Line 9c is $678.00. As a result, Debtor’s monthly disposable income is calculated to be $82.11. Additionally, on March 19, 2018, Debtor filed an amended Uniform Plan and Motion for Valuation of Collateral (“Plan“), which proposes three monthly payments in the amount of $350.00 and fifty seven monthly payments in the amount of $400.00 with an estimated 9.24% dividend or $5,211.17 available for unsecured creditors.

This Court held a hearing on confirmation of Debtor’s Plan in which the Chapter 13 Trustee (“Trustee“) recommended confirmation. This Court questioned Debtor’s Counsel and Trustee as to whether Debtor is required to list his monthly rent on Line 9b of Form 122C-2 and ordered briefing on the issue. On May 3, 2018, Debtor and Trustee submitted a joint brief in support of confirmation, which argued that Form 122C-2 does not require Debtor to list his rent on Line 9b because it is not a mortgage or debt secured by his home.

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