Posted by NCBRC - October 15th, 2018
Any conflict between Arizona’s Local Plan Form and the Bankruptcy Code’s requirement relating to a chapter 13 debtor’s obligation to file post-confirmation tax returns was not significant and the debtors here could not confirm a plan that failed to comply with the Local Form. In re Reichard, No. 16-12633 (Bankr. D. Ariz. July 5, 2018).
In their motion to set confirmation hearing, chapter 13 debtors, John and Ericka Rae Reichard, included a stipulated order of confirmation (SOC) under which they proposed to pay creditor, Harley Davidson, $6,255, consistent with Harley Davidson’s proof of claim but less than the amount the debtors had proposed in their plan. The SOC also included a provision for submitting post-confirmation tax returns to the court, in accordance with section 521(f), rather than directly to the trustee as required by Arizona Local Plan Form. Read More
Posted by NCBRC - October 2nd, 2018
A bankruptcy court may not deny confirmation of a debtor’s chapter 13 plan in the absence of objection by the trustee or unsecured creditor, based on its belief that the debtor miscalculated her disposable income. Briggs v. Johns (In re Briggs), No. 17-1080 (W.D. La. Sept. 28, 2018).
In calculating her disposable income, chapter 13 debtor, Marlea Briggs, deducted $913.00 as mortgage or rental expenses based on the IRS Local Standard. Though no one objected to the plan, the bankruptcy court scheduled a hearing and denied confirmation sua sponte. The court required Ms. Briggs to file a new plan calculating her income using her actual mortgage payments of $438.20. The court then confirmed the plan over Ms. Briggs’s objection. She appealed. Read More
Posted by NCBRC - July 17th, 2018
“In this Court’s view, attorney fees, which are governed by 11 U.S.C. § 328, should not be intertwined with § 1325(b)(1)’s requirement that debtors pay either 100% of general unsecured claims or all of their disposable income.” In re Jones, No. 17-40497, 2018 Bankr. LEXIS 1244 (Bankr. S.D. Ill. April 26, 2018).
Chapter 13 debtor, Gary Jones, proposed to pay secured creditors directly, and pay into the plan $100.00 per month with that amount going first to pay his attorney’s and the trustee’s fees in full, and then to pay 7.4% to his general unsecured creditors. Despite the fact that the attorney’s fees were below the court-approved no-look fee and that Mr. Jones could not afford to pay more into the plan, the trustee objected to confirmation on the basis that the plan was not filed in good faith.
Applying a totality of the circumstances inquiry into the issue of good faith, the court overruled the trustee’s objection. Read More
Posted by NCBRC - April 27th, 2018
In confirming the debtor’s chapter 13 plan, the bankruptcy court noted that “[a] debtor’s attorney fees are considered to be administrative priority claims and have priority above other claims . . .[under section] 507(a)(2).” In re Amaya, No. 17-70280 (Bankr. S.D. Tex. April 11, 2018).
In Evette Amaya’s chapter 13 bankruptcy, Propel Financial Services, LLC., filed a proof of claim in the amount of $25,303.63 secured by a tax lien on Ms. Amaya’s homestead. Ms. Amaya proposed a plan providing for two monthly payments in the amount of $1,100, and the remaining fifty eight monthly payments in the amount of $1,200. The plan specified that both Ms. Amaya’s counsel, to whom she owed $2,968.00 and Propel would be paid pro rata from month one through month fifty eight of the plan. The plan also provided that, subject to disposition of an avoidance motion, secured creditors would retain their liens. The trustee had her own internal distribution procedures under which she would pay Ms. Amaya’s counsel prior to other creditors. Read More
Posted by NCBRC - April 11th, 2018
The Bankruptcy Court did not err when it confirmed a plan in which the debtor prorated her expected Earned Income Tax Credit and offset the income with projected reasonably necessary expenses. Marshall v. Blake (In re Blake), No. 17-2809 (7th Cir. March 22, 2018).
Below-median chapter 13 debtor, Denise Blake, proposed a plan under which she pledged her federal tax refunds but retained any Earned Income Tax Credit. Notwithstanding that Ms. Blake worked full-time, lived in subsidized housing and had three dependent children, the trustee objected, arguing that Ms. Blake must count the EITC as income and include it in her plan payments. The bankruptcy court ultimately confirmed a plan over the trustee’s objection in which Ms. Blake treated the tax credit as income prorated over the course of the year and offset it with reasonable expenses. Read More
Posted by NCBRC - October 16th, 2017
The mortgage creditor cancelled the underlying debt when it filed a “cancellation of debt” form with the IRS and the debtors paid income taxes on the cancelled debt. In re Lukaszka, No. 17-242 (Bankr. N.D. Ia. Aug. 4, 2017).
In their proposed chapter 13 plan, James and Darcey Lukaszka sought an order requiring First Federal Credit Union, a junior mortgagee, to release their mortgage lien on the basis that, four years earlier, First Federal had issued the debtors a “cancellation of debt” form, 1099-C, indicating that it was no longer seeking to collect on the debt. As a result, the Lukaszkas reported the almost $60,000.00 debt cancelation to the IRS as income and paid taxes on it.
First Federal objected to confirmation. Read More
Posted by NCBRC - February 8th, 2017
Section 1322(b)(9) does not permit a court to confirm a plan vesting surrendered property in an unwilling creditor. Wells Fargo v. Sagendorph, No. 15-40117 (D. Mass. Jan. 23, 2017).
Paul Sagendorph’s chapter 13 plan proposed to surrender property on which Wells Fargo held the sole lien, and vest title in Wells Fargo notwithstanding Wells Fargo’s objection. The bankruptcy court held that the Code permitted Mr. Sagendorph’s treatment of the secured debt and confirmed the plan. In re Sagendorph, No. 14-41675 (Bankr. D. Mass. June 2015). Read More
Posted by NCBRC - October 26th, 2016
A plan providing for periodic payments on a mortgage ending with a balloon payment during the plan, does not violate the Code’s requirement that plan payments be in “equal monthly amounts.” In re Cochran, No. 15-52314 (Bankr. M.D. Ga. Sept. 1, 2016).
William Jackson Cochran had a loan from the Bank of Perry which was secured by his residence and surrounding land. The terms of the lending agreement were that Mr. Cochran would make regular monthly payments for three years then pay off the remainder of the loan in a balloon payment. When the balloon payment came due, Mr. Cochran was unable to make it but continued to make the regular monthly payments. The Bank assigned the loan to RREF and RREF instituted a foreclosure action. Mr. Cochran filed a chapter 13 bankruptcy petition to save his home. His proposed plan contemplated continuing the payments he had been making as Adequate Protection Payments. The plan proposed to pay the remainder of the debt in a single payment within twelve months of confirmation. Read More
Posted by NCBRC - July 6th, 2015
A plan providing for delayed payments to secured creditors was confirmed over the trustee’s objection based on the creditors’ implied acceptance of the repayment terms. Bronitsky v. Bea (In re Bea), No. 14-1376, 2015 Bankr. LEXIS 1793 (B.A.P. 9th Cir. May 29, 2015). Read More
