"Disposable Income" Means Post-Petition Income

In re Hardacre, __ B.R. __, 2006 WL 541028 (Bankr. N.D. Tex. 3/6/06) The Code calculates disposable income based on a prepetition income history. By definition however, chapter 13 plans are funded with post-petition income. After taking a close look at the statute, Judge Nelms concluded that "projected disposable income" for purposes of 1325(b) is based on the debtor's post-petition income rather than their income during the prior 6 months. First, use of "projected" suggests Congress intended something other than the traditional notion of "disposable income" (since Congress acts intentionally when it uses different language in different sections of a statute). Second, the statute refers to projected disposable income "to be received;" that is, the opposite of pre-petition income. Finally, 1325(b)(1) requires the court to determine whether the debtor is committing all of their projected disposable income "as of the effective date of the plan." Again, the language indicates that the court should consider current income, rather than historical income. Upshot: monthly plan payment is based on actual income and expenses appearing in schedules "I" and "J" rather than the hypothetical disposable income calculated pursuant to §§1325(b)(2), (b)(3) and (b)(4).