In re Brooks
498 B.R. 856
Bankr. C.D. Ill.2013Background
- Debtor Stephanie Brooks filed a Chapter 13 petition; she is above the Illinois median income for a three-person household, triggering the 60-month plan and means test.
- Form 22C shows monthly income of $6,614.50, with $6,214.50 from employment and $400 in child support for two children; she deducts the full $400 on Line 54 as reasonably necessary for the children.
- Debtor also deducts $141 daycare on Line 60, resulting in negative disposable income after applying all Form 22C deductions.
- Schedule I lists average monthly income of $4,340 (including child support) and Schedule J lists expenses of $4,252, yielding a net income of $88.
- The amended plan offers $100 per month for 60 months (total $6,000) to pay unsecured creditors, and would pay a $2,000 mortgage arrearage; unsecured creditors would otherwise receive nothing.
- Trustee objected to confirmation arguing exclusion of child support from disposable income results in improper double deduction and that other deductions on Form 22C are improper; evidentiary hearing held; Trustee’s other objections to Line 30, Line 47(c), and Line 60 were noted for later challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether child support can be excluded from disposable income under 1325(b)(2). | Trustee argues no exclusion; child support should be counted as income and not excluded. | Brooks argues the statute allows exclusion to the extent reasonably necessary for the child, properly applying Illinois law. | exclusion allowed; full $400 monthly is reasonably necessary and excludable. |
| How the 1325(b)(2) exclusion interacts with Form 22C’s standard living expenses. | Trustee says exclude only excess or extraordinary child-related expenses not captured by standard deductions. | Court should follow the buiding principle that exclusions apply to the income side and not reallocate expenses. | Court adopts debtor’s interpretation; exclusion applies on income side consistent with Congress’s scheme. |
| Whether the plan complies with 1325(b)(1)(B) given disposability and plan funding. | Trustee contends plan does not apply all projected disposable income to unsecured creditors. | Debtor’s entire disposable income is not reduced by excluding child support; plan reflects pay-down of mortgage arrearage and no distribution to unsecured creditors. | Plan is approved with exclusion of child support from disposable income; trustee’s other objections reserved for later hearing. |
Key Cases Cited
- Graby v. Graby, 87 N.Y.2d 605 (N.Y. 1995) (disability payments substitute for support; child benefit funds belong to child)
- Simms v. Simms, 175 U.S. 162 (U.S. 1899) (domestic relations matters reserved to state courts; child support funds dedicated for child’s needs)
- Bryant v. Bryant, 218 S.W.3d 565 (Mo.App. E.D. 2007) (foster care payments and similar exclusions tied to child’s needs; funds dedicated for child)