The Ninth Circuit today held that “Congress’s adoption of the BAPCPA forecloses a court’s consideration of a debtor’s Social Security income or a debtor’s payments to secured creditors as part of the inquiry into good faith under 11 U.S.C. § 1325(a).” Drummond v. Welsh (In re Welsh), No. 12-60009 (9th Cir. March 25, 2013), aff’g Drummond v. Welsh (In re Welsh), 465 B.R. 843 (B.A.P. 9th Cir. 2012).
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Kagenveama Survives Direct Assault
Wielding Hamilton v. Lanning, 130 S. Ct. 2464 (2010), the trustee in the Ninth Circuit case of In re Flores, launched a full-scale attack on Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir. 2008). Kagenveama won. The Ninth Circuit stood by its previous position that an above-median debtor with zero or negative disposable income does not need to confirm a 60-month plan under section 1325(b). Danielson v. Flores (In re Flores), No. 11-55452 (9th Cir. Aug. 31, 2012). NACBA assisted in drafting the debtor’s brief in this case. [Read more…] about Kagenveama Survives Direct Assault
Post-Petition 401(k) Contributions
Two recent cases came out the wrong way on the issue of whether a debtor may deduct post-petition contributions to his 401(k) from the calculation of disposable income. In re Parks, No. 11-1366 (B.A.P. 9th Cir. August 6, 2012), and In re Jenkins, No. 11-16960 (Bankr. E.D. Tenn. July 5, 2012). [Read more…] about Post-Petition 401(k) Contributions
Fourth Circuit Bases Household Size on Fractional “Economic Unit”
The Fourth Circuit affirmed the Bankruptcy Court’s calculation of “household size” using a modified “economic unit” analysis in which children sharing residences with ex-spouses were counted in fractional portions. Johnson v. Zimmer (In re Johnson), No. 11-2034 (4th Cir. July 11, 2012). [Read more…] about Fourth Circuit Bases Household Size on Fractional “Economic Unit”
Bad Faith Cannot Be Based on Income Determined in Compliance with Code
The Ninth Circuit BAP found that a Chapter 13 plan could not be determined to be in bad faith solely based on debtors’ deduction of payments made on secured debts, without regard to the “necessity” of those debts, and their exclusion of social security income from their calculation of disposable income. Drummond v. Welsh (In re Welsh), No. 10-1465 (B.A.P. 9th Cir. Feb. 17, 2012).
Welsh judgment [Read more…] about Bad Faith Cannot Be Based on Income Determined in Compliance with Code
Post-Petition Funds from 401(k) Loan Payoff May Not Be Voluntarily Contributed to Retirement Fund
In an opinion that strains to uphold the conclusion that the “core purpose” of BACPA is to “maximize[e] creditor’s recover[y],” the Sixth Circuit has held that “post-petition income that becomes available to debtors after their 401(k) loans are fully repaid is ‘projected disposable income’ that must be turned over to the trustee for distribution to unsecured creditors pursuant to § 1325(b)(1)(B) and may not be used to fund voluntary 401(k) plans.” Seafort v. Burden, No. 10-6248 (6th Cir. Feb. 15, 2012). The debtor appealed the Bankruptcy Appellate Panel’s reversal of the Bankruptcy Court’s decision in the debtor’s favor.
Seafort Opinion [Read more…] about Post-Petition Funds from 401(k) Loan Payoff May Not Be Voluntarily Contributed to Retirement Fund
NCBRC Files Amicus in Vehicle Ownership Expense Case
NCBRC has filed an amicus brief in In re Scott, No. 10-33131 (Bankr. S.D. Ill), involving the calculation of projected disposable income for vehicle ownership expense where the debtor’s actual contractual payments were less than the deduction allowed under the IRS Local Standards. NCBRC’s brief relies on the plain language of section 707(b)(2)(A)(ii)(I) for the position that a chapter 13 plan need not calculate pdi based upon the lesser of the IRS allowed deduction or the debtor’s actual payments. This position is further supported by the statute’s legislative history and is not undermined by the decision in Ransom nor is it contrary to bankruptcy policy. NCBRC’s brief was written by Jim Haller. Click here for the brief.