FOBB: U.S. Supreme Court to decide Means Test Issue, In re: Lanning by Gregory A. Holbus, Esq.
Friday, November 6th, 2009
"So I says to Greg..."
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Gregory A. Holbus, Esq. is a Green Bay, Wisconsin-based bankruptcy attorney licensed to practice in both Wisconsin and Michigan. To learn more about Greg, you can visit his website (www.holbuslaw.com) or his blog (wisconsinbankruptcy.blogspot.com).
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Greg Holbus, Esq.
U.S. Supreme Court to decide Means Test Issue, In re: Lanning
Before I get to the heart of the story, allow me to give you a quick refresher about the Means Test and what it means for a bankruptcy petitioner.
To grossly over-simplify the Means Test, it is basically Congress’ attempt to create a mathematical formula to objectively determine how much money, if any, a debtor can afford to pay to creditors holding unsecured claims. It (Form B22) determines whether you qualify for a Chapter 7, in which all of your unsecured creditors are discharged. And if you don’t qualify for Chapter 7, the same form determines how much income is available to those creditors.
A number of statutory deficiencies exist which have given rise to disputes and some bizarre interpretations to several aspects of the Means Test, often resulting in gross inequities. One example is whether a Chapter 13 debtor can take deductions on the Means Test for payments on a secured debt which the debtor intends to surrender because the payments are contractually due at the time of filing. In re: Dionne, in the Eastern District of Wisconsin says they can. I feel awkward writing about that decision because for one thing – this decision is favorable to debtors, and I am a debtors’ counsel. Also, I have nothing but respect for the judge who rendered the decision.
But I respectfully disagree that a debtor should be allowed to deduct payments on a loan that the debtor knows full well they will not pay again in the future. Fortunately for me, (more…)
