In Re Moffet
455 B.R. 718
| Bankr. D. Iowa | 2011Background
- Debtors are above-median income individuals who filed Chapter 13 and proposed a 60-month plan funding $972/month plus future income and tax refunds.
- Trustee objected to confirmation under § 1325(b)(1)(A)/(B) arguing the plan pays less than 100% to unsecured creditors and lacks a liquidation analysis.
- Debtors claim plan meets § 1325(b)(1)(A) by combining $972/month with anticipated future tax refunds designated to satisfy unsecured claims.
- Trustee contends future tax refunds are speculative and not a determinable “value” to satisfy 100% distribution.
- Court must decide whether plan can be confirmed under § 1325(b)(1)(A) or (B) given reliance on speculative future tax refunds.
- Court denies confirmation and sustains Trustee’s objection; plan is not confirmable under § 1325(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1325(b)(1)(A) can be satisfied with future tax refunds | Moffet argues future refunds add value to meet 100% | Dunbar contends refunds are speculative and non-quantifiable | Plan cannot rely on speculative future tax refunds to satisfy 1325(b)(1)(A) |
| Whether future income/tax refunds constitute 'property of a value' under § 1325(b)(1)(A) | Debtors claim value from $972/month plus refunds equals 100% | Trustee argues such refunds lack definite value and are uncertain | Future tax refunds lack definite value; cannot satisfy 1325(b)(1)(A) |
| Feasibility under 1325(a)(6) and reliance on fixed versus future sources | Plan feasible with 972/month and tax refunds | Feasibility requires known sources; refunds are speculative | Feasibility cannot be based on speculative funding; plan not confirmable under 1325(b) |
| Whether plan provides adequate certainty to unsecured creditors | Plan provides 100% through non-speculative funds | Uncertainty of future refunds defeats certainty | Certainty lacking; plan not confirmable |
Key Cases Cited
- Hamilton v. Lanning, 130 S. Ct. 2464 (2010) (recognizes consideration of known or virtually certain future events in disposable income)
- Segal v. Rochelle, 382 U.S. 375 (1966) (post-petition tax refunds are property of the estate)
- In re Wagner, 259 B.R. 694 (8th Cir. BAP 2001) (need for definite declaration of funds source for plan payments)
- In re Thornhill, 268 B.R. 570 (Bankr.E.D.Va.2001) (rejects speculative funds to fund plans)
- In re Cox, 2005 WL 681464 (Bankr.N.D.Iowa 2005) (required disclosure of actual tax refunds; rejected illusory amounts)
- In re Fantasia, 211 B.R. 420 (1st Cir. BAP 1997) (financial feasibility requires concrete funding sources)
- Ransom v. FIA Card Services, N.A., 131 S. Ct. 716 (2011) (context on statutory interpretation and future income considerations)