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Posts tagged "confirmation"

IRS Debt in a Chapter 13 Bankruptcy

In a case out of the Eastern District in 2008, the joint Chapter 13 debtors owed the IRS a debt of nearly $90,000.00, partially secured. The debtors proposed to pay the IRS directly but were less than clear on the terms of such repayment. The IRS objected asserting its right to be paid through the office of the Chapter 13 Trustee. The court noted that under Section 13.25(a) there are three options for the treatment of secured claims: one, obtain acceptance of the treatment by the affected creditor, two, surrender the collateral to the creditor, or three, provide for the retention of the existing lien by the creditor with a promise of future property distributions (such as deferred cash payments) whose total value, as of the effective date of the plan, is not less than the allowed amount of this creditor's secured claim.

Chapter 13 Plan Confirmation

In re Louviere, was a case out of the Eastern District of Texas where the Chapter 13 Trustee objected to confirmation on the basis that the debtor was not paying disposable income per the current monthly income calculation of the Means Test and because of the debtor's failure to provide evidence of the nonfiling spouse's contribution to household expenses. 

Avoiding Foreclosure with Bankruptcy

In re: Gonzales, was a Southern District of Texas Case where the debtors who were an above medium income household proposed a Chapter 13 Plan which would cure payment arrearages on their home.  A month later, the debtors decided to surrender their home.  The trustee and debtors disputed how the Court should evaluate future payments contractually due on the to-be-surrendered home when determining the debtors' disposable income.  The debtors argued that the Court should consider payments due on the petition date, while the trustee argued only those payments due as of the confirmation date should be considered.  The Court rejected both snapshot views in favor of a more expansive moving picture view.  While acknowledging the wealth of opinions that analyzed the calculation of projected disposable income under 1325(b), the Court found that the opinions are neither uniform in reasoning or results.  The Court utilized a flow chart to resolve 1325(b) disputes.  If an objection has been raised, the Court will then ask if the Plan proposes full payment to unsecured creditors.  If yes, the Plan is confirmed without disposable income analysis.  If no, the Court performs the analysis.  Five components are considered for the analysis: 1.) current monthly income; 2.) projective monthly income; 3.) allowed expenditures; 4.) projected allowed expenditures; and 5.) amounts reasonably necessary to be expended for projected allowed expenditures. 

Bankruptcy Means Testing

A case out of the Northern District of Texas occurred where an unsecured creditor objected to the confirmation of an above medium income debtor's proposed Chapter 13 Plan as failing to satisfy the "projected disposable income" requirement and was not being proposed in good faith.  In particular, the creditor asserted that the debtors had not committed all of their disposable income to plan payments.  At issue was the debtors' ability in performing the Means Test calculation to take standard vehicle ownership expense deductions in excess of their actual car payments or to take a deduction for payments that they were making on a recreational vehicle showing that the vehicle was necessary for the support of the debtors or their dependents.

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