Hamilton v. Lanning
United States Supreme Court
130 S. Ct. 2464 (2010)
Lanning (defendant) filed for Chapter 13 bankruptcy after receiving a one-time buyout from her former employer that inflated her average income over the six months before filing to $5,343.70 per month, even though her actual, ongoing job paid only $1,922 per month. Lanning proposed a repayment plan of $144/month for 36 months based on her real current income. Hamilton, the Chapter 13 trustee (plaintiff), objected, arguing a strict "mechanical approach" using the inflated six-month average required $756/month for 60 months — an amount the trustee conceded Lanning could not actually pay. The bankruptcy court approved Lanning's plan (extending the term to 60 months), and the Tenth Circuit affirmed, treating the mechanical approach as presumptively correct but rebuttable. The trustee sought Supreme Court review.
Whether, in determining a Chapter 13 debtor's "projected disposable income," a bankruptcy court may consider known or virtually certain changes in the debtor's future income or expenses rather than mechanically extrapolating from the pre-filing six-month average.