In re Garza
MEMORANDUM OPINION OVERRULING IN PART AND SUSTAINING IN PART TRUSTEE’S OBJECTION TO CONFIRMATION & DENYING CONFIRMATION OF DEBTORS’ CHAPTER 13 PLAN
Resolving ECF Nos, 19, 28
I. INTRODUCTION
It is well known that bankruptcy has two primary public policy objectives. The first is to promote equality of distribution among similarly situated creditors. The second is to afford the debtor a fresh economic start. These goals of distribution and a fresh start are sometimes referred to as the twin pillars of bankruptcy.
In the case sub judice, this Court must determine whether it should confirm above-median income Debtors’ chapter 13 plan wherein they have included a $424.52
II. FINDINGS OF FACT
This Court makes the following Findings of Fact and Conclusions of Law pursuant to Fed, R. Bankr. P. 7052, which incorporates Fed. R. Civ. P. 52, and 9014. To the extent that any Finding of Fact constitutes a Conclusion of Law, it is adopted as such. To the extent that any Conclusion of Law constitutes a Finding of Fact, it is adopted as such. To the extent that this Court made any oral findings and conclusions on
On December 14, 2016, Gilbert Longoria Garza and Santos Mesa (collectively, the “Debtors” or individually, respectively, “Mr. Garza” and “Mrs. Mesa”) filed their petition under chapter 13 of title 11 of the Bankruptcy Code,
On December 19, 2016, the first Meeting of Creditors was noticed for January 19, 2017, and April 19, 2017, was designated as the bar date for the filing of claims other than claims from governmental units. ECF No. 13. Simultaneously, Trustee filed her Notice of Confirmation Hearing and Plan Summary, which scheduled the confirma
On January 19, 2017, the Meeting of Creditors was conducted and concluded after which Trustee did not recommend the Plan’s confirmation. On February 16, 2017, Trustee filed an Objection to Confirmation of the Plan, which asserted that Debtors’ Plan cannot be confirmed because (i) the Plan does not propose to pay all of Debtors’ projected disposable income during the applicable commitment period and (ii) that due to errors on the Means Test, when corrected, would yield a higher dis-. posable income and (iii) the Plan improperly treats Crest’s unsecured claim as a secured claim under [Section] 5 of the Plan. ECF No. 19 (the “Objection”).
On February 23, 2017, the Court conducted a hearing on confirmation of Debtors’ Plan. At that hearing, Trustee reiterated the concerns her Objection raised: namely, Mr. Garza’s voluntary 401(k) contributions and whether he actually contributed to the 401(k) pre-petition, as well as the treatment of Crest’s claim in the Plan. Although raised in her written objection, Trustee did not press the issue of errors she raised regarding the Means Test. In response, Debtors’ Counsel confirmed that the voluntary 401 (k) contributions did not begin prior to bankruptcy; however, Mr. Garza’s employer would be matching a “large percentage” of the 401(k) contribution going forward. See ECF No. 5. Trustee countered that since Debtors are proposing such a large voluntary contribution—despite failing to contribute to the 401(k) pre-petition—the unsecured creditors, according to Trustee’s calculations, would receive a 31% dividend. Debtors’ Counsel requested additional time to respond to the Objection, and Plan confittnation was reset to March 23, 2017. ECF No. 20.
On March 23, 2017, the Court conducted its second hearing on plan confirmation. At that hearing, Trustee reiterated her objection to various errors contained in the Means Test. Additionally, Trustee reasserted her objection to Mr. Garza’s post-petition voluntary 401(k) contributions and Debtors’ exclusion of the voluntary 401(k) contribution from the disposable monthly income calculation in their initial Means Test. See also ECF No. 3 at 13. In response, Debtors’ Counsel reasoned that contribution to the 401(k) is superior to contributing to the Savings Fund because not only will Mr. Garza’s employer match up to 5% of Mr. Garza’s salary—approximately $424.52 per month—the funds deposited into the 401(k), unlike the Savings Fund, will earn interest. As Debtors’ only witness, Mr. Garza testified as follows:
i. He is the Director of Campus Dining for University of Texas—Rio Grande Valley through the independent contractor, Sodexo;
ii. His employment with Sodexo required him to move to seven different cities in the last ten years;
iii. The [Debtors] have four sons ranging from nine to twenty-years-old;
iv. Mr. Garza’s oldest son suffered a traumatic brain injury and requires .significant care, and his youngest son has an “eating disorder” requiring special food preparation, which resulted in Mrs. Mesa remaining ■ unemployed' to care for the sons;
v. Debtors are seeking resources to assist their oldest son in his college studies, however, they are unclear on the cost of those resources;
vi. Mr. Garza did not contribute to the 401(k) prior to bankruptcy because of the expenses associated with frequent moves and four children;
vii. Sodexo will match the 401 (k) contribution up to 5% of Mr. Garza’s salary, although the percentage can change;
viii. Mr. Garza’s 401(k) contribution will not be designated as earned income and Debtors will forgo the Savings Fund contribution and instead use the $100.00 previously designated as a Savings Fund as a portion of the 401(k) contribution.
On cross-examination, Mr. Garza testified as follows:
(i) He had never filed bankruptcy;
(ii) His salary would re-set with every move, due in part to a cost of living adjustment, therefore he was unable to set aside any savings;
(iii) He filed for bankruptcy because he was behind in his payments and wanted to provide a fresh start for his family.
The Court finds Mr. Garza’s testimony to be, not only sincere, but credible.
Regarding Trustee’s objections to the various Means Test calculations, Trustee noted that (i) the Plan is proposing to pay an average monthly payment of $270.00 for Vehicle 1 in comparison to the $421.73 average monthly payment listed on Line 13b, and (ii) Line 35 should be reserved for past-due priority claims and not ongoing priority claims. In response, Debtors’ Counsel noted that Sodexo was not withholding Mr. Garza’s taxes and that Line 35 represents an estimation of taxes owed, which was not included in the Plan in error. At the conclusion of the hearing, the Court ordered briefing from Debtors and Trustee, and took the matter under advisement. On April 20, 2017, the Internal Revenue Service (“IRS”) filed a Proof of Claim for $5,181.28, which was amended on May 25, 2017 provisioning for a $4,991.08 priority claim. Claim No. 13-2. Debtors filed their brief on April 21, 2017, whereas Trustee filed her brief on May 5, 2017. ECF Nos. 24, 25.
On June 23, 2017, Debtors filed an Amended Schedule J, which removed the $100.00 per month contribution to the Savings Fund previously contained on Line 21. ECF No. 26 at 3. Simultaneously, Debtors filed an Amended Means Test. ECF No. 27. Although the applicable commitment period remains 5 years, the amended Means Test now provisions the following:
(i) Line 13b decreased the average monthly payment of Vehicle 1 from $421.73 to $270.00;
(ii) Line 13e increased the average monthly payment of Vehicle 2 from $296.75 to $339.28;
(iii) Line 16 increased the monthly expense for federal, state, and local taxes from $1,299.50 to $1,414.78 per month;
(iv) Line 24 increased the total of all expenses allowed under the IRS allowances from $6,101.67 to $6,326.15;
(v) Line 33d increased the average monthly payment on the Crest Claim from $13.93 to $30.16;
(vi) Line 33e decreased the total average monthly payment from Lines 33a through 33d from $732.41 to $639.44;
(vii) Line 35 increased the amount of priority claims from $3,393.50 or $56.56 to $4,191.08 or $69.85;
(viii) Line 41 remains unchanged listing $0.00 as Debtors’ “monthly total of all amounts that your employer withheld from wages as contributions for qualified retirement plans, as specified in 11 U.S.C. § 541(b)(7);”
(ix) Line 45 decreased Debtors’ monthly disposable income from $530.41 to $384.47;
(x) Line 46 remains unchanged with the increased expense of $424.51 due to Debtors’ 401(k) contribution.
Compare id. at 8, 9,11,12,13 with ECF No. 3 at 8, 9,11,12,13.
On June 23, 2017, Debtors amended their Plan to, inter alia, account for the IRS claim and reduced the amount of dividend to the unsecured creditors to 36%.
III. LEGAL STANDARD
A. Statutory Interpretation
A basic canon for statutory interpretation is that if the language of the statute is plain, courts must enforce it as is written. In re Lively,
B. Property of the Estate and Disposable Income
The extent to which , creditors can reach a debtor’s retirement assets in bankruptcy
A debtor’s disposable income is determined under 11 U.S.C. § 1325(b)(2) and is based on the debtor’s current monthly income. Current monthly income “means the average monthly income from all sources that the debtor receives ... without regard to whether such income is taxable income, derived during the 6-month period ending on the last day of the calendar month immediately preceding the date of the commencement of the case.” 11 U.S.C. § 101(a)(10A)(A)(i). Consequently, “disposable income” is defined as “current monthly income received by the debtor ... less amounts reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor ... and for charitable contributions and certain business expenses.” Subsection (3), however, clarifies that for debtors with above-median income, “amounts reasonably necessary” under subsection (2) “shall be determined in accordance with subpara-graphs (A) and (B) of section 707(b)(2). § 1325(b)(2).
Additionally, with this unnumbered hanging paragraph, Congress created an interplay between the disposable income calculation and property of the estate, §§ 1325(b)(2) and 541(b)(7), respectively. In other words, “except that,” which begin the hanging paragraph, would normally indicate an exception to that particular rule, but instead, the statute continues on to address an unrelated concept: “disposable income” in a chapter 13 case. Compare § 541(b)(7) with § 1325(b)(2). The question then becomes whether the hanging paragraph functions to allow 401(k) contributions by above-median-income debtors despite the omission of 401(k) contributions from the list of necessary expenses under the means test and despite debtor’s failure to contribute to the 401(k) plan pre-petition.
Courts have encountered the relationship between these two sections and have developed three lines' of reasoning: (1) the Johnson approach, honing in on the phrase
C. Projected Disposable Income & Confirmation of a Chapter 13 Plan
Confirmation of a chapter 13 plan is governed by both 11 U.S.C. § 1322, and § 1325. Mandatory plan requirements are governed by § 1322(a), whereas permissive requirements are governed by § 1322(b). In re Sierra,
Similarly, § 1325(a) requires a court to confirm a chapter 13 if the following conditions, inter alia, are met:
(1) the plan complies with the provisions of this chapter and with the other applicable provisions of this title...;
(3) the plan has been proposed in good faith and not by any means forbidden by law;
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date ...;
(6) the debtor will be able to make all payments under the plan and to comply with the plan;
(7) the action of the debtor in filing the petition was in good faith.
Normally, the interplay of §§ 541(b)(7) and 1325(b)(2) do not stand in the way of plan confirmation. When a chapter 13 trustee or an unsecured creditor objects to confirmation, however, the intersecting sections are triggered resulting in the court being unable to confirm unless the plan “provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.” § 1325(b)(1)(B). Although “disposable income’ is defined by the Code as discussed above, “projected disposable income” is not. Compare § 1325(b)(1)(B) with § 1325(b)(2). Accordingly, courts have determined that “projected disposable income” in the context of § 1325(b)(1)(B) requires a debtor “to account for any events which will definitely occur during the term of the Plan that
IV. CONCLUSIONS OF LAW
A. Jurisdiction & Venue
This Court holds jurisdiction pursuant to 28 U.S.C. § 1334, which provides “the district courts shall have original and exclusive jurisdiction of all cases under title 11.” Section 157 allows a district court to “refer” all bankruptcy and related cases to the bankruptcy court, wherein the latter court will appropriately preside over the matter. 28 U.S.C. § 157(a); see also In re: Order of Reference to Bankruptcy Judges, Gen. Order 2012-6 (S.D. Tex. May 24, 2012). In the instant case, the Court must determine whether Debtors’ Plan is con-firmable under the Code. ECF No. 28; see also In re Sierra,
This Court may only hear a case in which venue is proper. 28 U.S.C. § 1408. In their petition, Debtors list their residence as Edinburg, Texas. ECF No. 1 at 2. Therefore, venue is proper.
B. Constitutional Authority to Enter a Final Order
This Court has an independent duty to evaluate whether it has the constitutional authority to sign a final order. Stern v. Marshall,
C.Post-Petition Voluntary 401k Contributions are Excluded from Projected Disposable Income
In considering whether Debtors’ Plan can be confirmed, the initial question
Much of the confusion surrounding this case stems from the calculation of Debtors’ projected disposable income. The amount of Debtors’ projected disposable income is crucial to this case because this Court cannot confirm Debtors’ Plan over Trustee’s Objection if Debtors do not commit all of their “projected disposable income” during the applicable commitment period. § 1325(b)(1)(B).
It is important to reiterate that although § 1325 permits a court to confirm a chapter 13 plan that includes a debtor’s deduction for a 401(k), a court is only required to scrutinize such an expense when the trustee or unsecured creditor, as in this particular case, objects on that basis. See id. For an above-median debtor, however, “[ajmounts reasonably necessary to be expended .,. shall be determined in accordance with subparagraphs (A) and (B) of section 707(b)(2).” § 1325(b)(3). The Code creates a “mathematical formula,” known as the means test, to eliminate a court’s discretion and calculate a debtor’s disposable income. In re Hardacre,
Nevertheless, the Bankruptcy Abuse Protection And Consumer Protection Act (“BAPCPA”) amendments appear to have created a statutory peculiarity for those above-median debtors who wish to contribute to their 401(k) plans, Although § 1325(b)(3) requires an above-median debtor’s expenses to be calculated based on the means test and § 707(b)(2)(A)-(B), the hanging paragraph of § 541(b)(7) provides that “any amount withheld by an employer from the wages of employees for payments as contributions” to, inter alia, a 401(k) is excluded from property of the estate and “shall not constitute disposable income,” which has resulted in different interpretations from Debtors and Trustee. See generally ECF Nos. 24, 25.
Debtors contend that this Court should be guided by the Johnson standard, whereas Trustee urges the Court to follow the Seafort standard rather than the stricter Prigge standard. Compare ECF No, 24 at 5 with ECF No, 25 at 5. Trustee asserts that Debtors are failing to contribute the entirety of their projected disposable income and therefore the Court cannot confirm the Plan pursuant to § 1325(b)(2). ECF No. 19. Although the Johnson and Seafort standards agree—in contrast with the Prigge standard—that § 541(b)(7) excludes voluntary retirement contributions from disposable income, the standards differ to the extent § 541(b)(7) excludes the contributions: to wit, whether all contributions are excluded or only to the extent debtors made contributions prior to filing bankruptcy. Compare In re Johnson, 346
This Court is inclined to side with the majority of courts and follow the reasoning of Johnson because excluding post-petition voluntary 401(k) contributions from projected disposable income comports with the plain meaning of § 541(b)(7). In re Johnson,
Although the hanging paragraph has undoubtedly caused a rift amongst courts, “the awkwardness of the language does not warrant a strained reading of an otherwise clear pronouncement that voluntary Retirement contributions are excluded from the § 1325(b) disposable income calculation.” In re Drapeau,
The Seafort analysis that Trustee proposes fails because it misinterprets the meaning of § 541. Specifically, the Seafort approach reads the phrase “as of the commencement of the case,” found • in § 541(a)(1) as relating to § 541(b)(7) as well.
This inclusive reading of § 541 is evident in the other provisions of subsection (a) as well as § 1306, which allude to post-petition property. See § 1306(a); In re Vanlandingham,
Further, the contention in Seafort that voluntary 401(k) contributions should not be considered “reasonable and necessary” expenses because they are not listed in § 707(b)(2)(A)-(B) treats the hanging paragraph of § 541(b)(7) as surplusage. Compare In re Seafort,
This Court also finds it necessary to address the Fifth Circuit’s holding in In re Lively,
Additionally, the cases are addressing two entirely different issues: to wit, the application of the absolute priority rule in an individual Chapter 11 case and confirmation of a Chapter 13 plan, respectively. Compare Lively,
Further, the property excluded by § 541(b) is specifically removed from the definition of property of the estate by the Code and therefore is not the “property of
Moreover, the Johnson approach is consistent with the Supreme Court’s holding in Canning, which provides bankruptcy courts with the authority to account for “known or virtually certain” changes to a debtor’s income or expenses when calculating projected disposable income. Lanning,
Additionally, “the term ‘projected disposable income’ is a post-petition concept in the sense that § 1325(b)(1)(B) requires that all of debtor’s disposable income ‘to be received’ be devoted to the payment of creditors under the confirmed plan [and] [a]mounts withheld from prepetition income for retirement contributions and paid to the retirement plan can never be ‘disposable income.’” In re Vanlandingham,
Although Trustee does not advocate the Court adopt the holding in Prigge, Trustee—similar to the court in Prigge—as-serts that because Congress stipulated in § 1322(f) that payments for retirement loans are not considered projected disposable income, but “did not give us such a provision ... for voluntary retirement contributions after the filing of the case,” then Congress must have intended for voluntary contributions to be considered a part of Debtors’ projected disposable income. Compare ECF No. 25 at 2 with In re Prigge,
Additionally, Trustee’s argument for Debtors’ lack of good faith rests upon a finding that post-petition contributions to a 401(k) are not allowed. ECF No, 25 at 5-6. In essence, Trustee is arguing that the Plan attempts to abuse the spirit of the Code by failing to commit all of Debtors’ projected disposable income to the Plan. See In re Stanley,
Furthermore, the Debtors’ $424.52 monthly contribution—$5,096.24 yearly—is well within the ERISA limit of $18,000.00. Retirement Topics-101 (k) and Profit Sharing Plan Contribution Limits, IRS (June 22, 2017), https://www.irs.gov/ retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharmg-plan-contribution-limits; see also In re Cantu,
Accordingly, this Court finds that despite the contradicting case law, the hanging paragraph of § 541(b)(7) is unambiguous and therefore the Court must enforce the statute as written. § 541(b)(7). Although this interpretation allows Debtors to seek a fresh start, it does not topple the twin pillars because Debtors are still required to contribute their entire projected disposable income to the Plan in order to provide for an equitable distribution to their creditors. § 1325(b)(1)(B). Excluding post-petition voluntary requirement contributions from projected disposable income does not modify the requirements of § 1325 because Debtors would be required to increase the contribution of their projected disposable income if they ceased contributing to Mr. Garza’s 401 (k) at any time during the Plan period. 11 U..S.C. § 1329(a)(1) (providing for a chapter 13 plan to be modified upon request of debt- or, trustee, or an unsecured creditor to “increase or reduce the amount of payments on claims of a particular class provided for by the plan”). Compare
D. Debtors’ Means Test is Improperly Calculated and Crest’s Claim is Improperly Treated Under the Plan
Irrespective of Mr. Garza’s voluntary 401(k) contributions, Debtors must still properly calculate their monthly disposable income in the Means Test in order for this Court to confirm the Plan. § 1325(b)(2). The Court may not approve Debtors’ Plan unless all of Debtors’ projected disposable income received during the Plan’s sixty-month applicable commitment period will be applied to pay the unsecured creditors because Trustee objected to confirmation of Debtors’ Plan. § 1325(b)(1)(B). Accordingly, this -Court must ensure that Debtors’ disposable income is properly calculated pursuant to § 707(b)(2) in order to confirm the Plan over Trustee’s Objection. § 1325(b)(1)(B). In her Objection, Trustee alleged that Lines 13b and 35 were improperly calculated and that a correction would result in a higher disposable income. ECF No. 19. At the March 23, 2017 hearing, Debtors’ Counsel agreed that there were miscalculations and Debtors subsequently amended the Means Test as denoted above. See generally ECF No. 27.
Initially, this Court considers the amounts Debtors list for Vehicles 1 and 2 on Lines 13b and 13e respectively of the Means Test. Id, at 8. Pursuant to the Code, Debtors must calculate the average monthly payment on each vehicle by adding the amounts contractually due to the creditor for 60 months after the petition date and then divide by 60, which is not necessarily the amount Debtors would pay pursuant to the Plan. See id.) § 707(b)(2)(A)(iii)(I); 6-707 Collier on Bankruptcy ¶ 707.04 (“But the deduction for secured claims is not in the amount that would be paid in chapter 13. Instead it is in the total amount “scheduled as contractually due” to any secured creditors in the 60 months after the petition.”). Debtors contractually owe $17,962.45 at 5.4% annual interest on Vehicle 1, which results in an average monthly payrrient of $342.28. Compare ECF No. 28 at 7 with ECF No. 27 at 8. Similarly, Debtors contractually owe $25,527.12 at 5.4% annual interest on Vehicle 2 over the course of the Plan, which results in an average monthly payment of $486.42. Compare ECF No. 28 at 7 with ECF No. 27 at 8.
Although Trustee did not specifically object to Line 16, the Court has an independent duty to evaluate whether the Means Test is properly calculated because the Debtors must devote all of their projected disposable income to be received during the applicable commitment period to the Plan for the payment of unsecured creditors. § 1325(b)(1)(B). Debtors amended Line 16 of the Means Test to deduct $1,414.78 per month, whereas Schedule I lists the monthly tax payroll deductions as $1,299.51. Compare ECF No. 27 at 9 with ECF No. 1 at 52. Pursuant to Debtors’ Payment Advices, however, this Court finds that an average of $647.68 is deducted from Mr. Garza’s current monthly income for taxes. ECF No. 5. The Means Test allows monthly expenses for “other necessary expenses,” which includes “the total monthly amount that [Debtor] actually pay[s] for federal, state, and local tax
Turning to the Crest claim, Trustee’s Objection contends that the Plan improperly treats Crest’s unsecured claim because it was originally listed as a secured claim under Section 5. ECF No. 19; see also ECF No. 2 at 6. Debtors amended the Plan to treat Crest’s claim under Section 7 as a secured debt to be paid in accordance with the pre-petition contract, and neither Crest nor Trustee has objected to the new treatment. ECF No. 28 at 6-7. Although the objection has not been raised, Debtors improperly treat Crest’s claim in both the Plan and the Means Test. ECF Nos. 27, 28. First, the Court notes Crest filed a proof of claim for $1,809.53 based on a rental purchase agreement, which classified the claim as unsecured. Claim No. 2-1. Therefore, the Debtors’ contract with Crest is an executory contract. In re Rigg,
Additionally, this Court turned its attention to Line 35 on which Debtors state that they owe $4,191.08 in past-due priority claims or $69.85 per month. Id. The IRS’s proof of claim states that Debtors owe $4,991.08 in past-due priority claims. Claim No. 13-2 at 3. Debtors did not object to the IRS claim and therefore, it is an allowed claim. 11 U.S.C. § 502. Thus, Line 35 of the Means Test must mirror the IRS claim, which should read $4,991.08 or $83.18 per month. Compare ECF No. 27 at 11 with Claim No. 13-2 at 3.
Accordingly, this Court finds that Debtors are not properly contributing all of their projected disposable income to the Plan due to the following errors in the Means Test: (i) miscalculating the average monthly payment for Vehicles 1 and 2; (ii) improperly listing the amount paid for monthly taxes; (iii) improperly deducting $30.16 per month toward the Crest claim; and (iv) improperly listing the amount of the IRS’s priority claim. ECF No. 27 at 8, 11. By correcting the calculations on the Means Test, this Court finds that Debtors’ monthly disposable income will increase from the current $384.47 to $1,152.97, thereby increasing the dividend available to pay the unsecured creditors.
V. CONCLUSION
In an attempt to achieve their “fresh start,” Debtors proposed Plan provides, inter alia, a 36% dividend to unsecured creditors and a monthly voluntary contribution of $424.52 to Mr. Garza’s 401(k), whereas Trustee attempts to ensure the Debtors are paying in all of their projected disposable income in satisfaction of creditors by objecting to confirmation on the grounds that voluntarily contributing to the 401(k)' post-petition detracts from the projected disposable income afforded to the creditors, the Means Test contains errors, and Crest’s claim is improperly treated in the Plan. Compare ECF No. 27 and ECF No. 28 with ECF No. 19.
Upon considering the Plan’s confirmation, this Court determined that the Code, specifically § 541(b)(7) in conjunction with § 1325(b)(1)(B), permits Debtors to ex-elude voluntary 401(k) contributions beginning post-petition from the projected disposable income calculation regardless if they were contributing pre-bankruptcy, provided Debtors act in good faith. See In re Johnson,
Nevertheless, despite this Court’s determination that Debtors properly excluded voluntary 401(k) contributions from their projected disposable income and Schedule I pursuant to § 541(b)(7) and § 1325(b)(1)(B), this Court cannot confirm Debtors’ Plan due to the miscalculations contained in the Means Test resulting in the Debtors failing to properly contribute their entire projected disposable income to be received during the applicable commitment period to the Plan. Compare ECF No. 27' with ECF No. 28. Additionally, Debtors improperly treat Crest’s unsecured claim under Section 7 of the Plan. Compare ECF No. 28 at 6-7 with Claim No. 2-1.
Accordingly, for the reasons discussed herein, Trustee’s Objection to Confirmation, ECF No. 19, is hereby OVER
An Order consistent with this Memorandum Opinion will be entered on the docket simultaneously herewith.
Notes
. In re Little Creek Dev. Co.,
. Debtors list the 401 (k) deduction amount as $424.51 in their Means Tests, but list the deduction as $424,52 in Schedule I. Compare ECF No. 1 at 52 with ECF No. 27 at 13. For the purposes of this opinion, Schedule I controls,
. Any reference to "Code” or “Bankruptcy Code” is a reference to the United States Bankruptcy Code, 11 U.S.C., or any section (i.e. §) thereof refers to the corresponding section in 11 U.S.C.
. 11 U.S.C. §§ 707(b)(2), 1325(b)(3)(A)
. Debtors improperly notate a change in Income or Expenses on Line 46, Part 3 of 122-C2 and cite to Line 19 of 122C-1 because Line 19 makes reference to a marital adjustment, if applicable.
. The Uniform Plan in the Southern District of Texas contains a unique provision for the Savings Fund to act as an apparatus for debtors to set aside funds for an emergency that .may arise during the course of the plan. See generally ECF No. 28 at ¶ 14. Debtors may file an application to withdraw from the savings fund throughout the bankruptcy and "the balance in the emergency savings fund will be paid” to the debtors upon discharge, dismissal, or conversion. Id.
. The Plan provisioned for $50,303.70 in general unsecured claims of which $20,257.57 was to be distributed pro-rata among the unsecured class.
. The Plan now provisions for $57,519.01 in general unsecured claims which results in $21,170.51 to be paid pro-rata.
. This should not be confused with the “hanging paragraph” found in 11 U.S.C. § 1325(a)(9).
. An "employee benefit plan” is defined as "an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan.” 29 U.S.C. § 1002(3). Notably, 401(k) plans, are employee benefit plans subject to ERISA. 26 U.S.C. § 401(k); 29 U.S.C. § 1003(a) (defining ERISA's coverage).
. “[A] proceeding is core under section 157 if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case.”
. “Except as provided in section 1161 of this title, chapters 1, 3, and 5 of this title apply in a case under chapter 7, 11, 12, or 13 of this title.”
. By implementing the correct calculations, Line 24 should total $5,355.06 for all allowed