Projecting the Impact of Lanning and Ransom : Calculating 'Projected Disposable Income' in Chapter 13 Repayment Plans

This article considers the impact of two recent Supreme Court decisions regarding how a bankruptcy debtor calculates projected disposable income that must be dedicated to repayment of creditors in a chapter 13 case. Though the Supreme Court decisions seem consistent in that both reject a “formulaic” approach to that calculation, there are subtle inconsistencies that have caused confusion in applying these decisions. The article considers how these decisions impact the projected disposable income calculation in two different factual scenarios: (1) the debtor's income or expenses terminate during the term of the plan, or (2) the debtor's expenses remain the same but never reach the level of deductions contemplated by the United States Bankruptcy Code. Ultimately, the article concludes that the calculation of projected disposable income should focus on the debtor's actual income and expenses in all situations