On April 8, 2008, Appellants Scott J. Baldwin and Tamara L. Baldwin ("Appellants" or "Debtors ") filed with this Court a Notice of Appeal from a Memorandum-Decision and Order of the United States Bankruptcy Court for the Northern District of New York (Robert E. Littlefield, Jr., B.J.), dated March 10, 2008, denying confirmation of Appellants' Chapter 13 Plan ("Plan") because they failed to include all disposable income in their Plan. Notice of Appeal (Dkt. No. 1); Order at 7 (Dkt. No. 1, Attach. 1). Appellants now contend that the Bankruptcy Court erred by concluding that www.paycheckcity.com was not an accurate method for calculating actual taxes incurred for purposes of Line 30 of Form B22C and denying confirmation of Appellants' Plan because they overstated their tax expense. For the following reasons, the March 10, 2008 decision of the Bankruptcy Court is reversed and this case is remanded for Appellants to file an amended Form B22C and Chapter 13 Plan.
The underlying facts are not in dispute. Debtors filed a Chapter 7 bankruptcy petition on June 15, 2006. Order at 2. On October 24, 2006, they filed a motion to convert the case to a Chapter 13 petition; the motion was granted on December 4, 2006. Id. at 3. On October 30, 2006, Debtors filed an amended Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income ("Form B22C").*fn1 Id. Debtors listed on line 30 of Form B22C ("Line 30") their monthly tax expense as $1,731.01, which results in monthly disposable income of $203.25. Id. at 3--4. On March 7, 2007, Andrea E. Celli, the Chapter 13 Standing Trustee ("Trustee"), filed her objection to the Plan asserting that Debtors failed to provide for the submission of all their disposable income pursuant to 11 U.S.C. § 1325(b)(1)(B). Id. at 4. Trustee objected to Debtors' use of a website, www.paycheckcity.com, to calculate monthly taxes "actually incur[red]" for purposes of Line 30, and argued that this methodology overstated Debtors' tax expense. Trustee's Mem. of Law at 5--8 (Dkt. No. 3, Attach. 10). Judge Littlefield sustained Trustee's objection and denied confirmation of the Plan on March 10, 2008. Order at 7. This appeal followed.
This Court has jurisdiction over the matter pursuant to 28 U.S.C. § 158(a). In reviewing the rulings of a bankruptcy court, a district court applies the clearly erroneous standard to a bankruptcy court's conclusions of fact, and reviews de novo conclusions of law. Yarinsky v. Saratoga Springs Plastic Surgery, 310 B.R. 493, 498 (N.D.N.Y. 2004) (Hurd, J.) (citing to In re Manville Forest Prods. Corp., 209 F.3d 125, 128 (2d Cir. 2000)); In re Petition of Bd. of Dirs. of Hopewell Int'l Inst. Ltd., 275 B.R. 699, 703 (Bankr. S.D.N.Y. 2002); FED. R. BANKR. P. 8013. Mixed questions of law and fact are reviewed de novo. In re Vebeliunas, 332 F.3d 85, 90 (2d Cir. 2003). Matters of statutory interpretation are also reviewed de novo. In re Treco, 240 F.3d 148, 155 (2d Cir. 2001). As there are no factual disputes in this case, the findings in the decision will be reviewed de novo.
Where a trustee objects to confirmation of a Chapter 13 Plan, the court may approve the plan only if, as of the effective date of the plan:
(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor's projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.
11 U.S.C. § 1325(b)(1). Only (B) applies in this case; thus the Court may approve the Debtors' Plan only if it provides that all of Debtors' projected disposable income will be devoted to making payments under the Plan.
For a debtor with an annualized current monthly income greater than the state's median income for a similarly sized household - so-called "above the median" debtors - "disposable income" is defined as the debtor's current monthly income (less certain benefits which do not apply in this case) minus the "amounts reasonably necessary to be expended." 11 U.S.C. §§ 1325(b)(2), 1325(b)(3); In re Koch, 391 B.R. 230, 232 (Bankr. N.D.N.Y. 2008); In re Johnson, 346 B.R. 256, 259 (Bankr. S.D. Ga. 2006). Current monthly income is a historical figure that is determined by the average monthly income of the debtor during the six month period ending on the last day of the month preceding the date of the commencement of the case. 11 U.S.C. § 101(10A)(i); In ...