529 B.R. 308
Bankr. C.D. Cal.2015Background
- Debtor filed voluntary Chapter 7 on Sept. 2, 2014, converted to Chapter 13 and proposed a 60-month plan that depends on $700/month in contributions from a live‑in boyfriend (Mayo); Debtor’s schedules show $4,300 take‑home pay and $4,510 monthly expenses.
- Plan payments require $490/month (then higher near end); without the $700 contribution Debtor’s net monthly income is negative and she cannot fund plan payments.
- Debtor submitted two declarations: Mayo (boyfriend) asserting intent to contribute $700/month (with two unauthenticated October paystubs), and Valle (mother) offering to serve as a backup contributor (with a one‑page bank printout and SSI/business income statements).
- Court repeatedly questioned the reliability of third‑party contributions and afforded Debtor opportunity to supply additional evidence; no further admissible evidence was produced.
- Bankruptcy court found contributions neither sufficiently documented nor reliably stable and therefore concluded the plan was not feasible and Debtor was not an "individual with regular income." Court denied confirmation and ordered conversion back to Chapter 7.
Issues
| Issue | Debtor's Argument | Trustee/Opposition's Argument | Held |
|---|---|---|---|
| Feasibility under 11 U.S.C. § 1325(a)(6): are nondebtor contributions sufficiently reliable to make plan feasible? | Mayo and Valle will provide $700/month (Mayo as primary, Valle as backup), enabling plan payments. | Contributions are undocumented, conditional, and not backed by financial records; therefore plan is not likely to be completed. | Denied — contributions not shown to be reliable/unqualified; plan not feasible. |
| Whether nondebtor contributions constitute "regular income" for § 101(30)/eligibility under § 109(e) | Contribution income should be included to show ability to pay plan. | Gratuitous family/friend payments are not ordinarily "regular income" absent evidence of stability, obligation, or history. | Denied — contributions do not qualify as regular income; Debtor not eligible as an individual with regular income. |
| Sufficiency of evidence from live‑in boyfriend (Mayo) | Mayo’s declaration and paystubs demonstrate intent and income to contribute. | Relationship is recent, commitment is conditional, and paystubs are limited; no multi‑month financial records. | Denied — factors (relationship duration, lack of history, conditional promise, weak income proof) weigh against reliability. |
| Sufficiency of evidence from mother (Valle) as backup contributor | Valle’s declaration and bank printout establish ability and unconditional commitment to cover unpaid portion. | Bank printout and deposits show low balances and volatility; no history of support or clear ability to sustain contributions. | Denied — although familial relationship favors contribution, Valle failed to prove financial ability and history; not reliable. |
Key Cases Cited
- In re Schwalb, 347 B.R. 726 (Bankr. D. Nev. 2006) (contributions from family disfavored but may be acceptable where there is firm commitment and long history of support)
- Meyer v. Hill (In re Hill), 268 B.R. 548 (9th Cir. BAP 2001) (debtor bears burden of proof on plan confirmation elements)
- Crowder v. [Trustee] (In re Crowder), 179 B.R. 571 (Bankr. E.D. Ark. 1995) (dismissing chapter 13 when nondebtor did not affirm specific ongoing support)
- Norwood v. [Trustee] (In re Norwood), 178 B.R. 683 (Bankr. E.D. Pa. 1995) (denying confirmation where debtor failed to prove amount/ability of relatives to contribute)
- Porter v. [Trustee] (In re Porter), 276 B.R. 32 (Bankr. D. Mass. 2002) (gratutious third‑party payments generally not "regular income" absent exceptions)
- Jordan v. [Trustee] (In re Jordan), 226 B.R. 117 (Bankr. D. Mont. 1998) (rejecting live‑in partner contributions as regular income absent strong proof)
- Murphy v. [Trustee] (In re Murphy), 226 B.R. 601 (Bankr. M.D. Tenn. 1998) (accepted live‑in boyfriend's contributions where there was long cohabitation, history of support, and an unconditional affidavit)
- Loomis v. [Trustee] (In re Loomis), 487 B.R. 296 (Bankr. N.D. Okla. 2013) (rejected contribution evidence where relationship short and no access/control over contributor's funds)