In re Quigley, No. 09-2102

Decided Mar. 7, 2012

Susan Quigley filed for Chapter 13 bankruptcy. On her Schedule B form, which inventories personal property, Quigley listed two ATVs and one Ford truck. She stated the ATVs were held as collateral on secured debts and that she would surrender them once the bankruptcy plan was in place. She also stated the truck actually belonged to an ex-boyfriend who, though Quigley had title to the vehicle, had possession and made payments on it. In making the determination of disposable monthly income to use toward repaying unsecured creditors, the district court adjusted the amount to take into account the fact that Quigley was not paying for the truck but refused to do so for the ATVs—though Quigley would be surrendering and making no more payments them—because the “court reasoned the Bankruptcy Code requires that projected disposable income be based only on expenses and income from the six-month period preceding a bankruptcy filing and that the court was statutorily precluded from considering even known changes in the Debtor’s future expenses.”

On appeal, the Fourth Circuit reversed and remanded. The Code requires a court to take in account a debtor’s “projected disposable income.” Though “projected” is undefined and the term “disposable income” specifically means past and current disposable income, the Supreme Court held in Hamilton v. Lanning—decided after both bankruptcy and district courts’ decisions—that the term “projected” be given its ordinary meaning. Therefore, the case must be remanded to reevaluate Quigley’s ability to repay unsecured creditors and there was no merit to Quigley’s argument that Lanning applied to income rather than expenses because the reasoning holds true for both determinations.

Full Opinion

-C. Alexander Cable

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