Thomas P. Gorman v. Ricardo Cantu, Jr.
713 F. App'x 200
| 4th Cir. | 2017Background
- Debtor Ricardo Cantu filed Chapter 13 to repay unsecured creditors and proposed a 5‑year plan paying $51,240 on $148,346 of unsecured debt.
- The plan excluded $338/month for two TSP retirement‑loan repayments; Trustee noted one loan would soon be paid off, freeing $268/month.
- Debtor amended the plan to resume contributing the $268/month to his Thrift Savings Plan (post‑petition contributions) once the loan ended; Trustee objected, claiming this diverted projected disposable income and was in bad faith.
- Debtor also excluded $1,625/month for child and spousal support on the ground he and his ex‑spouse agreed to $750 every two weeks; Trustee pointed to a divorce decree showing $1,500/month and challenged the deduction.
- The bankruptcy court adopted the majority rule allowing exclusion of post‑petition retirement contributions if made in good faith, found Debtor’s contributions were in good faith, credited Debtor’s testimony that the intended support was $1,625, and confirmed the plan; the district court affirmed.
Issues
| Issue | Plaintiff's (Trustee) Argument | Defendant's (Cantu) Argument | Held |
|---|---|---|---|
| Whether post‑petition retirement contributions may be excluded from "projected disposable income" and the estate | Such funds (the $268) become projected disposable income once a loan ends and must be committed to creditors; exclusion would improperly shield creditors | Debtor may resume prior retirement contributions (pre‑petition practice) and exclude them under §1322/§1325 if made in good faith | Court did not decide the statutory question broadly; treated good faith as prerequisite and upheld exclusion here because bankruptcy court’s factual finding of good faith was not clearly erroneous |
| Whether the Debtor’s proposed TSP contributions were made in bad faith | Contributions were opportunistic: Debtor stopped contributions pre‑petition and only resumed after Trustee identified extra income; Debtor is relatively young with other options and offers low dividend to creditors | Debtor had a long history (since 2000) of contributions, was suspended only due to hardship loans, proposed an amount well under contribution limits, and lacks other pension benefits | Bankruptcy court’s finding of good faith is supported by the record and not clearly erroneous; affirmed |
| Whether Debtor may deduct $1,625/month for family support rather than $1,500 shown in the divorce decree | The divorce decree is the controlling court order and it states $1,500/month; Debtor’s $1,625 claim is unsupported or inconsistent | Debtor testified parties agreed to $750 biweekly (26 pay periods = $1,625/month); earlier separation agreement in the record supports $1,625 and the decree misstated the parties’ intent (scrivener’s error) | Bankruptcy court credited Debtor’s testimony and corroborating separation agreement and found the decree misstated the parties’ intent; that factual finding is not clearly erroneous and was affirmed (concurring judge dissented on this point) |
Key Cases Cited
- Hamilton v. Lanning, 560 U.S. 505 (2010) (bankruptcy court must use a forward‑looking approach to project disposable income)
- Seafort v. Burden (In re Seafort), 669 F.3d 662 (6th Cir. 2012) (approach limiting exclusion of post‑petition retirement contributions; contrasting views on §541(b)(7))
- Behrmann v. National Heritage Found., Inc., 663 F.3d 704 (4th Cir. 2011) (good‑faith findings in bankruptcy reviewed for clear error)
- Brown v. Gore (In re Brown), 742 F.3d 1309 (11th Cir. 2014) (good‑faith determination for Chapter 13 plans is a factual finding reviewed for clear error)
- Gold v. First Tenn. Bank Nat’l Ass’n (In re Taneja), 743 F.3d 423 (4th Cir. 2014) (appellate standard: will not reverse factual findings unless clearly wrong)