488 B.R. 246
Bankr. M.D. Ga.2013Background
- Two Chapter 13 cases with Trustee objections over whether social security benefits must be committed to plans.
- Scott case: debtor above-median in Georgia; spouse is non-filer; Schedule I includes spouse SS benefits; Form B22C shows negative disposable income when excluding spouse SS.
- Lundy case: debtors below median in Georgia; plan pays $550/mo for 60 months; trustee objects to excluding Mr. Lundy’s SS benefits and asserts improper projected disposable income.
- Court applies Hamilton v. Lanning forward-looking approach to calculate projected disposable income; 11 U.S.C. § 101(10A) excludes Social Security from current monthly income.
- Court concludes SS benefits are excluded from current monthly income and not included in projected disposable income; Lundy objection overruled; Scott objection overruled as to good faith; Lundy plan extension to five years analyzed and granted for cause.
- Court will issue separate confirmation orders for both Scott and Lundy; trustee to notify court when ready for final hearings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SS benefits are excluded from projected disposable income | Lundy argues include SS under 101(10A) via pre-BAPCPA logic | Lundy contends SS excluded; Scott asserts non-debtor SS treated differently | SS benefits excluded from projected disposable income |
| Whether non-filing spouse SS benefits are includable for Scott | Trustee argues include to reflect true disposable income | Scott relies on Miller/ Cranmer line of authority excluding non-debtor SS | Non-filing spouse SS benefits not included; Scott’s plan feasible and in good faith |
| Whether plan proposed in Lundy is in good faith without Mr. Lundy’s SS | Trustee contends excluding SS shows bad faith | Lundy argues plan compliance with code; Kitchens factors reviewed | Plan deemed proposed in good faith despite SS exclusion |
| Whether extending Lundy plan to five years is warranted | Trustee argues against extension | Extension allowed for greater dividend to unsecured creditors given circumstances | Extension to five years approved for cause |
| Is the Scott/Lundy result aligned with the forward-looking method required by Lanning | Trustee urges forward-looking inclusion of known changes | Code excludes SS from disposable income; no change in circumstances | Projection calculated consistent with Lanning; SS excluded from projected disposable income |
Key Cases Cited
- Baud v. Carroll, 634 F.3d 327 (6th Cir.2011) (SS benefits excluded from projected disposable income under §101(10A))
- Cranmer v. Anderson (In re Cranmer), 697 F.3d 1314 (10th Cir.2012) (SS benefits excluded from projected disposable income; related to §101(10A))
- Ragos v. Beaulieu (In re Ragos), 700 F.3d 220 (5th Cir.2012) (SS benefits excluded; supports exclusion from projected disposable income)
- In re Rodgers, 430 B.R. 910 (Bankr.M.D.Fla.2010) (Pre-BAPCPA background; considered for comparison (later criticized))
- In re Miller, 445 B.R. 504 (Bankr.D.S.C.2011) (Non-debtor SS benefits may be excluded from current monthly income; supports Scott approach)