In Re Renteria
456 B.R. 444
Bankr. E.D. Cal.2011Background
- Petition filed January 20, 2011 under chapter 13 by debtor Amanda Renteria.
- Preston, attorney, represented debtor; mother Nellie Reser co-signed and guaranteed the fee agreement.
- In September 2010 Preston sued debtor and mother to collect fees; a default judgment was pursued in state court.
- Preston filed a proof of claim in the bankruptcy for $20,499.07; debtor did not object to this claim.
- Debtor's schedules show no real property; all personal property encumbered or exempt; both she and non-filing spouse are below median income.
- Plan would divert debtor’s net monthly income ($709.60) to trustee for 36 months to fully pay Preston Claim with 10% interest and provide no distribution to other unsecured creditors.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Preston Claim a consumer debt? | Meyer argues not a consumer debt. | Renteria contends it is a consumer debt due to family-law context. | Preston Claim is a consumer debt. |
| Does the unfair discrimination test in § 1322(b)(1) apply to the Preston Claim? | Meyer says test applies to all unsecured claims. | Renteria argues the However Clause exempts co-debtor-consumer claims from the test. | However Clause excludes co-debtor-consumer claims from the unfair discrimination test; plan confirmed. |
Key Cases Cited
- Zolg v. Kelly (In re Kelly), 841 F.2d 908 (9th Cir. 1988) (consumer debt includes family-related legal fees under 101(8))
- In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP 1994) (burden of proof for plan compliance; consumer debt interpretation cited)
- In re Wolff, 22 B.R. 510 (9th Cir. BAP 1982) (four-part test for unfair discrimination in plan classification)
- In re Thompson, 191 B.R. 967 (Bankr. S.D. Ga. 1996) (however clause carve-out for co-debtor-consumer claims; good faith relevance)
- Chinichian v. Campolongo (In re Campolongo), 784 F.2d 1440 (9th Cir. 1986) (good faith requirement central to confirmation)
- In re Reswick, 446 B.R. 362 (9th Cir. BAP 2011) (statutory interpretation of However Clause and classification authority)
- Lamie v. United States Trustee, 540 U.S. 526 (2004) (plain meaning of statute governs congressional intent)
- In re Thompson, 191 B.R. 967 (Bankr. S.D. Ga. 1996) (discussed for four-part Wolff analysis and good faith)