FILED
                                                        United States Court of Appeals
                                                                Tenth Circuit

                                                              October 24, 2012
                                   PUBLISH                  Elisabeth A. Shumaker
                                                                Clerk of Court
                  UNITED STATES COURT OF APPEALS

                              TENTH CIRCUIT



 In re: FRED FAUSETT CRANMER,

           Debtor.
 _______________________________

 KEVIN R. ANDERSON, Chapter 13 Trustee,

             Trustee-Appellant,
       v.                                                 No. 12-4002
 FRED FAUSETT CRANMER,

             Appellee,

 _______________________________

 NATIONAL ASSOCIATION OF
 CONSUMER BANKRUPTCY ATTORNEYS,

             Amicus Curiae.


        APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF UTAH
                   (D.C. NO. 2:11-CV-00230-TS)


Kevin R. Anderson, Esq., Standing Chapter 13 Trustee, Salt Lake City, Utah, for
Appellant.

Paul Toscano, Esq., Law Office of Paul Toscano, P.C., Salt Lake City, Utah, for
Appellee.

Tara Twomey, Esq., National Consumer Bankruptcy Rights Center, San Jose,
California, on the brief for Amicus Curiae.
Before MURPHY, HOLLOWAY, and O’BRIEN, Circuit Judges.


MURPHY, Circuit Judge.



I.    Introduction

      Fred Fausett Cranmer filed a Chapter 13 repayment plan, which excluded

Social Security income (“SSI”) from the projected disposable income calculation.

The bankruptcy trustee objected on that basis. The bankruptcy court denied

confirmation of the plan, concluding, inter alia, SSI must be included in the

projected disposable income calculation and Cranmer’s failure to do so meant he

did not propose his plan in good faith. Cranmer appealed and the district court

reversed. This court concludes SSI need not be included in the calculation of

projected disposable income and Cranmer’s failure to include it is not grounds for

finding he did not propose his plan in good faith. Exercising jurisdiction pursuant

to 28 U.S.C. § 158(d)(1), we therefore affirm the district court’s order.

II.   Background

      The facts are undisputed. On March 12, 2010, Cranmer filed a petition for

relief under Chapter 13 of the Bankruptcy Code. In connection with the petition,

Cranmer filed a Form 22C (Statement of Current Monthly Income and Calculation

of Commitment Period and Disposable Income). As allowed by 11 U.S.C.

§ 101(10A)(B), Cranmer did not include his SSI on Form 22C. Cranmer also

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filed Bankruptcy Schedules I & J. On Schedule I, which represents his monthly

income, Cranmer included $1940 of SSI. On Schedule J, which represents his

monthly expenses, Cranmer deducted a portion of that SSI as “exempt social

security funds.” The Chapter 13 repayment plan Cranmer ultimately proposed,

therefore, allowed him to retain a portion of his SSI rather than commit it to the

repayment of creditors.

      Kevin R. Anderson, the bankruptcy trustee (the “Trustee”), objected to

confirmation of the plan. While the Trustee acknowledged SSI is excluded from

the calculation of current monthly income, which is reflected on Form 22C, he

argued SSI is not excluded from the calculation of projected disposable income,

which is based on Schedules I and J.

      The bankruptcy court held a confirmation hearing and subsequently issued

a memorandum decision and order denying confirmation of Cranmer’s proposed

Chapter 13 plan. The bankruptcy court concluded SSI must be included in the

projected disposable income calculation and that Cranmer’s failure to do so

showed he did not propose his plan in good faith.

      Under protest, Cranmer filed an amended plan, which included all of his

SSI in his projected disposable income calculation. The bankruptcy court

confirmed this plan on September 21, 2010, noting that Cranmer retained his right

to appeal the bankruptcy court’s conclusions regarding SSI. Cranmer failed to

make payments in accordance with the amended plan and, on that basis, the

                                         -3-
bankruptcy court dismissed the case for noncompliance with the confirmation

order. 1

       Cranmer appealed the dismissal, arguing the bankruptcy court erred in

denying confirmation of his original Chapter 13 plan because SSI is specifically

exempted from bankruptcy repayment plans, i.e., from the projected disposable

income calculation. The district court issued a memorandum decision and order

on December 7, 2011, reversing the bankruptcy court’s decision. It concluded

SSI need not be included in the projected disposable income calculation and

failure to include it did not show Cranmer proposed his plan in bad faith. The

Trustee appeals.

III.   Analysis

       A.    Standard of Review

       The question whether SSI must be included in the projected disposable

income calculation is a question of law reviewed de novo. See Hamilton v.

Lanning (In re Lanning), 

, 1274 (10th Cir. 2008), aff’d, 

(2010). Whether a court may consider SSI in the good faith analysis is also

a question of law reviewed de novo. Drummond v. Welsh (In re Welsh), 

, 847 (B.A.P. 9th Cir. 2012); In re Love, 

, 1354 (7th Cir. 1992).



       1
       Cranmer’s payments, however, were consistent with the repayment plan
Cranmer originally proposed, which excluded a portion of his SSI from the
projected disposable income calculation.

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      B.     Projected Disposable Income

      Chapter 13 debtors like Cranmer “must agree to a court-approved plan

under which they pay creditors out of their future income.” Hamilton v. Lanning,

, 2469 (2010); see also 11 U.S.C. §§ 1306(b), 1321, 1322(a)(1),

1328(a). A bankruptcy trustee oversees the filing and execution of the debtor’s

plan. 

; see also 11 U.S.C. § 1322(a)(1); 28 U.S.C.

§ 586(a)(3). If the trustee or an unsecured creditor objects to confirmation of the

debtor’s plan, the debtor must either pay unsecured creditors in full or pay all

“projected disposable income” to be received by the debtor over the duration of

the plan. 11 U.S.C. § 1325(b)(1).

      The Bankruptcy Code does not define “projected disposable income.” It

defines “disposable income” as “current monthly income received by the debtor”

less certain amounts, including amounts reasonably necessary “for the

maintenance or support of the debtor or a dependent of the debtor.” 11 U.S.C.

§ 1325(b)(2). “Current monthly income” is defined as “the average monthly

income from all sources that the debtor receives (or in a joint case, the debtor and

the debtor’s spouse receive) without regard to whether such income is taxable

income.” 11 U.S.C. § 101(10A)(A). Benefits received under the Social Security

Act, however, are specifically excluded from the definition of current monthly

income. 11 U.S.C. § 101(10A)(B). The Trustee does not dispute SSI is expressly

excluded from the calculation of disposable income. Instead, he insists that, even

                                         -5-
though SSI is excluded from the calculation of disposable income, it is not

excluded from the calculation of projected disposable income.

      The starting point in calculating a debtor’s projected disposable income is

the debtor’s disposable income. 

. In most cases,

projected disposable income is the average of the debtor’s disposable income

during the six months preceding the bankruptcy filing multiplied by the number of

months in the debtor’s plan. 

As the Supreme Court noted in

Lanning, however, this method of calculating projected disposable income

produces “senseless results” in cases where a debtor’s disposable income during

the six months preceding the filing of bankruptcy is “either substantially lower or

higher than the debtor’s disposable income during the plan period.” 

In Lanning, for example, the debtor’s disposable income in the months

preceding her bankruptcy filing was greatly inflated by a one-time buyout from

her employer. 

Lanning held that in these “unusual cases,” a

court “may account for changes in the debtor’s income or expenses that are

known or virtually certain at the time of confirmation.” 

      The Trustee argues this is one of those unusual cases because it is known or

virtually certain Cranmer will receive more than $87,000 in SSI over the duration

of his plan and an above-median debtor 2 like Cranmer should not be allowed to

      2
      An above-median debtor is an individual whose income is above the
median for his state. See 11 U.S.C. § 1325(b)(3). Whether a debtor’s income
                                                                   (continued...)

                                         -6-
shield such surplus income from the repayment of creditors. As the district court

noted, however, Cranmer’s receipt of SSI is not a change in his income. It is

income he was receiving on the date of his bankruptcy filing. More importantly,

it is income the Bankruptcy Code expressly allows him to exclude from the

disposable income calculation. 11 U.S.C. §§ 101(10A), 1325(b)(2). Although the

term “projected disposable income” is not defined, it incorporates the term

“disposable income,” which is defined and which expressly excludes SSI. The

mere placement of the adjective “projected” in front of the words “disposable

income” does not imbue the term “disposable income” with different substantive

components. See In re Barfknecht, 

, 161 (Bankr. W.D. Tex. 2007)

(rejecting the argument that “the addition of the adjective ‘projected’ unhinges

the remaining two words from their Code-mandated definitions”). Thus, the plain

language of the Bankruptcy Code demonstrates SSI is excluded from the projected

disposable income calculation.

      Moreover, nothing in Lanning suggests a court may disregard the Code’s

definition of disposable income in calculating projected disposable income. Baud

v. Carroll, 

, 345-46 (6th Cir. 2011) (holding Lanning does not

support the view that bankruptcy courts may ignore the definition of disposable

      2
        (...continued)
falls above or below the median determines which expenses he can claim as
“amounts reasonably necessary to be expended . . . for the maintenance or support
of the debtor or a dependent” under § 1325(b)’s disposable income calculation.
See 11 U.S.C. §§ 707(b)(2), 1325(b)(2)(A)(I), 1325(b)(3)(A).

                                        -7-
income, which excludes SSI, and include SSI in the calculation of the debtor’s

projected disposable income “simply because there is a disparity between the

amount calculated using that definition and the debtor’s actual available income

as set forth on Schedule I”); 8-1325 Collier on Bankruptcy ¶ 1325.11[4][a] (16th

ed. 2012) (“There is no suggestion in [Lanning] that a bankruptcy court may rely

on the term ‘projected’ to otherwise deviate from the formula—for example, by

including income that the formula excludes, such as Social Security benefits

. . .”). To the contrary, Lanning made clear a debtor’s disposable income is not

only the starting point in calculating projected disposable income, but in most

cases it is 

. In short, Cranmer’s exclusion of a

portion of his SSI from the projected disposable income calculation, as allowed

by the Code, does not render his Chapter 13 proceeding one of the unusual cases

contemplated by Lanning. Thus, Cranmer’s projected disposable income is

calculated using his disposable income and, therefore, need not include his SSI. 3

      This conclusion is bolstered by language in the Social Security Act which

shields payments made pursuant to the Act from “execution, levy, attachment,

garnishment, or other legal process,” or from “the operation of any bankruptcy or



      3
       The Trustee makes several additional arguments with respect to the
question whether SSI must be included in the calculation of projected disposable
income and whether the exclusion of SSI from that calculation shows the debtor
proposed his plan in good faith. In light of our holding, we need not address
these additional arguments.

                                         -8-
insolvency law.” 4 42 U.S.C. § 407(a); see also Carpenter v. Ries (In re

Carpenter), 

, 936-37 (8th Cir. 2010) (Ҥ 407 operates as a complete

bar to the forced inclusion of past and future social security proceeds in the

bankruptcy estate.”); In re Welsh, 

, 843-44 (Bankr. D. Mont. 2010);

In re Radford, 

, 831 (Bankr. W.D. Mo. 2000); 4-522 Collier on

Bankruptcy ¶ 522.09[10][a] n.76 (16th ed. 2012) (“Congress amended 42 U.S.C.

§ 407 to clarify that the inalienability of Social Security benefits was not repealed

by the Bankruptcy Code, so that such benefits should not even become part of the

bankruptcy estate.”).

      C.       Good Faith

      Chapter 13 requires a debtor to propose his repayment plan in good faith.

11 U.S.C. § 1325(a)(3). The good faith determination is made on a case-by-case

basis considering the totality of the circumstances. Flygare v. Boulden, 

, 1347 (10th Cir. 1983). In evaluating a debtor’s good faith, courts should

consider eleven non-exclusive factors as well as any other relevant circumstances.

      4
        The protections of 42 U.S.C. § 407(a) may only be limited, superceded, or
otherwise modified by express reference to § 407. 42 U.S.C. § 407(b). None of
the relevant provisions of the Bankruptcy Code include any such reference.
      5
          These factors include:

      “(1) the amount of the proposed payments and the amount of the
      debtor’s surplus; (2) the debtor’s employment history, ability to earn
                                                                      (continued...)

                                         -9-
      The Trustee argues the good faith inquiry and the calculation of projected

disposable income are separate inquiries. Thus, the Trustee asserts even if

Cranmer was justified in excluding a portion of his SSI from the projected

disposable income calculation, the bankruptcy court did not err in concluding that

in doing so, Cranmer did not propose his plan in good faith. The Trustee’s

arguments are unpersuasive. When a Chapter 13 debtor calculates his repayment

plan payments exactly as the Bankruptcy Code and the Social Security Act allow


      5
       (...continued)
      and likelihood of future increases in income; (3) the probable or
      expected duration of the plan; (4) the accuracy of the plan’s
      statements of the debts, expenses and percentage repayment of
      unsecured debt and whether any inaccuracies are an attempt to
      mislead the court; (5) the extent of preferential treatment between
      classes of creditors; (6) the extent to which secured claims are
      modified; (7) the type of debt sought to be discharged and whether
      any such debt is non-dischargeable in Chapter 7; (8) the existence of
      special circumstances such as inordinate medical expenses; (9) the
      frequency with which the debtor has sought relief under the
      Bankruptcy Reform Act; (10) the motivation and sincerity of the
      debtor in seeking Chapter 13 relief; and (11) the burden which the
      plan’s administration would place upon the trustee.”

Flygare v. Boulden, 

, 1347-48 (10th Cir. 1983) (quoting United
States v. Estus (In re Estus), 

, 316-17 (8th Cir. 1992). Since Flygare
was decided, however, the Bankruptcy Code was amended to include 11 U.S.C.
§ 1325(b). See Educ. Assistance Corp. v. Zellner, 

, 1227 (8th Cir.
1987). Section 1325(b)’s “‘ability to pay’ criteria subsumes most of the Estus
factors” and, therefore, the good faith inquiry now “has a more narrow focus.”

must consider “factors such as whether the debtor has
stated his debts and expenses accurately; whether he has made any fraudulent
misrepresentation to mislead the bankruptcy court; or whether he has unfairly
manipulated the Bankruptcy Code.” Id.; see also Robinson v. Tenantry (In re
Robinson), 

, 668 n.7 (10th Cir. 1993).

                                       -10-
him to, and thereby excludes SSI, that exclusion cannot constitute a lack of good

faith. See Drummond v. Welsh (In re Welsh), 

, 856 (B.A.P. 9th Cir.

2012) (holding the exclusion of SSI from the projected disposable income

calculation, which § 407 and the Bankruptcy Code expressly allow for, “is not, by

itself, probative of a lack of good faith”); Fink v. Thompson (In re Thompson),

, 144 (B.A.P. 8th Cir. 2010) (“Standing alone, the Debtors’ retention

of Social Security income is insufficient to warrant a finding of bad faith under

§ 1325(a)(3).” (quotation omitted)). A contrary holding would render the Code’s

express exclusion of SSI from the calculation of the debtor’s disposable income,

and thereby, its exclusion of SSI from the calculation of the debtor’s projected

disposable income, meaningless. In re 

; see also

Kawaauhau v. Geiger, 

, 62 (1998) (“[W]e are hesitant to adopt an

interpretation of a congressional enactment which renders superfluous another

portion of that same law.” (quotation omitted)). It simply was not bad faith for

Cranmer to adhere to the provisions of the Bankruptcy Code and, in doing so,

obtain a benefit provided by it.

IV.   Conclusion

      For the foregoing reasons, this court affirms the district court’s order.




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