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MORE LINE BY LINES OF B22C
In re Hays, Case No 07-41285
April, 2008, Judge Karlin
13 Trustee objections to debtor’s attempts to claim living expenses for non-dependent debtors as well as for secured debt on a timeshare. Court followed Law and disallowed adult child expenses. The Court allowed the debt on the timeshare to be deducted. The decision is very thorough and is a recommended read.
Digest by:Â Jan Hamilton, Trustee
B22C CASE, LINE BY LINE…
In re Law, Case No. 07-40863
April 2008, Judge Karlin
Court sustained 13 Trustee’s objection to confirmation as debtor included: adult son in household size, tax levy on Line 33 and duplicated it on Line 49 and unencumbered vehicle on line 28. The decision is a good analysis of the status of B22C case law as of the date of the decision.
Digest by:Â Jan Hamilton, Trustee
OK FOR CHAPTER 13 DEBTORS TO TAKE B22C DEDUCTION FOR FULL PAYMENT
RATHER THAN CRAM DOWN AMOUNT
In re Allen, Case No. 07-41327
February 2008, Judge Karlin
Objected to confirmation on the basis that Debtor’s means test calculations erroneously included the full amount of the pre-petition car payments rather than the reduced or crammed-down amounts. In analyzing 1325(b)(1), the Court found that 707(b)(2)(A)(iii) applies and that Debtors need not only list the amounts they will actually pay through the plan. There is a split of authority on this important issue. This case was not appealed so no appellate decision is in the immediate future for the 10th Circuit. See the Hoss and Arroyo decision by Judge Nugent for the opposite result.
Digest by:Â Jan Hamilton, Trustee
CAR DEDUCTIONS ALLOWED EVEN THOUGH NO LIEN
In re Thomas, Case No 06-21108
In re Camacho, Case No. 06-20729
October 2007, Judge Berger
UST Motion To Dismiss under 707(b) for presumed abuse based upon totality of circumstances was denied. The Court concluded that the debtors are entitled to claim vehicle ownership for expenses, even though debtors did not have liens or leases on the vehicles. (See In Re Howell, 06-11652 for opposing view from Judge Nugent.). Judge Lungstrum subsequently reversed and remanded Thomas, 382 B.R. 793 (D. Kan. 2008).
Digest by:Â Jan Hamilton, Trustee
PLAN MAY NOT PROPOSE EARLY PAYOFF BUT 1329 MAY ALLOW POST
CONFIRMATION MODIFICATION
In re Kidd, et al, Case No. 06-41232
August 2007, Judge Karlin
The Court recognized changes in 1324(b)(4) and held that debtors may not propose an early pay off but may obtain the same in the right circumstances via 1329.
Digest by:Â Jan Hamilton, Trustee
B22C CONTROLS UNLESS SIGNIFICANT CHANGES IN CIRCUMSTANCES
In re Lanning, Case No. 06-41037
May 2007, Judge Karlin
Over the Chapter 13 Trustee’s objection, the Court confirmed the plan because of significant changes in circumstances at the time of filing that caused Line 58 on B22C to be higher than what the debtor could afford to pay. BAP and 10th Circuit Court of Appeals affirmed, Petition for Cert to U.S. Supreme Court pending. Lanning controls in Judge Karlin’s court, until, if and when, the decision is overturned.
Digest by:Â Jan Hamilton, Trustee
BELOW MEDIAN MUST RUN 36 MONTHS, B22C IS TEMPORAL
In re Daniel, Case No. 06-20714
December 2006, Judge Somers
In a Below Median case, debtor’s income is determined by B22C and expenses by Schedule J and must “run†for 36 months (The Applicable Commitment Period) or pay 100% of all allowed unsecured claims. B22C is temporal, rather than a multiplier. Read carefully.
Digest by:Â Jan Hamilton, Trustee
GAP insurance, service contracts, administrative fees and the traded-in car payoff are not part of a car lender’s purchase-money secured claim in chapter 13 bankruptcy and can be crammed-down if the car is worth less than the loan balance, Judge Janice Miller Karlin ruled this week in In Re Miller, Case No. 08-40935, (Bankr. D.Kan. December 2, 2008).
Judge Karlin suggested the ruling may be different for service contracts in a future case if the creditor convinces her the contract enhances the value of the vehicle. Creditors have the burden of proof to establish their purchase money security interest (PMSI) claim, she said.
Non-PMSI charges are still part of the creditor’s secured claim and must be paid in chapter 13 bankruptcy up to the value of the car. A debtor must pay the entire PMSI to retain a car even if the amount is greater than the car’s value if the loan was incurred within 910 days of bankruptcy. [Read more…]
A new procedure for issuing chapter 13 bankruptcy discharges and administratively closing the cases is being considered in the U.S. Bankruptcy Court for the District of Kansas. Here is a summary of the procedure from the minutes of the September 17, 2008, Bench and Bar Committee:
The Kansas Bankruptcy Court adopted a new rule requiring chapter 13 debtors behind on mortgage debts when the bankruptcy case is filed to be paid through the trustee. The rule goes into effect for cases filed on or after October 1, 2008.
Proponents of the new rule say the chapter 13 trustee records will aid the court in protecting debtors from charges for inappropriate fees and from false allegations of nonpayments. Opponents of the new rule object to the chapter 13 fee (up to 10%) added to the to the mortgage payments, creating additional financial hardship for debtors.
EDITOR UPDATE: This post is out of date. Judge Karlin reverted to her original ruling in In re Law after the Pearson decision was vacated. This issue is currently pending the the U.S. Court for the Tenth Circuit so we should have a binding ruling soon. December 13, 2009.
Topeka Bankruptcy Judge Janice Miller Karlin announced last week that she is reversing course and will follow the Pearson decision to allow debtors a means test deduction for ownership of a car without a debt against it.
Judge Karlin had earlier disallowed the car ownership deduction in In re Law, 2008 WL 1867971 (Bankr. D. Kan. 2008), following the decision by Kansas District Court Judge John W. Lungstrum in Wieland v. Thomas, 382 B.R. 793 (D. Kan. March 4, 2008), reversing Judge Robert D. Berger of Kansas City, KS, in In re Thomas, 2007 WL 2903201 (Bankr. D. Kan. Oct. 02, 2007). [Read more…]
