Home / Uncategorized / Uncertain or unliquidated personal injury awards do not have to be included as disposable monthly income (DMI) in a Chapter 13 bankruptcy proceeding in Michigan?

Uncertain or unliquidated personal injury awards do not have to be included as disposable monthly income (DMI) in a Chapter 13 bankruptcy proceeding in Michigan?

The Court in Connor (E.D. Mich. 2012) recently addressed the issue and concluded that prospective amounts do not have to be included in a DMI analysis in filing a bankruptcy in Michigan.

Typically, disposable monthly income (DMI) includes all the know or certain income as of the date of confirmation of a Chapter 13 plan. In some cases, courts have maintained that injury awards must be included in the DMI calculation.

In Lanning, the US Supreme Court held that “the average monthly income during the six-month look-back” period prior to filing provides the general basis for determining the DMI in any Chapter 13 proceeding. The Connor court relied on Baud to grant the Court broad discretion in determining whether certain types of future income or expense payments could be included in the DMI calculation.

The Connor court maintained that the inclusion of injury awards in the DMI calculation was dependent upon whether the award was known or virtually certain at the time of the Chapter 13 Plan confirmation. The Connor court refused to allow the injury award at issue to be included because the amount of the award was too uncertain at the time the Chapter 13 Plan was confirmed.

The Connor standard requires that the value of a personal injury claim must be certain at the time of Chapter 13 plan confirmation for it to be included in the disposable monthly income calculation. In Connor, even though the debtor received a personal injury settlement during the pendency of the Chapter 13 plan – those proceeds were exempted and the debtor was allowed to retain those monies.

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