31.3 Given the case above, breifly identify the Issue, the Legal Rule (Legal Tes

Question

31.3 Given the case above, breifly identify the Issue, the Legal Rule (Legal Test), the Facts Applied to the Test (Analysis), and the Conclusion/ Holding of the case.

Case Analysis 31.3 In re Welsh States Court of Appeals, Ninth Circuit, 711 F.3d 1120 (2013) In the Language of the Court PPLE, Senior Circuit judge Welsh's Social Security income of incomke $1,165 because Social Security income xcluded from the current monthl [David and Sharon Welsh] filed a oluntary Chapter 13 petition [in a fed- future payments on secured claims Before the BAP CPA, bankruptcy judges had authority to determine debtor's ability to pay based on th income calculation. After deductin eral bankruptcy court]. Their required the debtors were left with a disposable individual circumstances of each case chedules revealed the following assets: a home in Missoula, Montana, valued income of $218.12 per month. 400.000, encumbered by a secured provided for payments of $125 per claim of $330,593.66; a Ford F-250 valued ar $10,000, encumbered by afirst thirty months of the plan. After secured claim of $18,959; a 2006 Subaru Outback valued at of $9,500, encum-ments would increase to $500 per The Welshes proposed a plan that month to unsecured creditors for the cheir vehicle loans were paid, the pay- and cach debtor. Congress replaced this discretion with a detailed, mechanical means test, which requires debtors with above-median income to calculate their specific expenses from income," as defined by the Bankruptcy current monthly bered by a secured claim of $12,211; a month for the last thirty months of theCode. For our purposes, several elements plan. The proposed plan would pay off 2005 Toyora Matrix valued at $2,200, encumbered by a secured claim of $1,996; a 2005 Airstream trailer valtued at $23,000, encumbered by a secured of this calculation are important. The approximately $14,700 of the debtors' debtor begins with his 'aurrent monthly $180,500 unsecured debt. income, "wbich, by definition, explicitly The [Bankruptcy] Trustee objected xes benefits received under the Social caim of $39,000; and two 2007 Honda on the ground that the debtors had not Secrity Act. "The debtor then subtracts ATVs each valued at $2,700, encum proposed their plan in good faich" bered by secured claims of $3,065 and because [they failed] to commit one $4,500. In addition to their secured debes, the schedules revealed unsecured income to the plan daims totaling approximately $180,500, the largest of which were their daugh ters student loan debt in the amount of the Trustee's argument. $60,000 and ? joint debt owed to Bank of America on a line of credit in the amount of $50,000. living expenses based on the Internal Revenue Service's "Collection Financial tandards," a detailed series of aver ages for living expenses that the Service uses to calculate necessary expenditu for delinquent taxpayers. The debtor hundred percent of their disposable rhe bankruptcy court . . rejected [On the Trustee's appeall the [Bank-secured creditors due during the follow- ruptcy Appellate Panel (BAP) for the Ninth Circuit) affirmed the bankruptcy ing sixty months. [Emphasis added.] As is the case here, the manner in which the means test calculates "dis able income" may underestimate the amount of actual funds that a taxpayer has av reported on Schedule I a monthly income of $6,975.40. She also draws a pension of $1,100 per month. Mr In this appeal, the Trustee " .. maintains that, in determining whether e of $358.03 from wages, salary plan in good faith, the bankruptcy court income" " " does not have to ccoun for that income should have considered Mt. Welsh's and commissions, as well as Social Secu- fity income in the amount of $1,165 Because their income exceeds the median for the state of Montana, the pasable income according to the means test.The result may be that enacted the litle "disposable income," as that figure Bankruptcy Abuse Prevention and Con- is calculated, remains to pay unsecured sumer Protection Act ("BAPCPA). The creditors ood faich requirement remained the same, but there were significant changes with respect to the cacularion tend, of course, that the calculation of e according to the means test They listed their current m onthly Here, the Trustee does not con- as $8,116.31: their current income did not include Mr

Explanation / Answer

31.3 Given the case above, breifly identify the Issue, the Legal Rule (Legal Test), the Facts Applied to the Test (Analysis), and the Conclusion/ Holding of the case.

Case Analysis 31.3 In re Welsh States Court of Appeals, Ninth Circuit, 711 F.3d 1120 (2013) In the Language of the Court PPLE, Senior Circuit judge Welsh's Social Security income of incomke $1,165 because Social Security income xcluded from the current monthl [David and Sharon Welsh] filed a oluntary Chapter 13 petition [in a fed- future payments on secured claims Before the BAP CPA, bankruptcy judges had authority to determine debtor's ability to pay based on th income calculation. After deductin eral bankruptcy court]. Their required the debtors were left with a disposable individual circumstances of each case chedules revealed the following assets: a home in Missoula, Montana, valued income of $218.12 per month. 400.000, encumbered by a secured provided for payments of $125 per claim of $330,593.66; a Ford F-250 valued ar $10,000, encumbered by afirst thirty months of the plan. After secured claim of $18,959; a 2006 Subaru Outback valued at of $9,500, encum-ments would increase to $500 per The Welshes proposed a plan that month to unsecured creditors for the cheir vehicle loans were paid, the pay- and cach debtor. Congress replaced this discretion with a detailed, mechanical means test, which requires debtors with above-median income to calculate their specific expenses from income," as defined by the Bankruptcy current monthly bered by a secured claim of $12,211; a month for the last thirty months of theCode. For our purposes, several elements plan. The proposed plan would pay off 2005 Toyora Matrix valued at $2,200, encumbered by a secured claim of $1,996; a 2005 Airstream trailer valtued at $23,000, encumbered by a secured of this calculation are important. The approximately $14,700 of the debtors' debtor begins with his 'aurrent monthly $180,500 unsecured debt. income, "wbich, by definition, explicitly The [Bankruptcy] Trustee objected xes benefits received under the Social caim of $39,000; and two 2007 Honda on the ground that the debtors had not Secrity Act. "The debtor then subtracts ATVs each valued at $2,700, encum proposed their plan in good faich" bered by secured claims of $3,065 and because [they failed] to commit one $4,500. In addition to their secured debes, the schedules revealed unsecured income to the plan daims totaling approximately $180,500, the largest of which were their daugh ters student loan debt in the amount of the Trustee's argument. $60,000 and ? joint debt owed to Bank of America on a line of credit in the amount of $50,000. living expenses based on the Internal Revenue Service's "Collection Financial tandards," a detailed series of aver ages for living expenses that the Service uses to calculate necessary expenditu for delinquent taxpayers. The debtor hundred percent of their disposable rhe bankruptcy court . . rejected [On the Trustee's appeall the [Bank-secured creditors due during the follow- ruptcy Appellate Panel (BAP) for the Ninth Circuit) affirmed the bankruptcy ing sixty months. [Emphasis added.] As is the case here, the manner in which the means test calculates "dis able income" may underestimate the amount of actual funds that a taxpayer has av reported on Schedule I a monthly income of $6,975.40. She also draws a pension of $1,100 per month. Mr In this appeal, the Trustee " .. maintains that, in determining whether e of $358.03 from wages, salary plan in good faith, the bankruptcy court income" " " does not have to ccoun for that income should have considered Mt. Welsh's and commissions, as well as Social Secu- fity income in the amount of $1,165 Because their income exceeds the median for the state of Montana, the pasable income according to the means test.The result may be that enacted the litle "disposable income," as that figure Bankruptcy Abuse Prevention and Con- is calculated, remains to pay unsecured sumer Protection Act ("BAPCPA). The creditors ood faich requirement remained the same, but there were significant changes with respect to the cacularion tend, of course, that the calculation of e according to the means test They listed their current m onthly Here, the Trustee does not con- as $8,116.31: their current income did not include Mr

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