442 B.R. 28
10th Cir. BAP2010Background
- Debtors filed above-median Chapter 13; their Form 22C showed negative disposable income despite positive schedules I and J including Social Security.
- Debtors amended I and J after job loss, net monthly income stated as $130, which included Mrs. Timothy's Social Security income.
- Debtors proposed a plan paying $130/month with no fixed minimum term, aiming to repay unsecured creditors partially and pay attorney and trustees' fees.
- Trustee objected, arguing for a five-year applicable commitment period under § 1325(b)(4)(A)(ii) since above-median income debtors; shorter term only if unsecured claims paid in full.
- Bankruptcy court denied confirmation but allowed amendment; plan amended to $130/month for five years and was confirmed by another judge, with Debtors preserving appeal rights.
- Dispute centers on how to compute projected disposable income and the applicable commitment period under BAPCPA, especially with SS income involved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether above-median debtors may have less than five years plan if unsecureds not paid in full | Timothy objected to five-year term due to negative Form 22C disposable income. | Trustee contends § 1325(b)(4)(A)(ii) requires five years unless paid in full sooner. | Five-year commitment period required unless unsecured claims paid in full. |
| Whether Social Security income can be included in projected disposable income for plan feasibility | Debtors rely on SS income in I/J; SS excluded from Form 22C but included in I/J. | Trustee argues SS should be treated per § 101(10A) and not in projected disposable income calculation. | Court adopts approach that SS may be considered through Schedule I; plan feasibility analyzed accordingly. |
| Whether plan confirmation should be denied or conditioned due to negative 22C but positive I/J | Debtors contend negative 22C should not force five-year term if payments are modest and less than five years. | Trustee and court rely on five-year minimum for above-median debtors under BAPCPA. | Feasibility and best-interest tests require five-year term; plan confirmed. |
Key Cases Cited
- In re Frederickson, 545 F.3d 652 (8th Cir. 2008) (supports five-year minimum for above-median debtors)
- In re Tennyson, 611 F.3d 873 (11th Cir. 2010) (five-year commitment period unless paid in full; plain reading supports minimum term)
- Hamilton v. Lanning, 130 S. Ct. 2464 (2010) (supreme court on flexible projected disposable income concept informing §1325(b))