by The Tenth Circuit BAP interpreted the phrase “derived during” to mean that all income received during the 6-month look-back period be included in the current monthly income calculation. Based on this, the court found that the debtor was above-median and his chapter 7 case presumptively abusive under section 707(b)(2). When the debtor failed to convert to chapter 13, the bankruptcy court dismissed the case. The BAP affirmed. In re Miller, No. 14-2 (B.A.P. 10th Cir. Oct. 8, 2014).
The debtor calculated his income listing only the checks he both received and earned during the look-back period. One more paycheck put him out of chapter 7 range. The trustee challenged his calculation, arguing that Miller had to include the first paycheck received during the 6-month look-back period, representing income earned prior to that period.
Section 101(10A) defines CMI as “the average monthly income from all sources that the debtor receives . . . without regard to whether such income is taxable income, derived during the 6-month period ending on the last day of the calendar month immediately preceding the date of the commencement of the case. . .”
The debtor argued that the trustee’s position renders the phrase “derived during” redundant because both “receives” and “derived during” would have the same meaning. Instead, the debtor argued, “receives” should mean received during the look-back period, and “derived during” should be interpreted to mean earned during that period.
Noting that Congress occasionally uses different words synonymously, the court found that the statutory rule that the same word be given the same meaning does not lead to the corollary that different words be given different meanings. Further, the court was not troubled by the argument that this leads to redundancy. “[R]eceives without regard to whether such income is taxable income” refers to the type of income, while “derived during the 6-month period” refers to the temporal requirement.
Some courts, such as In re Strickland, No. 13-42820 (Bankr. Minn. Jan. 13, 2014), interpret the phrase “derived during” to establish a temporal perimeter around the time the income was earned, even though it might be received after the 6-month period ends. Under that construction, in a case in which the debtor earns a paycheck every two weeks, as is the case in Miller, the first paycheck in the look-back period representing income earned prior to the period, is not counted toward CMI, while the first post-period paycheck representing income earned during the look-back period, is counted toward that calculation. Apparently, neither the debtor nor the trustee argued in favor of this approach.
The two conflicting rules could thus be stated as:
Miller: all income received during the look-back period regardless of when it was earned.
Strickland: all income earned during the look-back period regardless of when it was received.
While, in this case, there may be no practical difference between the reasoning of Miller and Strickland—one more paycheck is included in CMI—the conclusion in Strickland presents a more logical reading of the statute. The Miller panel had to base its decision on a reading in which “receives” and “derived during” mean the same thing: an unlikely reading without regard to rules of statutory interpretation. Strickland reads “receives” outside the temporal restriction, but reads “derived during” in its logical sense: earned during the look-back period. Not necessarily a distinction without a difference.