The case of In re Arsenault, ___ B.R. ___, 2007 WL 1956277 (Bkrtcy.M.D.Fla.)(Williamson, J.) held that the presumptive starting point to determine a Chapter 13 debtor's "projected disposable income" under section 1325(b)(1)(B) is the number obtained from the Form B22C which makes this calculation based on the historical CMI. The court further held that this figure may be rebutted by evidence that Form B22C's "historic snapshot" does not form a reasonable basis for projected income forward over the life of the Chapter 13 plan. In applying these conclusions in Arsenault, the court found that the debtors' projected disposable income should not be determined solely by Form B22C and that the court should take into account the debtor husband's future annual bonuses that were not reflected in the Form B22C.
The court noted that in general two lines of cases dealing with this issue have emerged. One line of cases which is typified by In re Alexander, 344 B.R. 742 (Bankr.E.D.N.C.2006) holds that disposable income is based on CMI and that disposable income is the same as projected disposable income. The determination of projected disposable income is basically a mechanical test using historical income data. The other line of cases, typified by In re Hardacre, 338 B.R. 718 (Bankr.N.D.Tex.2006) holds that the term "projected disposable income" is not the same as "disposable income" and that projected disposable income must be based on the debtor's anticipated income during the term of the plan and not be merely an average of prepetition income. The court found that Hardacre line of cases to be the better-reasoned line of cases.
The court also addressed the manner of calculation of expenses for the above-median income Chapter 13 Debtor. The court held that per section 1325(b)(3), the expenses must be determined under Form B22C without resort to Schedule J. The court noted that this section uses the term "shall" in its direction to use 707(b)(2) for expenses and it meant to take away all judicial discretion in the specific deduction areas set forth in section 707(b)(2). e.g. In re Barr, 341 B.R. 181 (Bankr.M.D.N.C.2006). The court did note though that the plan is subject to being modified under section 1329 to increase or decrease payments if circumstances change resulting in different expense calculations than those under section 707(b)(2).
