GREAT NEWS FOR CHAPTER 13 DEBTORS, U.S. Supreme Court

[HHM]

The US Supreme Court upheld the ruling out of the 10th circuit of In Re Lanning

http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

Hamilton v. Lanning 08-998

The Supreme Court has adopted the Forward looking approach for determining disposable income for the chapter 13 plan payment. In a nutshell, no more stupid objections from Chapter 13 trustees if you have a bonus, severance, or other 1 time income event in your prior 6 month look back that eschews your monthly payment calculation. Chapter 13's are to be based on a common sense understanding of "projected" disposable income.

[newbie2]

The US Supreme Court upheld the ruling out of the 10th circuit of In Re Lanning

http://www.supremecourt.gov/opinions/09pdf/08-998.pdf

Hamilton v. Lanning 08-998

The Supreme Court has adopted the Forward looking approach for determining disposable income. In a nutshell, no more stupid objections from Chapter 13 trustees if you have a bonus, severance, or other 1 time income event in your prior 6 month look back. Chapter 13's are to be based on a common sense understanding of "projected" disposable income.

It's about darned tootin time!

[Mi Bankruptcy]

lol.. always falls back to congresses fault..

[HHM]

I should clarify, this ruling doesn't necessarily change how a 1 time income event would affect your ability to qualify for chapter 7 under the means test as far as calculating whether you "qualify" for chapter 7 BK. This ruling is specific to chapter 13 BK's and how you actually calculate a chapter 13 payment once chapter 13 is a foregone conclusion.

[tigergem]

Kudos to my judge and trustee for putting this into effect in my district well before this ruling!

[ColoradoBell]

WOW...couldn't have come at a better time, especially for me.
There's about a $6500/mo difference in last 6 months over next 6 months.
Thank you for posting this HHM...otherwise, its been a pretty down day.

[researchnerd]

Awesome news. We just filed on 5/28 and DH's unemployment ended the same week. Hopefully we can now exclude that income from our Plan, because it's simply not there any more.

[sheilaE]

Is this in effect in ALL district right now?

[CCB35]

I dont supposed this is going to help anyone who has been in bk for a while is it?
just for new filers?

[HHM]

You can probably modify your existing plan under section 1329.

It really depends on how your initial plan was set up. Obviously, if you have been in a plan for a few years based on the "mechanical approach", that is de-facto evidence that you can afford that payment. So, unless something has changed, it is unlikely you would get a new payment by redoing your budget.

[JimBK2009]

Im thinking that you should change the title of this sticky:

The Hamilton v. Lanning decision makes it clear that an above median chapter 13 debtor can no longer propose a 36 month plan. (In Re Kagenveama 541 F.3d 868 mechanical approach was overturned).

What this means is that if a debtor is above median by 1 dollar, it automatically becomes a 60 month plan rather than a 36 month plan. (in many district courts, debtors could propose a 36 month plan if after subtracting allowable expenses on the means test they had negative DMI)

This is bad news for debtors.

[HHM]

Im thinking that you should change the title of this sticky:

The Hamilton v. Lanning decision makes it clear that an above median chapter 13 debtor can no longer propose a 36 month plan. (In Re Kagenveama 541 F.3d 868 mechanical approach was overturned).

What this means is that if a debtor is above median by 1 dollar, it automatically becomes a 60 month plan rather than a 36 month plan. (in many district courts, debtors could propose a 36 month plan if after subtracting allowable expenses on the means test they had negative DMI)

This is bad news for debtors.

Not sure it matters that much, would you rather be in a chapter 13 at a payment you "can't" afford and therefore not be able to receive any discharge in any BK Chapter, or be in a 60 month chapter 13 at a payment you CAN afford and be out of debt in 5 years.

[JimBK2009]

Not sure it matters that much, would you rather be in a chapter 13 at a payment you "can't" afford and therefore not be able to receive any discharge in any BK Chapter, or be in a 60 month chapter 13 at a payment you CAN afford and be out of debt in 5 years.

What I am referring to are the $100 for 36 month payment plans with a lien strip.

This will affect them because:

1) Anytime Debtor's want to buy a car or get a loan they have got to go into court and get permission (and in the 4th and 5th year people's car usually craps out and they got to get a new car or have to make a new purchase - lol, I mean think about the guy who is locked into a 5 year payment plan and the car he is paying for is in the plan... its not gonna be paid in full for 5 years)

2) If they had a car loan with more than 3 years and they had a 3 year plan they could pay off the car outside of the Plan. NOW if their plan is 5 years and the car goes into the plan they have to pay off the original loan + 3-6% interest (In Re Till)

Im mean think about it... yes if they owe a lot they can stretch it out to 60 months, but by doing this they are paying a trustee 9.6% interest on all payments for 2 extra years AND they have to go into court to get permission from the court to buy/sell property for a longer period AND if they lose there job in the 4th-5th year or suffer any financial setback they risk having there whole case thrown out and have to start over unless they get a hardship discharge or modify the plan,

Trust me, in my district people are not happy... you want to get out of BK as soon as possible, you dont want to be stuck in it for 5 years

[HHM]

Well, I feel sorry for your clients, sorry to say. If you are pushing people into a chapter 13 to do a lien strip and can't get them qualified for a chapter 7, you have no creativity. FFS, have them file a chapter 7 and settle the 2nd mortgage for 5 or 10%, WTF are you putting these people into chapter 13 payment plans. How many of these token chapter 13's are actually making it to discharge, if its anything close to the nation average, (not many), then what have you really accomplished.

[mkstlowe]

This is great news. My 341 is tomorrow. I had 1 time bonus for a company merger. So he was putting the note why not to include it. Now is might not be an issue after all?