Mark C. Sorrell and Michelle B. Sorrell

UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION AT DAYTON
In re: 	M ARK C. S ORRELL
M ICHELLE B. SORRELL,
Debtors
Case No. 	06-31720
Judge Waldron
Chapter 7
DECISION DENYING MOTION OF
THE U.S. TRUSTEE TO DISMISS
CHAPTER 7 CASE PURSUANT TO 11
U.S.C. §§ 707(b)(2) AND/OR (b)(3)
DATED AT DAYTON, OHIO this 26th Day of January, 2007:
Background
On July 3, 2006, the Debtors, Mark and Michelle Sorrell, filed a chapter 7 petition
(Doc. 1). This chapter 7 case is subject to the provisions of Pub. L. No. 109-8, 119 Stat.
23, the Bankruptcy Abuse Prevention and Consumer Protection Act (the “2005 Act”),
more specifically, this case requires consideration of issues presented by 11 U.S.C. §
This document has been electronically entered in the records of the United
States Bankruptcy Court for the Southern District of Ohio.
IT IS SO ORDERED.
Dated: January 26, 2007
____________________________________________________________
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707(b), commonly referred to as the means test. 	The court further notes that this case
is limited to the consideration of § 707(b) in the context of a chapter 7 case.1
As this court has previously noted:
When Congress enacted the Bankruptcy Reform Act of 1978, Pub.L. No.
95-598, 92 Stat. 2549 (the Code), it repealed and completely replaced the
prior bankruptcy legislation (the Bankruptcy Act of 1898, Pub.L. No. 55-
171, amended by the Chandler Act of 1938, Pub.L. No. 75-696, 52 Stat.
840). When Congress enacted the 2005 Act, Pub.L. No. 109-8, 119 Stat.
23, it did not repeal or replace the prior bankruptcy legislation (the Code).
Instead, Congress merely attached a sidecar (the 2005 Act) to the existing
bankruptcy vehicle (the Code). The operation of this oddly constructed
vehicle is frequently difficult, depending on whether it is controlled solely
by the provisions of the Code, solely by the provisions of the 2005 Act, or,
as in this case, by some provisions of the 2005 Act and some provisions
of the Code.
In re Murray, 350 B.R. 408, 411 (Bankr. S.D. Ohio 2006) (footnote omitted). The issues
in this proceeding are controlled solely by the provisions of the 2005 Act.
On August 9, 2006, within the time requirements of § 704(b)(1) 2 , the United
States Trustee (the “UST”) determined that this case was presumed to be an abuse
under the means test of § 707(b)(2). 	The means test sets forth the congressionally
determined calculations of a debtor’s income and expenses, which, depending upon the
result obtained from completing the calculations, presumes the bankruptcy filing to be
an abuse of chapter 7 or permits the chapter 7 case to proceed.
As a bankruptcy court recently explained:
Section 	707(b)(2) 	of 	[the] 	Bankruptcy 	Code, 	as 	amended 	by 	the
Bankruptcy Abuse Prevention and Consumer 	Protection 	Act 	of 	2005
(“BAPCPA”), contains a mechanism called “the means test” for measuring
1 The court recognizes that certain provisions of § 707(b)(2) are specifically referred to in § 1325(b)(3).
2 Section 704(b)(1), which was added by the 2005 Act, requires the UST to “review all materials filed by
the debtor” and, within 10 days “after the date of the first meeting of creditors, file with the court a
statement as to whether the debtor’s case would be presumed an abuse under section 707(b).” 	Under
the court’s CM/ECF system, this statement appears directly on the docket. 	In this case, this filing
occurred on August 9, 2006. 	In addition, a separate notice was filed (Doc. 16) and, pursuant to §
704(b)(1)(B), was served upon all creditors.
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a debtor's presumed ability to repay her debts in the 60 months following
the 	bankruptcy 	filing. 	Under 	the 	means 	test, 	if 	the 	debtor's 	“current
monthly income” less specified allowable expenses would permit the
debtor to pay over the course of 60 months either (1) $10,000, or (2) 25
percent 	of 	her 	non-priority 	unsecured 	debt 	or 	$6,000 	(whichever 	is
greater), then her case is presumed to be an abuse of Chapter 7. 11
U.S.C. § 707(b)(2)(A)(i). The means test was designed to determine
whether the debtor could pay a significant amount to creditors in a
Chapter 13 case. The 60-month period in this provision corresponds to the
maximum term of a case under Chapter 13 of the Bankruptcy Code, and
other provisions of § 707(b)(1) allow a debtor to deduct expenses that
would be incurred in a Chapter 13 case from her current monthly income.
(footnote omitted)
In re Randle, 	B.R. 	, 2006 WL 3734351, at *1 (Bankr. N.D. Ill. 2006).
On September 6, 2006, within the time requirements of § 704(b)(2),3 the United
States Trustee (the “UST”) filed the Motion of the U.S. Trustee to Dismiss Chapter 7
Case Pursuant to 11 U.S.C. §§ 707(b)(2) and/or (b)(3) and Memorandum in Support
(Doc. 19). 	The Debtors filed a Response (Doc. 22) on September 26, 2006. 	The court
issued an Order Fixing Date for Filing Final Legal Memoranda (Doc. 24), which provided
the parties with an opportunity to suggest issues which would require an evidentiary
hearing, but further provided:
It would appear from these filings that the parties are in agreement that
there are no material factual issues in dispute and that the Court can rule
on the pending issues as a matter of law. To the extent that either party
believes the Court is incorrect in this conclusion, the parties shall, not later
than October 12, 2006, complete a filing setting forth the factual disputes
which will require an evidentiary hearing.
Neither party suggested any such issues, nor requested an evidentiary hearing. 	The
UST filed a final Reply to Debtor’s Response to Motion of U.S. Trustee to Dismiss (Doc.
3 If a debtor’s current monthly income [§ 101(10A)] is above the median income for the household size in
the state in which she filed, the UST must file the § 707(b) motion within 30 days of the § 704(b)(1)
statement.
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25) and the Debtors filed a final Legal Memorandum in support of their position (Doc.
27).
Positions Of the Parties
The UST’s position is that this case is subject to dismissal, since the Debtors
failed to correctly calculate certain components of the means test (Form 22A) or have
otherwise disposable income sufficient to repay a substantial portion of their debt within
a reasonable time. 	The UST asserts the Debtors erred (1) by excluding, when they
should have included, unemployment compensation (Line 9) in calculating current
monthly 	income 	(CMI) 	and 	(2) 	in 	including, 	rather 	than 	excluding, 	payments
contractually due (Line 42), and including, rather than excluding, a Local Standard
vehicle operating expense (Line 22) in connection with a vehicle the Debtors intend to
surrender. 	The UST further asserts that, even if the presumption of abuse is not
established, the issue of the Debtors’ ability to pay can be considered as part of “the
totality of the circumstances . . . of the [Debtors’] financial situation.” It is the position of
the UST that when the correct calculations are completed, the Debtors “would have
monthly disposable income of $1,184.28 or $71,056.80 over the course of a five-year
chapter 13 plan.” (Doc. 19).
The Debtors’ position is that they have correctly supplied the information required
in the means test (Form 22A). 	The Debtors dispute all of the calculations urged by the
UST. 	The Debtors, whose household consists of three minor children, one employed
spouse and one unemployed spouse, assert that their financial situation justifies the
relief available in chapter 7. 	It is the Debtors’ position that “[a]n examination of the
Debtors’ Schedules reflects [a total combined] net . . . monthly income of $4,515.84
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(Schedule I), and current monthly expenses of $6,481.80, including a $507.00 monthly
child support obligation, which has been temporarily suspended during Mr. Sorrell’s
period of unemployment (Schedule J). . . . 	It is clear beyond peradventure that the
Debtors in the instant case do not have sufficient income to fund a Chapter 13 plan and
repay their debts. Reasonable and necessary expenses exceed current income, and
additional vehicle expense is anticipated.” (Doc. 22)
Jurisdiction
This court has jurisdiction pursuant to 28 U.S.C. § 1334 and the Standing Order
of Reference entered in this District. 	This is a core proceeding pursuant to 28 U.S.C. §
157(b)(2)(A) and (O).
Issues Presented
1. 	In 	determining 	if 	abuse 	is 	presumed 	to 	exist 	under 	§ 	707(b)(2)(A)(i), 	is
unemployment compensation included or excluded in the calculation of current
monthly income as defined in § 101(10A)?
2. 	If the Debtors file a statement of intention to surrender a secured motor vehicle,
is it correct for the Debtors to include payments contractually due in calculating
the Debtors’ average monthly payments under § 707(b)(2)(A)(iii)(I) and is it
correct for the Debtors to deduct the Local Standard operating expense for that
vehicle under § 707(b)(2)(A)(ii)(I)?
3. 	If a chapter 7 case of above median income Debtors is determined not to be
subject to the presumption of abuse under § 707(b)(2), or that presumption is
overcome by special circumstances, is it correct to consider the Debtors’ ability
to pay under § 707(b)(3) as part of “the totality of the circumstances . . . of the
debtor’s financial situation?”
Issues Determined
1. 	In 	determining 	if 	abuse 	is 	presumed 	to 	exist 	under 	§707(b)(2)(A)(i),
unemployment compensation is excluded in the calculation of current monthly
income as defined in § 101(10A).
2. 	If the Debtors file a statement of intention to surrender a secured motor vehicle,
it is correct for the Debtors to include payments contractually due in calculating
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the Debtors’ average monthly payments under § 707(b)(2)(A)(iii)(I) and it is
correct for the Debtors to deduct the Local Standard operating expense for that
vehicle under § 707(b)(2)(A)(ii)(I).
3. 	If a chapter 7 case of above median income Debtors is determined not to be
subject to the presumption of abuse under § 707(b)(2), or that presumption is
overcome by special circumstances, it is correct to consider the Debtors’ ability
to pay under § 707(b)(3) as part of “the totality of the circumstances . . . of the
debtor’s financial situation.”
Analysis
Statutory Construction And The 2005 Act Generally
It merely states the obvious to note that the initial court decisions interpreting
provisions of the 2005 Act demonstrate that one element legislation should provide –
clarity of expression in the choice of language so that interested parties can have
predictability in their proceedings – is frequently lacking in significant portions of the
2005 Act. As an example, one court noted:
This is the first contested motion of its kind considered by this Court under
BAPCPA. As a threshold issue, the Court notes that the language in new
§ 362(c)(3) is very poorly written. It has been noted that the provisions of
this new subsection "are, at best, particularly difficult to parse and, at
worst, 	virtually 	incoherent." 	In 	re 	Charles, 	332 	B.R. 	538, 	541
(Bankr.S.D.Tex.2005). Judge Thomas Small, former chair of the Advisory
Committee on Bankruptcy Rules, has stated that "[i]n an Act in which
head-scratching opportunities abound for both attorneys and judges alike,
§ 362(c)(3)(A) stands out." In re Paschal, [337 B.R. 274, 277 (Bankr.
E.D.N.C. 2006)]. 	This Court likewise finds the provisions of § 362(c)(3) to
be neither consistent nor coherent.
In re Baldassaro, 338 B.R. 178, 182 (Bankr. D.N.H. 2006).
The point is not to criticize provisions of the 2005 Act; but, only to note that the
lack of clarity of expression in the choice of language in other significant provisions of
the 2005 Act is also present in § 707(b) and the related sections at issue in this
proceeding. 	The attempt (necessity) of bankruptcy courts to determine (create) the
results intended in the 2005 Act is complicated in such instances.
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In their attempts to properly interpret the provisions of the 2005 Act, courts
employ canons of statutory construction:
Statutory interpretation is among the most important skills a law student,
lawyer, or judge possesses, yet, as Karl Llewellyn pointed out, when it
comes to the tools of statutory interpretation, "[t]here are two opposing
canons on almost every point."
Karl 	N. 	Llewellyn, 	Remarks 	on 	the 	Theory 	of 	Appellate
Decision and the Rules or Canons About How Statutes Are
to Be Construed, 3 Vand. L. Rev. 395, 401 (1950); or as
Richard A. Posner wrote, "For every canon one might bring
to bear on a point there is an equal and opposite canon. This
is an exaggeration; but what is true is that there is a canon to
support 	every 	possible 	result." 	Richard 	A 	Posner, 	The
Federal Courts: Crisis and Reform 276 (1985).
Lance Phillip Timbreza, The Elusive Comma: The Proper Role of Punctuation in
Statutory Interpretation, 24 QLR 63, 91, fn. 5 (2005).
It is clear that the cabinet containing established canons of statutory construction
holds an array of tools, many appearing capable of completing a given task. 	The
difficult decision is determining which is best suited to yield the appropriate result.
The Mandate To Apply Plain Meaning
Without attempting a complete compilation of the body of authority concerning
statutory construction in connection with bankruptcy legislation, it must be recalled that:
As the United States Supreme Court has instructed courts in examining
the provisions of the Bankruptcy Code, “[w]e have stated time and time
again that courts must presume that a legislature says in a statute what it
means and means in a statute what it says there.” Connecticut Nat'l Bank
v. Germain, 503 U.S. 249, 253-254, 112 S.Ct. 1146, 1149, 117 L.Ed.2d
391 (1992) (citation omitted). That statement is consistent with the United
States Supreme Court's principles that statutory interpretation is a holistic
endeavor which must begin with the language of the statute itself. Resort
to an examination of legislative history is appropriate only to resolve
statutory ambiguity, and in the final analysis, such examination must not
produce 	a 	result 	demonstratively 	at 	odds 	with 	the 	purpose 	of 	the
legislation. See Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S.Ct. 1644,
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118 	L.Ed.2d 	280 	(1992); 	Pennsylvania 	Dept. 	of 	Public 	Welfare 	v.
Davenport, 495 U.S. 552, 110 S.Ct. 2126, 109 L.Ed.2d 588 (1990); Kelly
v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 93 L.Ed.2d 216 (1986). The
Sixth 	Circuit 	has 	likewise 	noted 	that 	statutes 	“must 	be 	read 	in 	a
‘straightforward’ and ‘commonsense’ manner,” and that “[w]hen we can
discern an unambiguous and plain meaning from the language of a
[statute], our task is at an end.” Rogers v. Laurain (In re Laurain), 113 F.3d
595 (6th Cir.1997) (citations omitted); see also Bartlik v. United States
Dep't of Labor, 62 F.3d 163 (6th Cir.1995).
Andersson v. Sec. Fed. Sav. & Loan of Cleveland (In re Andersson), 209 B.R. 76, 78
(B.A.P. 6th Cir. 1997).
The Supreme Court has repeatedly held:
The 	starting 	point 	in 	discerning 	congressional 	intent 	is 	the 	existing
statutory text, see Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438,
119 S.Ct. 755, 142 L.Ed.2d 881 (1999), and not the predecessor statutes.
It is well established that "when the statute's language is plain, the sole
function of the courts--at least where the disposition required by the text is
not absurd--is to enforce it according to its terms." Hartford Underwriters
Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1, 6, 120 S.Ct. 1942, 147
L.Ed.2d 1 (2000) (internal quotation marks omitted) (quoting United States
v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 103
L.Ed.2d 290 (1989) (in turn quoting Caminetti v. United States, 242 U.S.
470, 485, 37 S.Ct. 192, 61 L.Ed. 442 (1917))).
Lamie v. U.S. Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 1030 (2004); See also In re
Slusher, __ B.R. __, 2007 WL 118009, at *3 (Bankr. D. Nev. 2007) (summarizing
principles of statutory interpretation).
The Exceptions To The Plain Meaning Debate
This body of controlling authority concerning statutory construction in connection
with bankruptcy legislation requires a trial court to apply the ordinary meaning of the
statutory text, unless one of three recognized exceptions is applicable: the scrivener’s
error exception, the absurdity doctrine, or the doctrine of constitutional avoidance.
These exceptions have been found applicable to various provisions of the 2005 Act.
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In applying the scrivener’s error exception to provisions of 	the 2005 Act’s
exemption provision [11 U.S.C. § 522(p)], a court stated:
In his opinions, Justice Scalia has occasionally set out the high standard
that, in his view, a court must meet before it may substitute legislative
intent for legislative enactment. In brief, he requires that two conditions be
met before such variance is permissible. First, the plain meaning of the
statute under consideration must lack any rational purpose--not just what
Congress may have intended, but any plausible congressional purpose. In
Holloway v. United States, for example, Justice Scalia disagreed with the
majority's 	willingness 	to 	reform 	an 	otherwise 	unambiguous 	statute
because he found a "plausible congressional purpose in enacting this
language--not what I necessarily think was the real one." Holloway v.
United States, 526 U.S. 1, 19 n. 2, 119 S.Ct. 966, 143 L.Ed.2d 1 (Scalia,
J., dissenting) (1999). Further, he acknowledged, "I search for a plausible
purpose because a text without one may represent a 'scrivener's error'
that we may properly correct." Id. So, according to Justice Scalia, if there
is no plausible congressional purpose in the text as written, the statute is a
candidate for reformation.
But there must be more. A second element for Justice Scalia is that the
intended meaning to be used must be obvious. "The sine qua non of any
'scrivener's error' doctrine, it seems to me, is that the meaning genuinely
intended but inadequately expressed must be absolutely clear," he wrote.
"[O]therwise we might be rewriting the statute rather than correcting a
technical mistake." United States v. X-Citement Video, Inc., 513 U.S. 64,
82, 115 S.Ct. 464, 130 L.Ed.2d 372 (Scalia, J., dissenting) (1994).
* * * *
This court is, of course, reluctant to say that although Congress enacted X
it actually meant Y, and it does not do so lightly. But in this case, the
scrivener's error is obvious from the extensive record and from common
sense: The intent of Congress is crystal clear, and there is no feasible
rationale or policy for enacting what the text of the statute says. Indeed,
strictly 	applying 	the 	words 	of 	Section 	522(p) 	would 	actually 	prevent
Congress's goal from being achieved. So it is proper to give the statute the
meaning that Congress undeniably intended. (footnotes omitted)
In re Kane, 336 B.R. 477, 487-89 (Bankr. D. Nev. 2006). Contra In re McNabb, 326 B.R.
785 (Bankr. D. Ariz. 2005).
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In applying the absurdity doctrine to the 2005 Act’s provisions governing the
dismissal of chapter 11 cases [11 U.S.C. § 1112(b)], a court stated:
This is a case where the language of BAPCPA passed by Congress tends
to defy logic and clash with common sense. This is an example of a
specific revision to the Bankruptcy Code, if followed by the Court and
applied as Congress seems to intend--i.e., by way of strict construction--
would result in an absurd decision and totally unworkable legal precedent.
These drafting problems have the potential of bringing the bankruptcy
system to a halt while debtors, creditors, and the courts try to figure out
just exactly what Congress intended. This Court would add that it appears
that the largely overlooked changes to the bankruptcy provisions related to
non-consumer cases, such as the case presently before the Court, may
sometimes equal the poor crafting of the consumer provisions. Moreover,
serious and consequential constitutional questions may be looming on the
horizon because of inartful drafting. (footnote omitted)
* * * * *
The task of resolving the meaning of a statute begins where all such
inquiries must begin: with the language of the statute itself. Unfortunately,
here, the Plain Meaning Rule is not appropriate as it would lead to an
absurd result. First, if this Court were to require that all the elements of
section 1112(b)(4) had to be fulfilled, the Court would doubt very much
that 	a 	corporate 	Chapter 	11 	could 	ever 	be 	dismissed 	because, 	for
example, this Court can think of no instance where a corporate debtor
would have a domestic support obligation. Thus, dismissal could only
occur in a Chapter 11 case involving an individual debtor. Moreover, if
every element of section 1112(b)(4) was met, the debtor must not only be
dismissed, but probably deserves referral to the United States Attorney.
In re TCR of Denver, LLC, 338 B.R. 494, 495-96, 499 (Bankr. D. Colo. 2006).
In applying the doctrine of constitutional avoidance to provisions of the 2005 Act
governing debt relief agencies [11 U.S.C. § 526, 527 & 528], a court stated:
If lawyers are placed within the ambit of § 101(4A), the placement conflicts
with § 526(d)(2)(A). The conflict would exist because states would be
deprived of their ability “to determine and enforce qualifications for the
practice 	of 	law.” 	If 	BAPCPA's 	debt 	relief 	agency 	sections 	apply 	to
attorneys, 	it 	means 	Congress 	has 	taken 	upon 	itself 	the 	authority 	to
determine the advice attorneys can give their clients and what attorney
advertisements must say, thereby infringing on the state's traditional role
of regulating attorneys. See Leis v. Flynt, 439 U.S. 438, 442, 99 S.Ct. 698,
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58 L.Ed.2d 717 (1979) ( “Since the founding of the Republic, the licensing
and regulation of lawyers has been left exclusively to the States.”)
This view is supported by the doctrine of constitutional avoidance. This
doctrine counsels that, in construing a statute for ambiguity, the Court
must opt for a construction which avoids grave constitutional questions.
Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades
Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 99 L.Ed.2d 645 (1988). The
Court perceives a clear ambiguity in this statute-on one hand it appears to
regulate a lawyer's practice; on the other, such regulation is specifically
reserved 	to 	the 	states. 	As 	outlined 	above, 	these 	sections 	would 	be
unconstitutional if applied to attorneys. For these reasons, the Court finds
§§ 526, 527 and 528 do not apply to attorneys.
Milavetz, Gallop & Milavetz P.A. v. U.S., 	B.R. 	, 2006 WL 3524399, at *7 (D. Minn.
2006). Contra Olsen v. Gonzales, 350 B.R. 906 (D. Or. 2006).
The compelled conclusion is that, absent one of the above exceptions, a court
must apply the ordinary meaning of the language as enacted and, thus, adhere to its
proper role as a court in our constitutional scheme.
Legislative History
It is necessary to note that the history of the legislative efforts culminating in the
2005 Act is not the same as the legislative history of the 2005 Act. 	To the extent
legislative history of the 2005 Act can be used to resolve any arguable ambiguity in the
statutory language, it is of dubious assistance. 	First, there is no joint conference
statement because the 2005 Act did not have a conference committee. See In re Green,
348 B.R. 601, 609 (Bankr. M.D. Ga. 2006) (“Congress produced no conference report
for [the 2005 Act].”). 	A conference report is generally the best source of legislative
history. 	Similarly, unlike the 1978 Bankruptcy Code, no report of the floor managers
exists which might be given the weight of a conference committee report. See Begier v.
IRS, 496 U.S. 53, 64, 110 S.Ct. 2258, 2266, fn. 5 (1990) (citation omitted) (“Because of
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the absence of a conference and the key roles played by Representative Edwards and
his counterpart floor manager Senator DeConcini, we have treated the floor statements
on the Bankruptcy Reform Act of 1978 as persuasive evidence of congressional intent”).
The versions of the 2005 Act passed by the Senate and House of Representatives were
identical 	and 	a 	conference 	committee 	was 	not 	required. 	Even 	assuming 	it 	is
appropriate to consider the House Judiciary Report (which represents only a view of
members of one committee of one house of the federal bicameral legislature) as a
source of legislative history, it often contains a mere recitation of the eventually enacted
statutory text and adds little, if any, assistance to the court’s efforts in determining
Congress’s intent. See H.R. Rep. 109-31(I), 2005 U.S.C.C.A.N. 88. See also McNabb,
326 B.R. at 789 (“Legislative history is virtually useless as an aid to understanding the
language and intent of BAPCPA. 	The section-by-section analysis in the Report of the
House Committee on the Judiciary merely provides a gloss of the statutory language of
BAPCPA § 322. It does not provide an example of the kind of problem or abuse it was
intended to correct, nor a citation to a case whose result it sought to alter.”).
As the United States Supreme Court has stated:
As we have repeatedly held, the authoritative statement is the statutory
text, not the legislative history or any other extrinsic material. Extrinsic
materials have a role in statutory interpretation only to the extent they
shed 	a 	reliable 	light 	on 	the 	enacting 	Legislature's 	understanding 	of
otherwise 	ambiguous 	terms. 	Not 	all 	extrinsic 	materials 	are 	reliable
sources of insight into legislative understandings, however, and legislative
history in particular is vulnerable to two serious criticisms. First, legislative
history 	is 	itself 	often 	murky, 	ambiguous, 	and 	contradictory. 	Judicial
investigation of legislative history has a tendency to become, to borrow
Judge Leventhal's memorable phrase, an exercise in " 'looking over a
crowd and picking out your friends.' " See Wald, Some Observations on
the Use of Legislative History in the 1981 Supreme Court Term, 68 Iowa
L.Rev. 195, 214 (1983). Second, judicial reliance on legislative materials
like 	committee 	reports, 	which 	are 	not 	themselves 	subject 	to 	the
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requirements of Article I, may give unrepresentative committee members-
-or, worse yet, unelected staffers and lobbyists--both the power and the
incentive to attempt strategic manipulations of legislative history to secure
results they were unable to achieve through the statutory text. We need
not comment here on whether these problems are sufficiently prevalent to
render legislative history inherently unreliable in all circumstances, a point
on which Members of this Court have disagreed.
Exxon Mobil Corp. v. Allapattah Svcs., Inc., 545 U.S. 546, 	, 125 S.Ct. 2611, 2626
(2005).
A brief comment is appropriate about the concept “those who can pay, should
pay.” 	This concept, which appears in the UST’s filings in this case and has found its
way into reported decisions, is often offered as evidence of congressional intent to
include various funds and exclude various expenses in connection with § 707(b)(2)
issues and is suggested as a basis to disregard the actual language of the enacted
legislation. See, e.g., In re Hardacre, 338 B.R. 718, 725 (Bankr. N.D. Tex. 2006)
(“Congress’s intent with respect to the means test is well known to even the most casual
bankruptcy petitioner. 	The means test was intended to ‘ensure that those who can
afford to repay some portion of their unsecured debts [be] required to do so.’ 151
CONG. REC. S2470 (March 10, 2005).”).
First, although it may be correct to recognize the existence of this concept,
neither this (nor any similar) phrase appears in the text of the 2005 Act. 	Second,
Congress, in the appropriate exercise of its policy choices in enacting the 2005 Act,
determined to exclude or include various funds as a component of what could be paid
and what should be paid in a debtor’s bankruptcy. 	The text of the 2005 Act excludes
various retirement funds, which are often one of the significant assets of a debtor. Such
assets, if included as part of the property of a debtor’s estate, could be available for
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payment to creditors. 	The 2005 Act rejected case law which prohibits a chapter 13
debtor from claiming the repayment of certain loans as an expense in calculating
disposable income and has the effect of reducing the funds available from a debtor for
payment to creditors. 4 Such funds, among others, are now excluded from property of
the estate5 or the 2005 Act provides an exemption for such funds. 6 Finally, to the extent
a bankruptcy court’s interpretation of the 2005 Act, in connection with charitable
contributions, would have resulted in an increase in funds available for payments to
creditors, Congress, exercising its permissible policy options, has enacted legislation to
prevent such funds from being available for payment to creditors. 7
The simple point from these examples is to recognize that Congress, of course,
can exercise its discretion in determining “those who can pay - should pay”; however,
this concept only exists within the confines of the language in the 2005 Act.
As the Supreme Court has held:
If Congress enacted into law something different from what it intended,
then it should amend the statute to conform it to its intent. “It is beyond our
province to rescue Congress from its drafting errors, and to provide for
what 	we 	might 	think 	··· 	is 	the 	preferred 	result.” 	United 	States 	v.
Granderson, 511 U.S. 39, 68, 114 S.Ct. 1259, 127 L.Ed.2d 611 (1994)
(concurring opinion). This allows both of our branches to adhere to our
4 See, e.g., Harshbarger v. Pees (In re Harshbarger), 66 F.3d 775 (6th Cir. 1995) (Payroll deductions to
repay an unsecured loan form an ERISA-qualified profit sharing account were property of the estate and
constituted disposable income.). Cf. § 1322(f) (“A plan may not materially alter the terms of a loan
described in § 362(b)(19) and any amounts required to repay such loan shall not constitute ‘disposable
income’ under section 1325.”). The court notes that the loans described in § 362(b)(19) includes the type
of loan in Harshbarger. See also In re Thompson, 350 B.R. 770, 775 (Bankr. N.D. Ohio 2006) (“The court
reads [§ 1322(f)] to overrule In re Harshbarger. . . .”).
5 §§ 541(b)(5), (6) and (7).
6 § 522(n).
7 See, e.g., In re Diagostino, 347 B.R. 116, 119 (Bankr. N.D.N.Y. 2006) (Under § 1325(b)(2), as revised
by the 2005 Act, the court held that charitable contributions are not available as a deduction for above
median income debtors. The text of § 1325(b)(3), and an amendment proposed to S. 256, both indicate
this result “was intentional.”); however, Congress recognized the issue and amended the statutory
language of § 1325(b)(3) in the Religious Liberty and Charitable Donation Clarification Act of 2006 to
allow such deductions. 	The amendment became law on December 20, 2006 as Pub. L. 109-439, 120
Stat. 3285.).
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respected, and respective, constitutional roles. In the meantime, we must
determine intent from the statute before us.
Lamie, 540 U.S. at 542, 124 S.Ct. at 1034.
The 	balance 	of 	this 	decision 	focuses 	on 	the 	application 	of 	these 	general
principles of statutory construction in the context of the specific provisions of the 2005
Act presented for determination in this proceeding.
Overview Of 11 U.S.C. § 707(b) Under The 2005 Act
11 U.S.C. § 707(b) governs the dismissal or conversion of a case filed under
chapter 7. 	The 2005 Act significantly changed the provisions of former § 707(b). 8 The
first significant change is in the presumption formerly available in § 707(b). Under the
Bankruptcy Code prior to the 2005 Act, a presumption existed “in favor of granting the
relief requested by the Debtor.” 	This presumption was available to a debtor filing
chapter 7, without any language referencing the debtor’s family size, total assets, total
income, total debts, or other factors, including the ability to pay some, or all, debts in a
chapter 13 plan. 	The presumption could only be overcome, if, upon the motion of the
court or the UST, the court determined “[t]he granting of relief would be a substantial
abuse” of the provision of chapter 7. See former § 707(b) (emphasis added).
This provision was completely rewritten by the 2005 Act’s language in current §
707(b) to eliminate both the former presumption in favor of granting the relief requested
and to eliminate the word “substantial.” 	These changes, coupled with the additional
8 Former Section 707(b) stated: “After notice and a hearing, the court, on its own motion or on a motion by
the United States trustee, but not at the request or suggestion of any party in interest, may dismiss a case
filed by an individual debtor under this chapter whose debts are primarily consumer debts if it finds that
the granting of relief would be a substantial abuse of the provisions of this chapter. There shall be a
presumption in favor of granting the relief requested by the debtor. In making a determination whether to
dismiss a case under this section, the court may not take into consideration whether a debtor has made,
or continues to make, charitable contributions (that meet the definition of ‘charitable contribution’ under
section 548(d)(3)) to any qualified religious or charitable entity or organization (as that term is defined in
section 548(d)(4)).” (emphasis added)
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requirements of current § 707(b), completely change the default for a chapter 7 debtor.
Instead of a burden-free entrance, containing a presumption in favor of granting the
relief available in a chapter 7 case, except in the circumstance of substantial abuse,
now the debtor faces a burden-filled application process, containing, depending upon
the information provided, and subject to challenge from an expanded number of entities
granted standing to bring such actions, a presumption against the relief available in a
chapter 7 case.
In addition to these significant changes, perhaps the most significant change is
the congressionally determined mathematical formula in § 707(b) used to calculate
whether a debtor’s financial circumstances creates a presumption against granting the
relief available in a chapter 7 case. 	This formula applies to debtors, such as the
Debtors in this case, whose current monthly income is above the median income for the
household size in the state where they filed. See § 707(b)(7)(A) & (B). Current monthly
income (“CMI”) is a newly defined term in the 2005 Act. 	See § 101(10A). The Debtors’
filings concede they are above median income Debtors. 	CMI, even for above median
income debtors is, however, a crucial element in the application of the congressionally
determined 	formula 	calculating 	whether 	their 	financial 	circumstances 	create 	a
presumption against the relief available in a chapter 7 case. 	For a debtor subject to §
707(b)(2), 	the 	formula 	requires 	that 	specifically 	designated 	standard 	expenses
established by the Internal Revenue Service (National Standards, Local Standards and
Other 	Necessary 	Expenses), 	together 	with 	certain 	secured 	debt 	and 	other
miscellaneous allowed expenses, be subtracted from CMI.
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If, as a result of these various calculations, a debtor has $167 per month in
disposable income, the case is presumed an abuse [§ 707(b)(2)(A)(i)(II)]; or, if a debtor
has between $100 – $167 in disposable income per month the case may be presumed
an 	abuse, 	depending 	on 	the 	nonpriority 	unsecured 	claims 	in 	the 	case 	[§
707(b)(2)(A)(i)(I)]; however, if a debtor has less than $100 per month in disposable
income, the case is not presumed to be an abuse.
If the case is presumed to be an abusive filing, a debtor can, nevertheless, rebut
the presumption. 	In order to rebut the presumption, a debtor must show “special
circumstances,” which would justify modifications to income and expenses from the §
707(b)(2) formula [§ 707(b)(2)(B)(i – iv)]. 	The only examples given are “a serious
medical 	condition” 	or 	“a 	call 	or 	order 	to 	active 	duty 	in 	the 	Armed 	Forces.” 	[§
707(b)(2)(B)(i)]. 	Special 	circumstances 	require 	documentation 	and 	a 	detailed
explanation, which all must be attested to under oath [§ 707(b)(2)(B)(ii & iii)]. 	Finally,
the adjustments for “special circumstances” must bring the debtor’s disposable income
below the congressionally determined income thresholds [§ 707(b)(2)(B)(iv)].
If a debtor’s case is not presumed to be an abuse under § 707(b)(2), or if the
presumption is overcome by special circumstances, the court shall consider whether the
case is nevertheless an abuse because either “the petition was filed in bad faith” or the
“totality of the circumstances . . . of the debtor’s financial situation demonstrates abuse.”
§707(b)(3). 	If a case is determined to be an abuse, the case will be dismissed unless
the debtor consents to a conversion to chapter 11 or 13. § 707(b)(1).
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1. Unemployment Compensation Is One of the “Benefits Received Under the
Social Security Act” And Is Excluded From Current Monthly Income
[§ 101(10A)(B)]
The initial issue for determination is whether unemployment compensation is one
of the “benefits received under the Social Security Act” and, therefore, should be
excluded from CMI. It is undisputed the Debtors received unemployment compensation
during 	the 	applicable 	period. 	It 	is 	also 	undisputed 	that 	this 	unemployment
compensation was distributed through a program administered by the state of Ohio.
The UST argues that unemployment compensation is a benefit of the state of Ohio only.
The court is not aware of any reported decisions on the question, although the
issue has been addressed by bankruptcy commentators. See, e.g., David W. Allard,
David E. Grochocinski, Hon. Marci McIvor, and Susan L. Rhiel, Means Testing – Can it
Work?, 061506 ABI-CLE 11 (June 15-18 2006) (summarizing arguments concerning
whether unemployment compensation is excluded from CMI). 	The drafters of Form
22A, which was intended to implement § 707(b) through an official bankruptcy form,
were apparently aware of the legal issue and left the decision of whether to include
unemployment compensation as income to each debtor.9
As previously explained, in determining a debtor’s income for purposes of §
707(b)(2), the court does not consider a debtor’s income as it exists at the time of filing
bankruptcy; but instead calculates what Congress has determined to be a debtor’s
current monthly income – CMI. 	CMI is defined in § 101(10A) as:
The term "current monthly income"--
9 See Line 9 of Form 22A (10/06) (“Unemployment Compensation. Enter the amount in the appropriate
column(s) of line 9. However, if you contend that unemployment compensation received by you or your
spouse was a benefit under the Social Security Act, do not list the amount of such compensation in
Column A or B, but instead state the amount in the space below[.] “)
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(A) means the average monthly income from all sources that the debtor
receives (or in a joint case the debtor and the debtor's spouse receive)
without regard to whether such income is taxable income, derived during
the 6-month period ending on--
(i) the last day of the calendar month immediately preceding the date of
the commencement of the case if the debtor files the schedule of current
income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for
purposes of this title if the debtor does not file the schedule of current
income required by section 521(a)(1)(B)(ii); and
(B) includes any amount paid by any entity other than the debtor (or in a
joint case the debtor and the debtor's spouse), on a regular basis for the
household expenses of the debtor or the debtor's dependents (and in a
joint case the debtor's spouse if not otherwise a dependent), but excludes
benefits received under the Social Security Act, payments to victims of
war crimes or crimes against humanity on account of their status as
victims of such crimes, and payments to victims of international terrorism
(as defined in section 2331 of title 18) or domestic terrorism (as defined in
section 2331 of title 18) on account of their status as victims of such
terrorism. (emphasis added)
This detailed definition of CMI, with its particularized components, contains
Congress’s decision to calculate a debtor’s current monthly income based on the
inclusion or exclusion of funds received by a debtor in the specified six month period
prior to filing bankruptcy. 	In addition to any earnings from employment, CMI includes
and excludes funds from other sources. 	The exclusions from CMI contain the words
“benefits 	received 	under 	the 	Social 	Security 	Act.” 	There 	is 	no 	dispute 	that
unemployment compensation constitutes a benefit, the analysis focuses on whether this
is one of the “benefits received under the Social Security Act.”
A 	component 	of 	this 	analysis 	is 	a 	brief 	understanding 	of 	unemployment
compensation law, which involves both state and federal law, specifically the Social
Security Act. States may, but are not required, to enact unemployment compensation
law. See Allard at Part C (Unemployment Compensation). 	If, however, a state does
enact an unemployment compensation law, it is required to comply with a series of
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federal mandates. See 42 U.S.C. § 1321 (Eligibility requirements for transfer of funds;
reimbursement by State; application; certification; limitation). 	These mandates are
inextricably entwined with the Social Security Act. 	For example, the Secretary of Labor
must certify each state’s compliance with the Social Security Act. 	42 U.S.C. § 504
(Judicial Review) and 42 U.S.C. § 503 (State laws). 	To the extent a state law is not in
compliance with the Social Security Act, it would be invalid under the Supremacy
Clause of the United States Constitution. U.S. Const. art. VI, § 1, cl. 2; See generally
Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363, 120 S.Ct. 2288 (2000). 	In
addition, unemployment compensation is funded, in part, through federal grants [See 42
U.S.C. §§ 1101 – 1105], which are conditioned on compliance with federal law. See id.
The Social Security Act even provides for research of the unemployment compensation
program, personnel training of state employees and an advisory counsel. 42 U.S.C. §§
1106 (Unemployment compensation research program), 1107 (Personnel training) and
1108 (Advisory Counsel on Unemployment Compensation).
The UST recognizes that there is no “definitive guide” to the term “benefits” in the
Social Security Act (Doc. 25 – page 3); however, the UST urges this court to draw a
distinction 	between 	direct 	and 	indirect 	payments. 	The 	UST 	argues 	that 	direct
payments, such as social security retirement payments, would be one of the “benefits
received under the Social Security Act”, but unemployment compensation, as an
indirect benefit from the Social Security Act, would not; however, the plain meaning of
the words in § 101(10A)(B) do not contain such a distinction. 	The applicable text does
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not 	speak 	of 	“payments”, 	direct, 	indirect, 	or 	otherwise, 	but 	instead 	contains 	the
unambiguously broader term “benefits.”10
It is correct that that the actual payments to eligible unemployed workers, such
as the Debtors, are administered by the individual states. See, e.g., Ohio Revised Code
§ 4141.01, et seq. 	However, it is undisputed that unemployment compensation exists,
including a component of any funding of such a state program, only if individual states
comply with the Social Security Act. 	It is also clear that, although there is a number of
differing state programs, which operate through a variety of state distribution criteria, the
common 	funding 	source 	and 	common 	control 	component 	of 	all 	unemployment
compensation programs is the Social Security Act. 	An overall consideration of the
Social 	Security 	Act 	and 	unemployment 	compensation 	provides 	support 	for 	the
conclusion that unemployment compensation is one of the “benefits received under the
Social Security Act.”
Additionally, the Supreme Court has previously addressed the purpose of the
Social Security Act and, in the process, recognized unemployment compensation as
one of its benefits:
The purpose of the [Social Security] Act was to give prompt if only partial
replacement of wages to the unemployed, to enable workers “to tide
themselves over, until they get back to their old work or find other
10 The UST attempts to equate the word benefit and payment by a dictionary definition (Doc. 25 – page
3). 	The use of dictionary definitions has been used by the United State Supreme Court to interpret
bankruptcy statutes. See Rousey v. Jacoway, 544 U.S. 320, 326, 125 S.Ct. 1561, 1566 (2005). The UST
cites Webster’s New Word Dictionary (2nd Ed. 1986), which refers to benefits, at least in the context of
the Social Security Act, as “payments.” However, Black’s Law Dictionary 5th Ed. (1979), page 143 refers
to “[f]inancial assistance received in time of 	. . . unemployment, etc. either from insurance or public
programs such as social security.” In the court’s view, the term “financial assistance” is the better one in
that it is not simply the actual check or electronic transfer from a state administered program, but is
instead the funds themselves, which come, in part, from the Social Security Act. Moreover, all the funds
received, regardless of the source, are subject to mandatory federal oversight. 	The court finds no
principled basis to distinguish between direct and indirect payments as one of the “benefits received
under the Social Security Act.”
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employment, without having to resort to relief.” 	Unemployment benefits
provide cash to a newly unemployed worker “at a time when otherwise he
would 	have 	nothing 	to 	spend,” 	serving 	to 	maintain 	the 	recipient 	at
subsistence levels without the necessity of his turning to welfare or private
charity. (emphasis added; footnotes omitted)
California Dept. of Human Resources Development v. Java, 402 U.S. 121, 131-32, 91
S.Ct. 1347, 1354 (1971) (emphasis added). 	This recognition provides further support
for the conclusion that unemployment compensation is one of the “benefits received
under the Social Security Act.”
An examination of the provisions of the 2005 Act contains other references to the
Social Security Act, but only to various specific provisions of the Social Security Act. In
§ 362(b)(2), the exceptions to the automatic stay in connection with domestic relations
issues were expanded:
(b) The filing of a petition under section 301, 302, or 303 of this title, or of
an application under section 5(a)(3) of the Securities Investor Protection
Act of 1970, does not operate as a stay—
* * * * *
(2) under subsection (a)—
* * * * *
(D) of the withholding, suspension, or restriction of a driver's license, a
professional or occupational license, or a recreational license, under State
law, as specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer
reporting agency as specified in section 466(a)(7) of the Social Security
Act;
(F) of the interception of a tax refund, as specified in sections 464 and
466(a)(3) of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV
of the Social Security Act[.] (emphasis added)
References to specific provisions of the Social Security Act can also be found in §
704(c)(1)(A)(i):
In a case described in subsection (a)(10) to which subsection (a)(10)
applies, the trustee shall—
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(A)(i) 	provide 	written 	notice 	to 	the 	holder 	of 	the 	claim 	described 	in
subsection (a)(10) of such claim and of the right of such holder to use the
services of the State child support enforcement agency established under
sections 464 and 466 of the Social Security Act for the State in which such
holder resides, for assistance in collecting child support during and after
the case under this title[.] (emphasis added)
The same reference can also be found in § 1302(d)(1)(A)(i).
In all of these examples, Congress did not choose the broad term the “Social
Security Act,” which is the language chosen in connection with CMI; but, rather,
selected specific provisions of the Social Security Act. The CMI definition does not
contain any congressionally limited specific provisions of the Social Security Act. 	It is
appropriate to conclude that when Congress wished to limit the applicability of the
Social Security Act, it did so by reference to specific sections. 	Canons of statutory
construction approved by the Supreme Court recognize that congressional enactments
which contain particular language in one section of a statute, but omit such particularity
in another section, reflect Congress’s intention and purpose in such disparate use. BFP
v. Resolution Trust Corp, 511 U.S. 531, 537, 114 S.Ct. 1757, 1761 (1994), citing
Chicago v. Environmental Defense Fund, 511 U.S. 328, 338, 114 S.Ct. 1588, 1593
(1994). See also Keene Corp. v. United States, 508 U.S. 200, 208, 113 S.Ct. 2035,
2040 (1993).
A comparison of the specificity which Congress chose in referring to limited,
specific provisions of the Social Security Act in §§ 362(b)(2)(D), (E), (F) and (G),
704(c)(1)(A)(i) and 1302(d)(1)(A)(i) as opposed to Congress’s choice in referring to the
unlimited, general provisions of the entire Social Security Act in § 101(10A)(B) provides
further support for the conclusion that unemployment compensation is one of the
“benefits received under the Social Security Act.”
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In summary, in consideration of the text of various relevant portions of the Social
Security Act, United States Supreme Court language, and a comparison with other
statutory text of the 2005 Act, which reference specific provisions of the Social Security
Act, the court holds that unemployment compensation is one of the “benefits under the
Social Security Act.” 	Accordingly, the $1,295.00 listed by the Debtors on line 9 of their
Form 22A is correctly excluded from CMI. 	As a result of this exclusion, and the
absence of any further dispute between the parties concerning any other aspect of the
CMI calculation, the court determines the Debtors’ CMI, as calculated on the Debtors’
Form 22A (Doc. 1), is $7,606.97.
2. Section 707(b)(2)(A)(iii)(I) Allows A Debtor To Deduct A Vehicle’s Monthly
Secured Debt Payment And § 707(b)(2)(A)(ii)(I) Allows A Local Standard Operating
Expense, Even If The Vehicle May Be Surrendered During The Chapter 7 Case
Once 	CMI 	is 	calculated, 	the 	court 	must 	subtract 	the 	expenses 	under 	the
§707(b)(2) formula to determine if the Debtors’ disposable income is sufficient for the
court to presume this case is an abusive filing. 	The parties’ only dispute concerns
expense deductions for a vehicle, a Ford Fusion, that the Debtors intend to surrender
during the chapter 7 case.
On line 42 of Form 22A, the Debtors deducted a monthly payment of $489.84 as
an amount, in accordance with § 707(b)(2)(A)(iii)(I), which is “scheduled as contractually
due to secured creditors in each month of the 60 months following the date of the
petition; and . . . divided by 60.” (Doc. 1). 	In addition, on line 22 of the Debtors’ Form
22A, the Debtors deducted $343.00 as the Local Standard for a monthly vehicle
operation expense where a debtor has two or more vehicles.11
11 The UST uses $260 for line 22 which was the Local Standard monthly vehicle operation expense for a
debtor with one vehicle at the time this chapter 7 case was filed (Doc. 19).
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On September 3, 2006, in the Debtors’ Statement of Intention (Doc. 4), the
Debtors indicated the vehicle was to be surrendered. The court has no evidence in the
record of whether the vehicle was ever surrendered; however, Ford Motor Credit was
granted relief from stay, by default, on the vehicle on August 24, 2006 (Doc. 18). 	The
parties dispute whether the secured debt on the vehicle are proper deductions under §
707(b)(2)(A)(iii)(I) when the vehicle is to be surrendered. 	The UST argues that only
payments which are to be paid during the 60 month period post-filing can be deducted.
Since the vehicle was to be surrendered, the UST asserts the vehicle payments cannot
be deducted.
Although there could be an instinctive assent to the position that there should not
be an allowed deduction for a payment which may not be made, this argument rests on
the premise that Congress’s choice of language in the applicable sections cannot be
accorded its plain meaning. This premise is not supported by any recognized exception
to the mandatory cannon of according Congressional enactments their plain meaning.
To the contrary, Congress, in its policy choices, is certainly entitled to eliminate the
delay and uncertainty of a court determined vehicle-by-vehicle, case-by-case approach
to whether a particular vehicle will be reaffirmed, redeemed or surrendered. 	Congress
can choose to eliminate any analysis of a debtor’s initial decisions concerning the
monthly payments in connection with any reaffirmation or redemption, total amount due,
the 	interest 	rate 	or 	other 	aspects 	of 	the 	modification 	of 	secured 	debt 	and
reconsideration of any such determinations, including surrender, at various points in the
subsequent 	progress 	of 	the 	case. 	Congress 	eliminated 	such 	discretionary
determinations by its choice of language in connection with these mandated deductions.
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This result is not surprising in that the overall means test of § 707(b)(2) is a
formulaic attempt by Congress to establish the calculations used to determine a
presumption of abuse with a minimum, if any, exercise of discretion. 	The formula,
although time consuming in proceeding through its various subsections, simply employs
pre-determined expenses and subtracts these expenses from another formula which
calculates income (CMI). 	Section 707(b)(2), unlike § 707(b)(3), provides very limited
judicial discretion.
The 	parties 	do 	not 	dispute 	that 	payments 	were 	contractually 	due 	under
applicable nonbankruptcy law prior to filing. 	The filing of the chapter 7, by itself, does
not change that fact. Randle, 2006 WL 3734351, at *4. 	The intent to surrender a
vehicle, by itself, also does not change the contractual obligations. In re Simmons, __
B.R. __, 2006 WL 3782959, at *4 (Bankr. N.D. Ohio 2006).
The UST argues the words “scheduled as” are ambiguous and do not refer to
payments scheduled under a contractual agreement, but instead to a secured debt
listed on the Debtors’ bankruptcy schedules and other filings. 	The UST argues that
“scheduled as” in § 707(b)(2)(A)(iii)(I) has the same meaning as the phrase “scheduled
as” in § 1111(a) (“A proof of claim or interest is deemed filed . . . for any claim of interest
that appears in the schedules filed . . . except as claim of interest that is scheduled as
disputed, contingent or unliquidated.”). As a corollary to that argument, the UST further
argues by looking at all of the Debtors’ filings, including the Statement of Intention, the
Debtors are indicating the secured vehicle is being surrendered, and therefore there is
no contractually amount due over the next 60 months. 	The court notes that the use of
the words “scheduled as”, in the context of § 1111(a), is unambiguous in its plain
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language. 	In the context of § 707(b)(2)(A)(iii), the words “scheduled as” are used in a
completely different context and, unlike § 1111(a), do not refer to the bankruptcy
schedules.
When considering the word “scheduled” as used in the Bankruptcy Code (as
amended by the 2005 Act), a similar conclusion can be drawn. An excellent discussion
of this issue is contained in In re Nockerts, 	B.R. 	, 2006 WL 3689465, at *4 (Bankr.
E.D. Wisc. 2006). The Nockerts court concluded that the word “scheduled” may or may
not refer to the bankruptcy schedules. The court noted that in two instances in the
Bankruptcy Code (as amended by the 2005 Act), the word “scheduled” refers to the
bankruptcy schedules: § 523(a)(3), which addresses when certain debts not listed or
scheduled are nondischargeable; and § 554(c), which addresses when property is
deemed abandoned. 	Similar to the use of the phrase “scheduled as” in § 1111(a), the
meaning of the word “scheduled” in these sections can only refer to the bankruptcy
schedules. 	However, in § 524(k)(3)(H)(ii), which addresses reaffirmation agreements,
the term “scheduled” is referring to a repayment schedule. 	In § 1326(a)(1)(B), the term
“scheduled” refers to pre-confirmation lease payments. 	In an analysis of the use of the
word “scheduled” within the surrounding language of these two examples, the word
“scheduled” does not refer to the bankruptcy schedules. 	Sections §§ 524(k)(3)(H)(ii)
and 	1326(a)(1)(B) 	has 	three 	commonalities 	with 	§ 	707(b)(2)(A)(iii)(I): 	1) 	all 	the
provisions were added in the 2005 Act; 2) all the provisions address circumstances
where a debtor scheduled payments in a lease or contract and 3) those sections do not
refer to the bankruptcy schedules.
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Secondly, even if the court were to adopt the UST’s reasoning concerning the
meaning of either “scheduled as” or “scheduled”, a debtor’s statement of intention is not
a schedule. See In re Randle, 2006 WL 3734351, at *5 (“There is no bankruptcy
schedule that requires the debtor to list ‘all amounts due to secured creditors in each of
the 60 months following the date of the petition’ So, there is no bankruptcy schedule to
which § 707(b)(2)(A)(iii) could refer.”). 	The Bankruptcy Code, both before and after the
2005 Act, distinguished, in plain language, between a schedule and a statement of
intention. Cf. § 521(a)(1)(B) and § 521(a)(2). 	The schedules, specifically schedule D,
indicate the Debtors have a secured debt on a Ford Fusion. The debt is not contingent
or disputed in any manner. By scheduling these debts, the Debtors are conceding what
they owe their creditors as of the petition date. See In re Jorczak, 314 B.R. 474, 482
(Bankr. D. Conn. 2004) (the scheduling of a debt is a judicial admission by the debtor).
Finally, the UST argues that certain expenses can be analyzed as “forward
looking” for purposes of § 707(b)(2) and the court should consider whether, in the
future, the vehicle may be surrendered. 	The UST states in its brief that “[a]lthough
certain expenses, such as housing and utilities payments might in some cases be
calculated based on constant historical amounts because there is no reason to believe
such expenses will change in the future, the wording of § 707(b)(2) does not expressly
require expense calculations to be historical in nature . . .” (Doc. 25, page 9). The court
agrees that § 707(b)(2) requires adherence 	to congressionally defined expenses;
however, the reality is that housing and utility expenses do change. In fact, the expense
allowances for these items are periodically adjusted upward even in figures referenced
by the UST. 	In a debtor’s actual budget, these post-petition changes can be dramatic
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and sudden, but this new reality would not be reflected in the UST’s position concerning
permissible expenses under § 707(b)(2). 	As noted by another reported decision, §
707(b)(2)(A)(ii)(I) refers to expenses “as in effect on the date of the order for relief.”
Nockerts, 2006 WL 3689465, at *6 (emphasis added).12
Thus, the UST is seeking income and most expenses (National Standards, Local
Standards and Other Necessary Expenses) be considered “frozen figures” on the date
of the order for relief, but, in the particular case of secured debt payments, urges an
opposite position – that the court should look into the future. 	In an attempt to apply all
of 	the 	§ 	707(b)(2) 	formula 	in 	a 	consistent 	manner, 	such 	an 	argument 	appears
inconsistent and, more importantly, not justified by the plain meaning of the language in
§ 707(b)(2)(A)(iii)(I) which requires a calculation based upon “the 60 months following
the date of the petition.” Section 707(b)(2)(A)(iii)(I) does not reference any post-petition
eventuality, which would alter the expense amount for purposes of the § 707(b)(2)
formula, to adjust that calculation, including an intention to surrender secured property,13
12 Indeed, Official Form 22A refers to the website of the United States Trustee to find some of these
expense figures. The web site currently instructs that the expense figures apply only to “Cases Filed
Between October 1, 2006, and January 31, 2007, Inclusive.” 	This information can be found at
http://www.usdoj.gov/ust/eo/bapcpa/20061001/meanstesting.htm.
13 Nevertheless, the UST argues an additional example of a “forward looking” expense is §
707(b)(2)(A)(iii)(II), which states “any additional payments to secured creditors necessary for the debtor,
in filing a plan under chapter 13 of this title, to maintain possession of the debtor’s primary residence,
motor vehicle, or other property necessary for the support of the debtor and the debtor’s dependents, that
serves as collateral for secured debts[.]” Even if somehow § 707(b)(2)(A)(iii)(II) was a “forward looking”
subsection of § 707(b)(2), it refers to secured payments needed to maintain possession of secured
property for a chapter 13 plan. 	The contrast with § 707(b)(2)(A)(iii)(I) is stark. 	Section §
707(b)(2)(A)(iii)(I) does not concern itself with whether a payment is needed to maintain possession into
the future or otherwise. It is either contractually due in monthly payments over a 60 month period or it is
not. That fact can be readily determined immediately at filing and, as explained, should be determined in
that manner. Cf. Randle, 2006 WL 3734351, at *5 (“Generalized descriptions of the nature of the
expenses under the means test are not persuasive given the specific statutory language in §
707(b)(2)(A)(iii) dictating that the debtor deduct amounts contractually due on her secured debt-period.”).
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The court also notes that this result does not render the obligation of the UST
under § 704 to review “all materials by the debtor” surplusage. 	The Statement of
Intention and other filings beyond a debtor’s schedules would remain relevant for
purposes of § 707(b)(3) analysis. See also Randle, 2006 WL 3734351, at *5 (“[T]he
Trustee’s duty to review documents has nothing to do with proper interpretation of §
707(b)(2)(A)(iii).”).
Finally, the UST argues the result reached today damages § 707(b)(2) as a
“congressionally-imposed bright line test” and also could cause a debtor to seek to
defeat the means test by purchasing secured collateral pre-petition and surrendering
the property shortly after filing (Doc. 25 – page 5, fn. 8).
Concerning the first argument, this court is obligated to apply § 707(b)(2) as it is
written and not what may be thought “is the preferred result.” Granderson, 511 U.S. at
68, 114 S.Ct. at 1275. 	Although this court attempts to apply an appropriate analysis to
the statutory language, if the statute as enacted is not achieving its intended result, this
court is not the appropriate forum for correction. Lamie, 540 U.S. at 538, 124 S.Ct. at
1032 (“Our unwillingness to soften the import of Congress's chosen words even if we
believe the words lead to a harsh outcome is longstanding. It results from ‘deference to
the supremacy of the Legislature, as well as recognition that Congressmen typically
vote on the language of a bill.’”; citation omitted).14
As for a debtor manipulating the means test by purchasing secured collateral
simply to avoid the § 707(b)(2) presumption, such a prepetition manipulation could be
an appropriate component of an analysis under § 707(b)(3).
14 See footnote 7 – Congressional correction to § 1325(b)(3).
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The court concludes the $489.84 secured debt expense for the Ford Fusion is
properly deducted as an amount “scheduled as contractually due secured creditors in
each month of the 60 months following the date of the petition[.]”15 In addition, since the
“date of the order for relief” is the relevant date for purposes of § 707(b)(2)(A)(ii)(I), the
Local Standard vehicle operating expense for two vehicles of $343.00 is also correct. 16
Since, the Debtors’ overall disposable income is a negative figure, they lack the
necessary disposable income to trigger the abuse thresholds of § 707(b)(2)(A)(i).17 The
motion to dismiss this case pursuant to § 707(b)(2) is DENIED.
3. If A Chapter 7 Case Of Above Medium Income Debtors Is Determined Not To Be
Subject To The Presumption Of Abuse Under § 707(b)(2), Or That Presumption Is
Overcome By Special Circumstances, It Is Correct To Consider The Debtors’
Ability To Pay Under § 707(b)(3) As Part Of “The Totality Of The
Circumstances . . . Of The Debtor’s Financial Situation.”
The court has determined there is no presumption of abuse pursuant to §
707(b)(2); 	however, 	the 	UST 	argues 	this 	case 	remains 	subject 	to 	dismissal 	or
conversion pursuant to § 707(b)(3), which states:
In considering under paragraph (1) whether the granting of relief would be
an 	abuse 	of 	the 	provisions 	of 	this chapter in a case in which the
presumption in subparagraph (A)(i) of such paragraph does not arise or is
rebutted, the court shall consider—
(A) whether the debtor filed the petition in bad faith; or
(B) the totality of the circumstances (including whether the
debtor seeks to reject a personal services contract and the
15 The court acknowledges the UST’s citations to reported decisions to the contrary and respectfully
disagrees with these decisions. See, e.g., In re Skaggs, 349 B.R. 594 (Bankr. E.D. Mo. 2006) (vehicle
intended to be surrendered cannot be deducted as a § 707(b)(2)(A)(iii)(I) expense). See also In re
Singletary, 	B.R. 	, 2006 WL 2987945 (Bankr. S.D. Tex. 2006) (vehicle surrendered by the date of a §
707(b) motion cannot be deducted as a § 707(b)(2)(A)(iii)(I) expense).
16 The Local Standards are found in the Internal Revenue Manual 5.15.1.9 (effective 5-1-2004).
17 As noted, the court finds the $7,606.97 is the Debtors’ CMI. The UST included $49.50 that the Debtors
failed to claim for the hypothetical chapter 13 administrative fee. 	Therefore, in subtracting all allowed
monthly expenses of $8,290.53, the Debtors’ disposable monthly income, for purposes of § 707(b)(2), is
negative $683.56.
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financial need for such rejection as sought by the debtor) of
the debtor's financial situation demonstrates abuse.
The court notes that a recent decision, In re Mestemaker, 	B.R. 	, 2007 WL 79306
(Bankr. N.D. Ohio 2007) contains a detailed analysis of § 707(b)(3) in connection with
Sixth Circuit decisions. 	This court believes it will add little to this opinion to recite, in
different language, the holdings in that case, which include a determination that:
The plain meaning of the phrase “debtor’s financial situation” must include
a debtor's actual income and expenses, since such information is the
starting point for any analysis of an individual's financial situation. There is
no provision in § 707(b) stating that the means test is the only method
through which a court may determine whether there is abuse based on a
debtor's ability to pay. Rather, the plain language of § 707(b)(3), read in
conjunction with § 707(b)(1) and (2), is clear and compels a conclusion
that a court must consider a debtor's actual debt-paying ability in ruling on
a motion to dismiss based on abuse where the presumption does not
arise or is rebutted.
Id. at *4.
It is important to recognize the parties agreed that there are no factual issues and
the UST’s Motion (Doc. 19) can be resolved as a matter of law. 18 In the filings of the
UST, the only argument given is that the Debtors have the ability to pay – i.e. fund a
chapter 13 plan. 	The UST raises no other factors in this case such as, but not limited
to, bad faith, rejection of a personal services contract, prepetition manipulation of the
means test, hiding assets, incorrect schedules, future inheritances or income, future
business opportunities, or, significantly for this proceeding, any disagreement with any
of the amounts listed on the Debtors’ schedules I and J. 	The court notes that a review
of all filed information also fails to disclose any concern about such factors.
18 See Order Fixing Date For Filing Final Legal Memoranda (Doc. 24 – October 2, 2006).
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A review of all filed information, specifically, the unchallenged Schedules I & J
(Doc. 1), establish, for purposes of this proceeding, the debtors’ actual income and
expenses.
The amount of income on Schedule I is $4,515.84, which includes, under the
§707(b)(3) analysis, the husband Debtor’s unemployment compensation of $1,295.00,
as the UST argued should be included, although the court determined unemployment
compensation should be excluded under the § 707(b)(2) analysis.
The amount of expenses on Schedule J is $6,481.80, which excludes, under the
§707(b)(3) analysis, the secured debt payment of $489.84 on the vehicle which is
proposed to be surrendered, as the UST argued should be excluded, although the court
determined the secured debt payment of $489.84 on the vehicle which is proposed to
be surrendered should be included under the § 707(b)(2) analysis. 	Additionally,
whether the court considers the Debtors’ transportation expense listed as $400.00 on
schedule J or the UST’s proposed amount of $260.00 (a $140.00 difference, reducing
the total adjusted expenses to $6,341.80), it is clear that the Debtors do not have
available income allowing them to have an ability to repay their debt. [Total monthly
income – $4,515.84; total monthly adjusted expenses – $6,341.80].19
Even 	using 	all 	the 	amounts 	urged 	by 	the 	UST 	and 	recalling 	that 	in 	this
proceeding both parties agreed that this case did not require an evidentiary hearing,
and the issue for determination was, as a matter of law, whether the Debtors had the
19 This remains true even if the deduction for the $507.00 monthly child support obligation, which was
suspended during the debtor husband’s unemployment, is removed as an expense. The Debtors would
still have a substantial shortfall in their monthly budget. 	The monthly income of $4,515.84 minus the
adjusted monthly expenses of $5,974.80 equals negative $1,458.96 per month. See Doc. 1. The court
notes that a focused examination of a debtor’s income and expenses frequently results in a determination
that a debtor lacks sufficient income to pay present expenses, which, not surprisingly, contributes to the
decision to file a chapter 7 case.
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ability to pay, the court determines that the totality of the circumstances of the Debtors’
financial situation, under § 707(b)(3), does not establish that they have any ability to
repay their debt and granting them the relief requested would not be an abuse of the
relief available under the provisions of chapter 7. 	The Motion (Doc. 19) to dismiss
pursuant to § 707(b)(3) is DENIED.
Conclusion
All relief requested in the Motion of the U.S. Trustee to Dismiss Chapter 7 Case
Pursuant to 11 U.S.C. §§ 707(b)(2) and/or (b)(3) and Memorandum in Support (Doc. 19)
is DENIED.
c:
Pamela D. Rice, Esq., 170 North High Street, Suite 200, Columbus, Ohio 43215
(Attorney for the U.S. Trustee)
Eileen K. Field, Esq., 36 East Fourth Street, #1127, Cincinnati, Ohio 45202 (Attorney for
the Debtors)
Mark and Michelle Sorrell, 5301 Renaissance Park Dr., Franklin, Ohio 45005 (Debtors)
Paul Spaeth, Esq., 130 West Second Street, Suite 450, Dayton, Ohio 45402 (Chapter 7
Trustee)
Office of the United States Trustee, Attention: MaryAnne Wilsbacher, 170 North High
Street, Suite 200, Columbus, Ohio 43215
###
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