Taking care of elderly parents in bankruptcy

On Behalf of | Sep 19, 2010 | Bankruptcy |

In a 2009 case, the Chapter 13 Trustee objected to plan confirmation and challenged a $613 expense for a mortgage payment and taxes in the debtors’ budget.  The mortgage was on a home in which the joint debtor’s parents resided in.  Additionally, the home had been previously transferred to the debtors by the joint debtor’s parents to secure a home equity loan.  The proceeds of this loan were used for home improvements and upkeep.  Thus, the property was part of the estate.

The joint debtors’ parents were elderly and received no income other than social security.  The court recognized that this expense appeared to be the maintenance of a second home.  But, the court found the expense to be a “continuation of an actual expense that is reasonable and necessary for the case and support of the parents.”  The Trustee argued that the appreciation of the value of the home would inure to the debtor’s benefit.  The court stated that if an expense is deemed allowable, the fact that the payment might benefit a debtor or a creditor should not preclude the expenditure.