## Facts

- Brooks Lewis Musselman, an above-median income debtor, filed a Chapter 13 case in the U.S. Bankruptcy Court for the Eastern District of North Carolina.
- Musselman proposed a 55-month plan that paid nothing to unsecured creditors, relying on Form B22C calculations showing negative projected disposable income.
- eCast Settlement Corporation, an unsecured creditor, objected to confirmation.
- eCast argued that (1) the plan had to run for the five-year “applicable commitment period” under 11 U.S.C. § 1325(b)(4) and (2) Musselman overstated deductions by using IRS Local Standards for housing and transportation that exceeded his actual expenses.
- The bankruptcy court required a 60-month plan term but otherwise accepted Musselman’s use of the full IRS Local Standards amounts when calculating projected disposable income.
- Musselman appealed the plan-length ruling; eCast cross-appealed the projected-disposable-income and expense-deduction rulings.
- The district court heard the consolidated appeal under 28 U.S.C. § 158(a)(1).

## Issues

1. Whether the “applicable commitment period” in 11 U.S.C. § 1325(b)(4) is a mandatory minimum plan duration for an above-median debtor when an unsecured creditor objects, even if projected disposable income is zero or negative.
2. Whether “projected disposable income” under § 1325(b)(1)(B) for an above-median debtor is determined primarily by the statutory means-test formula (Form B22C) rather than by a discretionary, forward-looking estimate.
3. Whether an above-median debtor may deduct the full IRS Local Standards amounts for housing and transportation under § 1325(b)(3) and § 707(b)(2), even when those amounts exceed the debtor’s actual expenses.

## Decision

- The district court affirmed the bankruptcy court’s requirement that Musselman propose a 60-month plan.
- The court held that the applicable commitment period is a temporal requirement setting a minimum plan length for above-median debtors once § 1325(b) is triggered by an objection.
- The court largely affirmed the bankruptcy court’s method for calculating projected disposable income for above-median debtors.
- The court permitted use of the full IRS Local Standards amounts for housing and transportation, even when higher than actual expenses, in computing disposable income for plan-confirmation purposes.

## Legal Principles

- When an unsecured creditor objects and § 1325(b) applies, the “applicable commitment period” in § 1325(b)(4) functions as a mandatory minimum plan duration; for above-median debtors, it is not less than five years.
- “Projected disposable income” under § 1325(b)(1)(B) for above-median debtors is anchored to the statutory definition of “disposable income” in § 1325(b)(2) and the expense methodology incorporated by § 1325(b)(3) from § 707(b)(2).
- Form B22C is the presumptive starting point for projected disposable income; departures require evidence that the historical income measure is not representative of income “to be received” during the commitment period.
- For above-median debtors, the IRS Local Standards amounts for specified expense categories operate as standardized allowances in the means-test calculation and may be claimed in full even if actual expenses are lower, so long as the category applies.

## Conclusion

The court required an above-median Chapter 13 debtor, upon an unsecured creditor’s objection, to remain in a five-year plan despite negative projected disposable income and approved a means-test-based calculation that allows full IRS Local Standards deductions for housing and transportation even when they exceed actual expenses.


Musselman v. eCast Settlement Corp., 394 B.R. 801 (E.D.N.C. 2008)