During an era when courts torture the language of opaque statutes to find answers for difficult questions, it was refreshing to read an opinion by Bankruptcy Judge Robert A. Mark of Miami, who used logic and common sense.
The debtor filed a chapter 13 petition in May 2019 and confirmed a 60-month plan a few months later. The plan contained a so-called income-verification provision requiring the debtor to give her income tax returns to the chapter 13 trustee each year.
If her income increased by more than 3%, the provision required the debtor to file a recalculation of disposable income.
The debtor’s primary creditor was her homeowners’ association, or HOA. Because the HOA increased its charges by almost $100 a month, the debtor filed a motion to modify the plan to pay the increase.
At the same time, the debtor received a sizeable pay increase from her employer, kicking in the obligation to recalculate disposable income.
The chapter 13 trustee and HOA did not object to increasing the monthly payment to the HOA, but both objected to the debtor’s disposable income calculation. They argued that the debtor should have used the IRS national standards of allowable expenses in effect on the chapter 13 filing date, not the IRS standards when the debtor was seeking to modify the plan.
In his November 15 opinion, Judge Mark said, “[T]he answer is simple.” He found no caselaw nor any statute “mandating the use of the IRS Standards in effect on the petition date.”
Where the objectors wanted to use the filing-date standards, Judge Mark said, “Logic and fairness (not always a choice under BAPCPA) compel the opposite conclusion.”
“If the Debtor’s increased current income may obligate her to increase her payments to unsecured creditors, the Debtor must be allowed to calculate her disposable income using current expenses,” Judge Mark said. If it were otherwise, “[t]hat just wouldn’t make sense,” he said, because “an artificial increase in disposable income [would require] higher plan payments for a debtor who had no extra money to afford the higher payments.”
Judge Mark directed the debtor to file an amended calculation of disposable income using the IRS standards currently in effect.
During an era when courts torture the language of opaque statutes to find answers for difficult questions, it was refreshing to read an opinion by Bankruptcy Judge Robert A. Mark of Miami, who used logic and common sense.
The debtor filed a chapter 13 petition in May 2019 and confirmed a 60-month plan a few months later. The plan contained a so-called income-verification provision requiring the debtor to give her income tax returns to the chapter 13 trustee each year.
If her income increased by more than 3%, the provision required the debtor to file a recalculation of disposable income.
The debtor’s primary creditor was her homeowners’ association, or HOA. Because the HOA increased its charges by almost $100 a month, the debtor filed a motion to modify the plan to pay the increase.
At the same time, the debtor received a sizeable pay increase from her employer, kicking in the obligation to recalculate disposable income.