TOPIC BANKRUPTCY:EASTERN DISTRICT OF MICHIGAN BANKRUPTCY COURT. BANKRUPTCY FLINT ,ATTORNEY POSTING BY Flint Bankruptcy Lawyer Terry R. Bankert 810-235-1970.[Comments of Flint Bankruptcy lawyer Terry R. Bankert ,810-235-1970 ,in bracket or CAP headlines. If you have bankruptcy questions call today-810-235-1970 this article presented in a SEO format see, http://www.nojoketobebroke.com ]
Opinion Sustaining Trustee’s Objection to Confirmation
TRUSTEE OBJECTS AND ENDS BANKUPTCY OF MARRIED DEBTORS
Spouses, Deborah and Timothy Lovell, filed separate Chapter 13 cases because their combined unsecured debt exceeded the debt limit of § 109(e). Timothy Lovell’s unsecured debt is $355,438. Deborah Lovell’s unsecured debt is $112,933.
Deborah Lovell is unemployed.
HUSBAND TO FUND WIFES PLAN
She proposed a plan paying $250 per month for 60 months. Her husband is funding her plan.
TRUSTEE SAYS WIFE DOES NOT HAVE A REGULAR INCOME
The trustee objected to confirmation of Deborah’s plan, arguing that she is not eligible to be a debtor because she is not an individual with regular income.
The Court requested briefs from the parties on the following issues:
1) whether Deborah is an individual with regular income;
2) if so, whether the cases should be jointly administered; or
3) whether the cases should be substantively consolidated.
COURT AGREE WITH TRUSTEE, BANKRUPTCY OVER
Subsequently, the Court issued an oral decision sustaining the trustee’s objection to confirmation. This opinion supplements that decision.
BANKRUPTCY SOURCE OPINION.
United States Bankruptcy Court Eastern District of Michigan Southern Division
In re: Deborah A. Lovell, Case No. 10-62081-R
Debtor. Chapter 13,Signed on March 24, 2011,Steven Rhodes
United States Bankruptcy Judge
WIFE SAYS HER WORK IN THE HOME IS A JOB
Deborah contends that she receives income in the nature of contributions from her husband. She argues that she provides a service to him because she drives him to work when his medical condition prevents him from driving.
WIFE SAYS SO FAR SHE HAS MADE ALL THE PAYMENTS
She further contends that her regular income is evidenced by
the fact that she has made all plan payments in a timely manner.
ITS OKAY WITH WIFE FPOR JOINT ADMINISTRATION
Deborah does not object to joint administration, as long as the interests of the creditors of each estate is protected.
OPPOSITION TO CONSOLIDATION
Deborah opposes substantive consolidation.
HUSBAND MUST APPY ALL HIS DISPOSABLE INCOME TO HIS PLAN
The trustee contends that Deborah cannot rely upon contributions from her husband to fund her plan because all of his disposable income must be used to fund his plan.
TRUSTEE SAYS WIFE DOES NOT HAVE A REGULAR INCOME
Therefore, the trustee asserts, Deborah is not an individual with regular income.
TRUSTEE WANTS THE CASE COMBINED
Alternatively, the trustee contends that the cases should be jointly administered. The trustee argues that will promote administrative convenience because the cases will be administered by a single docket and there will be a single plan, single set of schedules, and single issuance of notices.
The trustee contends that substantive consolidation is not appropriate.
CHAPTER 13 IS FOR PEOPLE WITH REGULAR INCOME
11 U.S.C. § 109(e) provides:
Only an individual with regular income that owes, on the date of the
filing of the petition, noncontingent, liquidated, unsecured debts of
less than $360,475 and noncontingent, liquidated, secured debts of
less than $1,081,400, or an individual with regular income and such
individual’s spouse, except a stockbroker or a commodity broker, that
owe, on the date of the filing of the petition, noncontingent,
liquidated, unsecured debts that aggregate less than $360,475 and
noncontingent, liquidated, secured debts of less than $1,081,400 may
be a debtor under chapter 13 of this title.
WHAT IS REGULAR INCOME
11 U.S.C.A. § 109(e) (footnotes omitted).
An “[i]ndividual with regular income” is defined in the Bankruptcy Code as an “individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13 . . . .” 11 U.S.C. § 101(30).
“The test for regular income is not the type or source of income, but rather its regularity and stability.” In re Sigfrid, 161 B.R. 220, 221 (Bankr. D. Minn. 1993) (citations omitted).
In recognizing that “Congress intended the term ‘regular income’ as used in sections 101(30) and 109(e), to be interpreted broadly.” In re Antoine, 208 B.R. 17, 19 (Bankr. E.D.N.Y. 1997)
WELFARE IS INCOME
Courts have found sufficient income in cases of support derived from “welfare, pensions, investment income, self-employment and other regular sources.” Id. (citations omitted). “
REGULARITY OF INCOME IS KEY
The cases that have addressed the subject of nondebtor spouse contributions to the income of the debtor spouse overwhelmingly agree that, assuming the required evidence of regularity and stability is provided, such contributions constitute income of the debtor for purposes of the debtor’s Chapter 13
eligibility.” In re Bottelberghe, 253 B.R. 256, 260 (Bankr. D. Minn. 2000).
HUSBAND THOUGH IS IN HIS OWN CHAPTER 13
The difference between the cases cited and the case before the Court here is that here, the “non-debtor spouse” who is funding the debtor’s plan, is actually a debtor in his own case.
CASE ON POINT?
The trustee relies on In re Gestring, 91 B.R. 870 (Bankr. E.D. Mo. 1988). There, the debtor was unemployed and proposed to fund her plan with contributions from her spouse, who had also filed his own chapter 13 case.
WIFE LIVING OF C HUSBAND HAS NO CHAPTER 13 INCOME IF…
The Court concluded, without analysis, that the debtor was not an
individual with sufficiently regular income.
NEAR FIRST IMPRESSION
There do not appear to be any other cases directly on point.
THESE DEBTORS LOSE WIFE’S CHAPTER 13 DISMISSED
However, because the debtor husband is now obligated to pay all of his disposable income into his own chapter 13 plan, he cannot
use a portion of his income to pay his wife’s creditors by funding her plan. The Court therefore concludes that Deborah is not an individual with regular income.
The trustee’s objection to confirmation is sustained.
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