445 B.R. 504
Bankr. D.S.C.2011Background
- Debtor Mary E. Miller filed a Chapter 13 plan on August 7, 2010; the plan proposes $255 monthly payments for 36 months to unsecured creditors.
- Debtor's household income is $4,956 monthly, consisting of her $588 Social Security benefit and other household contributions; her non-filing spouse receives $1,545 in Social Security and $2,823 in VA disability benefits monthly.
- Spouse resides in a nursing home; their joint account holds the benefits paid to the spouse, not the Debtor.
- Debtor's Schedule I lists expenses at $2,567.67 with net monthly income of $2,388; Schedule F shows over $87,000 in unsecured credit card debt; mortgage on Debtor's home is the only secured debt ($149,000) and is current.
- Trustee objects to inclusion of the non-debtor spouse's Social Security income in disposable income and to the plan's good faith; Debtor responds that Social Security income is excluded from current monthly income and that the plan is proposed in good faith.
- The Court held that non-debtor spouse Social Security benefits are excluded from current monthly income and that the plan was proposed in good faith, leading to confirmation of the plan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether non-debtor spouse Social Security is includable in disposable income | Trustee argues it is not exempt under §522(d)(10)(A) and must be included. | Miller argues Social Security benefits are excluded from current monthly income under §101(10A) and thus from disposable income. | Excludable; husband's Social Security is excluded from current monthly income and disposable income. |
| Whether the plan is proposed in good faith | Trustee contends the plan fails the totality of circumstances test. | Miller argues the plan reflects her limited income and absence of alternatives, with no luxury items, and reasonable payout. | Plan is proposed in good faith; confirmed. |
Key Cases Cited
- In re Carpenter, 614 F.3d 930 (8th Cir. 2010) (Social Security benefits excluded from forced inclusion in bankruptcy plan; supports exemption stance)
- In re Johnson, 438 B.R. 854 (Bankr.D.S.C.2010) (Totality of circumstances test for good faith in Chapter 13 plan)