Supreme Court Lets Bankruptcy Courts Look at Debtors' Actual Current Income

On June 7, 2010, the United States Supreme Court decided the case Hamilton v. Lanning. The decision resolved an issue confronting bankruptcy courts in Chapter 13 cases: What happens when the debtor's projected disposable income (calculated by averaging the debtor's income over the six months prior to filing) and actual current income differ? The disposable income figure is used in Chapter 13 bankruptcy cases to determine the debtor's ability to fund a Chapter 13 plan.

In Hamilton v. Lanning, the Supreme Court ruled that bankruptcy courts may consider changes in the debtor's current income and expenses when calculating the debtor's disposable income, rather than having to rely solely on the debtor's prior six months of income.

• Full text of the decision: Hamilton v. Lanning