In re Martellini, 482 B.R. 537

Debtor Anthony Martellini filed a Chapter 13 petition on July 15, 2012; wife did not join.
Debtor’s income decreased after a 2010 job relocation, leading to a plan proposed July 25, 2012 and Trustee objection July 30, 2012.
Debtor’s household income is high relative to state median; schedules show two mortgages on a home and several secured claims (Camaro, boat, jet ski, Silverado).
Debtor seeks to surrender interest in the watercraft while non-filing spouse maintains payments outside the plan; plan pays $1,410/month for 60 months, with $631 to Camaro lien.
Unsecured debt includes over $70K; priority tax claim of $14,800; planned treatment results in about 26% to unsecured creditors.
Court finds plan not proposed in good faith under 11 U.S.C. § 1325(a)(3) due to the retention of luxury items and the non-filing spouse burden, and denies confirmation with 10 days to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the plan satisfy disposable income requirements?	Trustee contends debtor under-allocates disposable income to unsecureds by diverting luxury expenses to non-filing spouse.	Debtor argues family income and expenses should be considered collectively; plan presents a proportional allocation.	Plan denial; not meeting §1325(b)(1) disposable income requirements.
Is the plan proposed in good faith under §1325(a)(3)?	Trustee claims plan funds luxury items via spouse outside the plan, signaling bad faith.	Debtor asserts good faith given circumstances and family budget; focuses on need to surrender watercraft only.	Plan denied for lack of good faith.
May a non-filing spouse fund the debtor’s luxury items outside the plan without good faith concerns?	Trustee argues this is an improper loophole that shifts debt obligations away from unsecured creditors.	Debtor contends non-filing spouse’s income is budgeted for family needs and not improperly diverted.	Not approved as proposed; court disallows resultant luxury-item retention via outside payments.
Should the court consider the family lifestyle and non-debtor spouse’s income in calculating disposable income?	Trustee relies on case law disallowing luxury items funded through non-filing spouse.	Debtor references McNichols-type reasoning; a totality-of-circumstances approach should apply.	Court rejects per-se luxury-item rule but finds overall plan not good faith.

Deans v. O'Donnell, 692 F.2d 968 (4th Cir. 1982) (good faith and overall circumstances govern §1325(a)(3) inquiry)
In re Solomon, 67 F.3d 1128 (4th Cir. 1995) (broad factors for good faith assessment; not a checklist)