On Subtantial Abuse Issues in Chapter 13 Plans

The ABI's BAPCPA Blog has a few updates to the limited case law on the issue of substantial abuse issues in chapter 13 plans, read the update here.

Confusion over "disposable income" vs. "projected disposable income" was [A]ddressed in the case of Hardacre

[W]hether a debtor's "projected disposable income," which must be devoted to a Chapter 13 plan under Section 1325(b), is the same thing as the "disposable income" calculated based on the debtor's income for the six months prior to the petition date. The definition of "disposable income" used in 1325(b)(2) incorporates the term "current monthly income," which in turn is defined under Section 101(10A) based on the 6-month pre-filing period. The Hardacre court concluded that "projected disposable income" meant something different from "disposable income," and necessarily requires review of the debtor's current income at time of confirmation rather than the prepetition income.