2013 Bankr. LEXIS 82
Bankr. D. Colo.2013Background
- Debtor Tammy L. Toxvard filed a Chapter 13 petition (April 11, 2011) and proposed a five-year plan; she resides in the Longmont Property with Mr. Toxvard, who is not on title to that property and is solely liable on its mortgages.
- Debtor previously married to Matthew Weese; Frederick Property is titled in Debtor’s name only with no equity and anticipated foreclosure to lienholders.
- Debtor’s second marriage to Mr. Toxvard includes separate finances; Longmont Property is not property of the estate.
- Form B22C initially shows combined income with Mr. Toxvard but Debtor’s Schedules I and J omit his income; Line 19 marital adjustment deduction reduces household income to just below Colorado median for a two-person household.
- Trustee filed objections (Feb. 8, 2012) contending Marital Adjustment is overstated and Schedule I is incomplete, triggering §1325(b) analyses; Court held confirmation improper pending amendments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Line 19 marital adjustment properly excludes non-filing spouse income. | Trustee argues Debtor’s Line 19 undercounts income by excluding regular non-household contributions. | Debtor argues Line 19 properly excludes non-regular or non-household contributions per §101(10A)(B). | Marital Adjustment permissible but must reflect household expenses; need amended Form B22C. |
| Whether non-filing spouse income must be included in current monthly income for disposable income. | Trustee asserts Debtor’s income exceeds median; means test applies under §1325(b)(3). | Debtor contends household contributions are not Debtor’s income; Line 19 excludes them. | Court adopts nuanced approach under Lanning; includes portions of non-filing spouse income as household expenses when appropriate. |
| Whether mortgage payments by non-filing spouse are household expenses of the Debtor. | Trustee treats mortgage payments as Debtor’s household expenses and include them in income. | Debtor argues she has no ownership or liability; payments are not Debtor’s expenses. | Mortgage payments by non-filing spouse are not Debtor’s household expenses; only specific, apportioned amounts may be included. |
| Whether Schedule I should include Mr. Toxvard’s income for feasibility and plan confirmation. | Incomplete Schedule I obscures feasibility and good-faith determination. | Spouse income should be disclosed; omission prevents proper feasibility analysis. | Confirmation denied pending amended Schedule I including spouse income. |
Key Cases Cited
- In re Lanning, 545 F.3d 1269 (10th Cir. 2008) (forward-looking projected disposable income under §1325(b)(1)(B))
- In re Sturm, 455 B.R. 130 (N.D. Ohio 2011) (marital adjustments and means-testing treatment of mortgage payments)
- In re Shahan, 367 B.R. 732 (Bankr. D. Kan. 2007) (mortgage payments by non-filing spouse may be marital adjustment)
- In re Rable, 445 B.R. 826 (Bankr. N.D. Ohio 2011) (non-debtor spouse mortgage payments and household expense considerations)
- Ransom v. FIA Card Servs., N.A., 131 S. Ct. 716 (2011) (debtors may not deduct loan costs when not obligated to pay)
- In re Arrigo, 399 B.R. 700 (Bankr. D. Colo. 2008) (means-test and Form B22C analyses in Colorado context)