According to a recent ruling, Chapter 13 debtors who file bankruptcy petitions in courts governed by the 10th U.S. Circuit Court of Appeals are not required to include Supplemental Security Income (SSI) when calculating their “projected disposable income.” The bankruptcy case in question involved a man who filed a Chapter 13 petition in March 2010 with the U.S. Bankruptcy Court for the District of Utah, which is governed by the 10th U.S. Circuit Court of Appeals. The same appeals court also governs federal courts in Oklahoma, Wyoming, Colorado, Kansas and New Mexico. If you are considering applying for bankruptcy protection in Oklahoma, contact our experienced bankruptcy attorneys at Oklahoma Legal Center today to protect your legal options and ensure that your case is handled appropriately.
SSI Payments and Projected Disposable Income
Fred F. Cranmer did not include his Supplemental Security Income (SSI) from the Social Security Administration (SSA) on forms reflecting his current monthly income and disposable income at the time that he filed for Chapter 13 bankruptcy. According to the 10th Circuit Court’s opinion, SSI does not have to be included on those forms, under 11 U.S.C. § 101(10A)(B). However, when he calculated his “projected” disposable income, he included $1,940 of monthly SSI benefits and deducted another portion of the income as exempt. Cranmer’s Chapter 13 trustee objected to this action, which would have allowed Cranmer to retain a portion of his SSI benefits, rather than turn it over to creditors.
According to the Chapter 13 trustee, Cranmer is set to receive over $87,000 in SSI payments throughout the duration of the plan he developed. And, while the trustee conceded that SSI does not have to be included in the calculation of current monthly income, he argued that the income should not be excluded from the calculation of “projected” disposable income. The Bankruptcy Court sided with Cranmer’s trustee, indicating the the Social Security income had to be factored into the debtor’s “projected” disposable income. In response, Cranmer filed an amended plan that included all future SSI payments. Cranmer’s bankruptcy case was dismissed for noncompliance however, when he began to make payments based on his original plan.
Federal Appeals Court Reverses Bankruptcy Court’s Ruling
Cranmer appealed the Bankruptcy Court’s ruling to the U.S. 10th Circuit Court of Appeals, which reversed the original decision, indicating that Social Security income does not need to be included in a debtor’s projected disposable income calculation. The appeals court said that the Bankruptcy Code expressly allows debtors to exclude SSI from the calculation of their current monthly income, and the panel disagreed with the Chapter 13 trustee that “projected” disposable income is somehow different. “The mere placement of the adjective ‘projected’ in front of the words ‘disposable income’ does not imbue the term ‘disposable income’ with different substantive components,” the appeal court wrote.
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In support of its ruling, the appeals court referred to 42 U.S.C. § 407(a) of the Social Security Act, which the court said protects Social Security payments from “execution, levy, attachment, garnishment, or other legal process,” or from “the operation of any bankruptcy or insolvency law.” If you are considering filing for bankruptcy in Oklahoma, contact our reputable bankruptcy lawyers at Oklahoma Legal Center today. The process of filing a bankruptcy petition can be extremely complicated, and too often the rights of debtors are taken advantage of by the court, creditors, or other deceptive parties. Our bankruptcy attorneys at Oklahoma Legal Center have extensive experience protecting the legal rights of Oklahomans seeking bankruptcy protection, and can help you pursue the debt relief you need.