Christopher Isaac Juarez and Terra Kristine Juarez

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re
Christopher Isaac Juarez and
Terra Kristine Juarez, Debtors. 	No. 13-08-11174 SA
MEMORANDUM OPINION ON CONFIRMATION
This matter came before the Court to consider confirmation
of the Debtors’ Chapter 13 Plan (doc 2) and the Trustee’s Amended
Objection thereto (doc 51). 	Debtors appeared with their attorney
Michael Daniels. 	The Trustee was self-represented. 	This is a
core proceeding. 	28 U.S.C. § 157(b)(2)(L). 	For the reasons set
forth below, confirmation will be denied with leave to amend the
Plan within 21 days; if no amended Plan is filed, the case will
be dismissed.
FACTS
Debtors, both police officers for the City of Albuquerque,
filed their joint voluntary Chapter 13 case and Plan on April 17,
2008. 	Debtors used the standard form plan in use in New Mexico,
filling out only the blanks that specified payments of $300 per
month for 60 months. 	The plan pays no priority or secured
claims.
Initially, Debtors were self-represented. 	After some early
confusion in the case (e.g., missing a preliminary confirmation
hearing and the § 341 meeting, see docs 20, 21) Debtors hired an
attorney, who promptly restored the case to order. 	He filed
amended Schedules A-J (doc 29), an amended Statement of Financial
Affairs (doc 30) and an amended Form 22C (doc 31). 	He also sent
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1CMI is defined in 11 U.S.C. § 101(10A).
2(CMI as listed $8,392.29 * 6 + (omitted payrolls of
$2,302.10 + $1741.08)/6 = $9,066.15.
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out a Notice of Deadline to File Objections to Confirmation of
the Plan (doc 32). 	The Trustee objected to confirmation (doc
51). 	Debtors responded by filing a second amended Form 22C (doc
52) and second amended Schedule I (doc 59).
Schedules I (2nd amended) and J (amended) show combined
average monthly income of $6,897.78 and average monthly expenses
of $6,969.03, for a negative cash flow of -$71.25 per month. 	The
2nd amended Form 22C shows Current Monthly Income 1 (“CMI”)(line
20) of $8,392.29, which is more than the median family income in
New Mexico for a family of 5 (see line 16). 	Therefore, their
“applicable commitment period” is 5 years (see line 17) and their
“Disposable income is determined under § 1325(b)(3)” (see line
23). 	The Total Deductions from Income figure is $8,212.30 (line
52) and their Monthly Disposable Income Under § 1325(b)(2) is
$179.99 (line 59).
At trial, Debtors’ attorney realized that the Forms 22C
filed in the case inadvertently left out one payroll period for
both Debtors in October, 2007. 	See, e.g., Doc 52, p. 9. 	The
result is that Debtors’ CMI was understated. 	If the Court
assumes that the two payrolls in October, 2007 were identical,
then the correct CMI figure would be $9,066.15. 2 	Trustee’s
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3CMI $9,066.15 - expenses $8,476.09 = $590.06.
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Exhibit 5, which is the Trustee’s version of Form 22C, calculated
CMI at $9,440, but this figure was based on a 12 month period
that included post-petition wages. 	The Court finds that the CMI
was $9,066.15. 	Debtors did not show any substantial change in
circumstances after filing the petition.
Trustee’s Exhibit 5 substantially agrees with Debtors’ Form
22C regarding expenses. 	There are two minor differences that
total $264 (in favor of the Debtors) on Exhibit 5. 	The Court
will use the Trustee’s calculation that the total of all
deductions allowed under 707(b)(2) (line 52) is $8,476.09. 	The
Debtors’ disposable income is therefore $590.06 3 .
Debtors significantly over-withhold taxes during the year.
Ms. Juarez testified that this is intentional, to serve as a form
of savings for an emergency fund. 	Debtors refunds for calendar
year 2007 were over $7,500. 	Trustee Exhibit 1.
DISCUSSION
In the Chapter 13 context, income tax refunds are disposable
income. 	Midkiff v. Stewart (In re Midkiff), 342 F.3d 1194, 1202
n.4 (10th Cir. 2003).
Confirmation is governed by 11 U.S.C. § 1325. 	Subsection
(b) deals with the situation we have in this case, i.e., the
Trustee has objected and the Plan does not pay unsecured
creditors in full. 	That subsection states in part:
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(b)(1) If the trustee or the holder of an allowed
unsecured claim objects to the confirmation of the
plan, then the court may not approve the plan unless,
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.
“As to the income side of the § 1325(b)(1)(B) inquiry, the
starting point for calculating a Chapter 13 debtor’s ‘projected
disposable income’ is presumed to be the debtor’s ‘current
monthly income,’ as defined in 11 U.S.C. § 101(10A)(A)(1),
subject to a showing of a substantial change in circumstances.”
Hamilton v. Lanning (In re Lanning), 545 F.3d 1269, 1282 (10th
Cir. 2008). 	Therefore, to confirm this Plan, the Debtors need to
pay $590.06 monthly for 60 months plus surrender their tax
refunds to the Trustee during the life of the Plan.
Debtors argue that they simply do not have this much
disposable income, and instead ask the Court to base the minimum
plan payments on Schedules I and J. 	The Court cannot.
“We have stated time and again that courts must presume that
a legislature says in a statute what it means and means in a
statute what is says there.” 	Connecticut Nat’l Bank v. Germain,
503 U.S. 249, 253-54 (1992)(Citations omitted.) 	When a statute’s
language is plain, the sole function of the court is to enforce
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it according to its terms unless the result is absurd. 	Hartford
Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6
(2000)(quoting United States v. Ron Pair Enter., Inc., 489 U.S.
235, 241 (1989)).
Section 1325's language is plain. 	When the Trustee
objected, these above-median income Debtors needed to pay all
projected disposable income to unsecured creditors for 5 years.
11 U.S.C. § 1325(b)(1)(B). 	This result is not absurd. 	It may be
unfair to some unfortunate debtors, but it is not absurd. 	The
Court must enforce Congress’ chosen words even if they lead to a
harsh outcome. 	Lamie v. United States Trustee, 540 U.S. 526, 538
(2004).
An appropriate order will enter.
Honorable James S. Starzynski
United States Bankruptcy Judge
Date filed on docket: April 15, 2009
copies to:
Michael K Daniels
PO Box 1640
Albuquerque, NM 87103-1640
Kelley L. Skehen
625 Silver Avenue SW
Suite 350
Albuquerque, NM 87102-3111
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
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