447 B.R. 876
Bankr. D. Minn.2011Background
- Debtors filed for Chapter 13 on August 13, 2010; this was their second confirmation hearing on a proposed plan.
- Second Amended Plan was denied due to surrender of homestead and hunting land to three mortgagees and disallowance of unsecured deficiency claims, erroneously claimed as 100% plan.
- Fifth Modified Plan would retain the homestead, sell hunting land to apply proceeds to priority mortgagees, and continue hunting land payments pending sale; claimed to be a 44% plan with $1100 monthly to Trustee plus Linda’s employment bonuses totaling about $112,000 over 65 months.
- Trustee objec ted that the Plan did not propose paying all disposable income; First State Bank of Alexandria joined the objection seeking dismissal.
- Debtors’ schedules or amendments (Schedule B22C) were incomplete or inadequately disclosed, particularly vehicle ownership/expenses; the case has been pending eight months with multiple plan iterations.
- The court concluded the plan failed to propose payment of all disposable income and dismissed the case.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Fifth Modified Plan pay all disposable income as required under §1325(b)? | Trustee asserts plan does not commit all disposable income to the plan. | Hagers contend available income includes bonuses and certain deductions; plan structure reflects proposed payments. | No; plan does not provide for all disposable income and thus fails. |
| Should the case be dismissed for lack of a confirmable plan after multiple amendments? | Trustee/Bank argue ongoing inability to generate a confirmable plan and extended pendency warrant dismissal. | Debtors continue to attempt plan modifications to achieve confirmation. | Yes; the case is dismissed. |
Key Cases Cited
- In re Baird, 234 B.R. 546 (Bankr.M.D.Fla.1999) (burden to prove plan compliance with 1325 and related provisions)
- In re Davis, 239 B.R. 573 (10th Cir. BAP 1999) (plan must comply with disposable income requirements)
- In re Letsche, 234 B.R. 208 (Bankr.D.Mass.1999) (disposable income and plan feasibility considerations)
- In re Lessman, 159 B.R. 135 (Bankr.S.D.N.Y. 1993) (requirements of plan funding and feasibility)