Hamilton v. Lanning - Oral Argument - March 22, 2010

Hamilton v. Lanning

Media for Hamilton v. Lanning

Audio Transcription for Opinion Announcement - June 07, 2010 in Hamilton v. Lanning

Audio Transcription for Oral Argument - March 22, 2010 in Hamilton v. Lanning

John G. Roberts, Jr.:

We will hear argument first this morning in Case 08-998, Hamilton, the Chapter 13 Trustee, v. Lanning.

Mr. Hamilton.

Jan Hamilton:

Mr. Chief Justice, and may it please the Court:

The Tenth Circuit and Stephanie Lanning were wrong in ignoring the new Chapter 13 means test contained in the 2005 amendments to the Bankruptcy Code.

The amendments to the 2005 Bankruptcy Code were intended to reduce judicial discretion by inserting a formula rather than the judicial discretion that had previously been accorded to judges and to the litigants.

Stephanie Lanning fell afoul of the means test because during the first 2 months of a 6-month lookback period, which I will explain in a moment, she had more income than what she had in the rest of the 6-month lookback period.

That income was from a buyout from her former employer, Payless, and distorted what her income appeared to be during that 6-month period of time.

Because of that, the amount which the means test showed that she would be required to pay to her creditors was more than she could actually pay.

Ruth Bader Ginsburg:

Which means -- which means what?

What is the consequence of that?

You concede that on the strict application of the 6 months she -- her income is much too high for her possibly to pay the creditors.

So what happens to her?

Jan Hamilton:

What happens to her and what could have happened to her may be two different propositions, Justice Ginsburg.

In the first place, there are two parts to that 6-month lookback period, which are found in 101(10A) of the United States Bankruptcy Code -- and the statutes, by the way here, are found at pages 83 through 96 of the petition appendix.

101(10A) has a first part which defines the 6-month lookback period as being 6 months prior to the filing of the date of the petition -- actually, the end of the month prior to the filing of the petition.

Congress's thought was, it seems, that that would be more representative of what an individual's actual income would be.

There is a second part to that 6-month lookback period which says essentially that the debtor can move that 6-month lookback period by not filing certain papers with the court.

Ruth Bader Ginsburg:

That's -- can you explain that?

It seems very odd.

It says she can do that if she doesn't do what the statute requires her to do.

I mean, she's supposed to file that schedule.

She's required, the statute says, to file it.

But she gets an advantage if she doesn't do what she's instructed to do?

Jan Hamilton:

The part of the statute that you are referring to is under 523, and it essentially says that debtor shall file -- 521, excuse me -- shall file certain schedules and that would include the income and expense schedules, Schedule I and Schedule J.

And certainly the court has the ability, under that statute, to extend the time or to excuse the performance of a debtor in that regard.

So there's nothing incongruous about that wording in the statute.

Sonia Sotomayor:

What do you -- what do you do with the contention that the court is bounded by other requirements such as the timing of the meeting of creditors and the plan confirmation, that that binds the district court from resetting it?

Jan Hamilton:

Certainly all of those time frames can be moved, Justice Sotomayor.

There is -- again, the actual timing of the confirmation hearing in a Chapter 13 case may be fluid, although there are certain time limits for the first meeting of creditors and for when the first -- when the confirmation hearing is held.

They can be extended, just as the confirmation hearing would be in a Chapter 12 or in a Chapter 11 case.