476 B.R. 653
Bankr. D.C.2012Background
- Debtor Raymond Wise, Jr. files a second amended Chapter 13 plan objected to by the trustee.
- Plan seeks to cure Wells Fargo mortgage arrears by counting the cure amount ($11,988) as part of projected disposable income.
- Wise excludes Social Security income from projected disposable income, and includes cure payments as deductions.
- Trustee argues Social Security must be included and cure payments cannot be deducted; also challenges timing under 1322(b)(5) and good faith.
- Wise proposes modifying the plan to accelerate the cure (15 months at $699) and then pay $71.58 for 21 months, to satisfy 1322(b)(5) and 1325(b)(1)(B).
- Court confers but requires modification to accelerate cure while keeping aggregate projected disposable income at $1,925.98; confirms plan with that modification.
- Confirmation delayed to August 29, 2012 per the trustee’s request and debtor’s consent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Social Security income is excluded from projected disposable income. | Wise excludes Social Security as income per §101(10A) and Baud. | Trustee argues I.R. Schedule I/J misleads; some courts treat differently. | Social Security must be excluded from projected disposable income. |
| Whether curing prepetition Wells Fargo arrears can be deducted as a reasonably necessary expense. | Cure payments are necessary to maintain residence and are deductible. | Trustee contends cure shouldn't be deducted as an expense. | Cure payments deductible under §1325(b)(2)(A)(i) as reasonably necessary. |
| Whether the cure timing satisfies 1322(b)(5) and affects 1325(b)(1)(B) aggregation. | Acceleration to cure within reasonable time is allowed; aggregate PDI remains $1,925.98. | Constant payment would not cure timely; objection that PDI must be paid evenly. | Modified plan cures within reasonable time and aggregates to $1,925.98; complies with 1325(b)(1)(B). |
| Whether the plan is proposed in good faith under §1325(a)(3). | Plan reflects honest intention; Social Security exclusion is lawful under statute. | Wise could pay more using Social Security; argues lack of good faith. | Plan proposed in good faith; exclusion of SS income does not defeat good faith. |
Key Cases Cited
- Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011) (Social Security income excluded in disposable income projection)
- In re Lasowski, 575 F.3d 815 (8th Cir. 2009) (permits considering changes in income; aggregate projection permitted)
- In re Renteria, 420 B.R. 526 (S.D. Cal. 2009) (discusses double counting when priority claims are included in projection)
- In re Wilbur, 344 B.R. 650 (D. Utah 2006) (treatment of unsecured creditors in projection; above-median context)
- Barnes v. Whelan (In re Barnes), 689 F.2d 193 (D.C. Cir. 1982) (good faith—honesty of intention; excluded income alone not dispositive)