Shorter Chapter 13 Bankruptcies!

[Amadan]

Shorter Chapter 13 Bankruptcies!
by Thomas McAvity on July 11, 2011

Thanks to the Reed decision, issued by a Portland, Oregon Bankruptcy Court late last week, debtors who fail the means test but who have the right mixture of projected and real expenses may now qualify for significantly shorter Chapter 13 Plans than they did previously. The end result of this decision is that a certain set of Chapter 13 debtors, who may have previously had to pay out tens of thousands of dollars to their unsecured creditors over the course of a five year period, may now file a Chapter 13 for just long enough to pay off their secured creditors and pay nothing at all to their unsecured creditors.

http://nwdrlf.com/bankruptcy-info/shorter-chapter-13-bankruptcies/

[Amadan]

I stumbled across this when searching "the google". Anybody heard about this yet? I cant seem to find anything more detailed. There's a lot of "Reed" decisions out there, lol. Wondering what it all means.

[Pandora]

Here is the case in full : http://www.orb.uscourts.gov/Judges/f...0711101605.pdf

but in a nutshell it all boiled down to this:

"....that the applicable commitment period for above-median-income debtors who have no projected disposable income is five years, such debtors would not necessarily be required to continue paying the proposed monthly plan payment amount for the entire five years. Section 1325(b)(1)(B) requires that a debtor’s plan provide “that all of the debtor’s projected
disposable income to be received in the applicable commitment period” be applied to make payments to unsecured creditors under the plan. Where projected disposable income is zero or less, it is hard to see how the statute requires any payment to unsecured creditors. Zero times 60 months is still zero.

Although debtors might be required to remain in chapter 13 for the full 60 months, with the possibility that the plan might be modified “before the completion of payments under” the plan due to changes in circumstances, § 1329(a), it is not clear that the statute requires that any particular amount be paid unsecured creditors. See Baud v. Carroll, 634 F.3d 327, 353-357 (6th Cir. 2011).

CONCLUSION

Debtors have income above the applicable median income, but have negative projected disposable income. The Ninth Circuit’s decision in Kagenveama with regard to applicable commitment period for such debtors has not been effectively overruled by the Supreme Court’s decisions in Lanning and Ransom. Therefore, debtors’ plan, which proposes a 43-month plan that pays less than 100 percent to unsecured creditors, will be confirmed. Debtors should submit their order confirming plan. "

[IamOld]

Thanks Pandora!

Spouse is in a 15% plan for unsecureds...I wonder if in a few months this may be worth speaking to the atty about...

Only other thing is less than $5K 2 months mort plus R/E tax arrears and IRS....

[chicagoed195]

Nice result in the Ninth Circuit.

Depending on case law in our own circuits, it may or may not have potential. Probably more of an opportunity for individuals who haven't filed as opposed to those of us who are in existing plans. Especially those of us who may not want to rock the applecart due to changes in our circumstances that the trustee doen't need to have handed to him on a platter.