Income

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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

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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

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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

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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