In a significant win for debtors, the Fourth Circuit today held “that the plain language of the Bankruptcy Code excludes Social Security income from the calculation of ‘projected disposable income,’ but that such income nevertheless must be considered in the evaluation of a plan’s feasibility.” Ranta v. Gorman (In re Ranta), No. 12-2017 (July 1, 2013). [Read more…] about Social Security Not Part of PDI but May Be Considered for Feasibility
Social Security Income May Not Be Considered in Good Faith Analysis
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).
[Read more…] about Social Security Income May Not Be Considered in Good Faith Analysis
Social Security May Not Be Considered in 707(b)(3)(B) Totality of Circumstances Test
The Catch-22 of considering social security income for a Chapter 7 abuse analysis while excluding its use in a Chapter 13 plan was recently addressed by a bankruptcy court in the Central District of California. In In re Suttice, No. 12-21006 (Bankr. C.D. Cal. Jan. 9, 2013), the debtors were an 85-year-old husband and a 69-year-old wife, both with significant medical concerns. The bulk of their income consisted of social security benefits, pension and retirement accounts, and Veterans Benefits with a small amount coming from family contributions. Their combined income minus expenses left them with a monthly surplus of $896.94. The trustee sought to dismiss their Chapter 7 bankruptcy on the basis that the totality of the circumstances indicated abuse of bankruptcy under section 707(b)(3)(B). Specifically, the trustee sought to have the debtors’ social security income considered in their ability to pay. [Read more…] about Social Security May Not Be Considered in 707(b)(3)(B) Totality of Circumstances Test
Drummond v. Welsh, No. 12-60009 (9th Cir.)
Type: Amicus brief
Date: October 11, 2012
Description: Whether social security income is included in “projected disposable income.”
Result: Judgment affirmed March 25, 2013 – debtor won
In re Mort Ranta, No. 12-2017 (4th Cir.)
Type: Amicus
Date: October 16, 2012
Description: Whether social security income is included in projected disposable income.
Result: Vacated and remanded, July 1, 2013
Anderson v. Cranmer, No. 12-4002 (10th Cir.)
Type: Amicus
Date: June 12, 2012
Description: Whether social security income should be excluded from calculation of projected disposable income.
Result: Judgment affirmed, October 24, 2012
Beaulieu v. Ragos, No. 11-31046 (5th Cir.)
Type: Amicus
Date: March 27, 2012
Description: Whether social security income may be considered in good faith analysis or for purposes of confirming plan over objection of trustee.
Result: Judgment affirmed. Debtor won.
Washington v. Reding, No. 09-0579 (M.D. Ala.)
Type: Amicus
Date: October 29, 2009
Description: Whether unemployment compensation is excluded from CMI as social security benefit.
Result: Affirmed. Debtor lost.