This Research Guide tackles the following:

• attempts to collect all the cases discussing the calculation of projected disposable income insofar as the discussion is specific to Chapter 13
• review how a court applies § 1325(b) to the numbers generated by the debtor under § 101(10A) and § 707(b)(2)
• collects the cases discussing the treatment of a Chapter 13 debtor’s retirement plan contributions and loan repayments, and those cases determining the classes of unsecured creditors comprehended by Code § 1325(b)(1)(B), requiring a debtor to pay all of his or her projected disposable income to “unsecured creditors” if those creditors are not paid in full.

Robin has graciously allowed me to make this guide available to my readers and visitors. I think you’ll find it a useful tool in your Chapter 13 practice.

Download the guide by clicking here.

It is important to review your credit reports at least every six months to ensure that no incorrect information appears on the reports. For people who went through bankruptcy, the most common error involves creditors failing to update their reporting to indicate that the debt was discharged in bankruptcy and has $0 due.

These errors can be addressed a number of different ways, the most reliable one being through the provisions of the Fair Credit Reporting Act. The requirements for a dispute to be processed properly are very strict, but a failure on the part of the creditor to properly update the report once the errors is brought to its attention can result in a claim for a violation of the bankruptcy discharge, Fari Credit Reporting Act, and a variety of state laws.

The Debtors filed a Chapter 13 case noting that they had three vehicle loans, all of which would mature during the course of their plan. The Plan, however, did not call for payments to increase as the vehicle loans were paid off.

The Chapter 13 Trustee and an unsecured creditor, eCast Settlement Corporation each objected to the confirmation of a proposed Chapter 13 Plan on the grounds that the proposed plan failed to devote all of the Debtors’ “projected disposable income” to be received in the “applicable commitment period” within the meaning of 11 U.S.C. § 1325(b)(1)(B).

Judge Littlefield, in overruling the objections and confirming the Plan, noted that in order for the court to confirm a plan over the objection of the trustee or a holder of an unsecured claim, a debtor must pay each allowed unsecured claim in full, 11 U.S.C. § 1325(b)(1)(A), or devote all projected disposable income to be received in the applicable commitment period to make payments to unsecured creditors, 11 U.S.C. § 1325(b)(1)(B). The Plan in question would pay a 5% divident to unsecured creditors, so the Debtors are required to devote all of their projected disposable income to be received in the applicable commitment period to make payments to their unsecured creditors pursuant to § 1325(b)(1)(B).

Subsequent to the parties briefing the issue in this case, the court rendered In re Green, — B.R. —-, 2007 WL 4026511 (Bankr.N.D.N.Y. Aug. 29, 2007), which held, in relation to the issue in the current case, that disposable income and projected disposable income are interrelated and are based on historical numbers as mandated in § 1325(b).

Applying the court’s analysis in Green to the case sub judice leads to the conclusion that financial events occurring over the course of a debtor’s plan would have no relevance to a debtor’s plan payment necessary for confirmation purposes. Id. Future events simply do not mesh with the backward glance required by § 1325(b)(1)(B) at confirmation. Thus, the apparent liberation of debtor monies by the proposed retirement of automotive loans during the life of a plan is not an impediment to confirmation for purposes of § 1325(b)(1)(B). [FN6] As the Debtors’ second amended plan provides for monthly plan payments of $250 for a period of 60 months, the court finds that the Debtors have satisfied § 1325(b)(1)(B).

11 U.S.C. § 1325(b) requires when an objection to a Plan is filed, a debtor must either pay all claims in full or dedicate sufficient funds to the plan as measured by so much of “disposable income” as is received during the applicable commitment period. There, the Chapter 13 Trustee filed an Objection to the Debtors’ Plan alleging that a monthly expense of $200 spent toward educating an adult daughter and $240 are not necessary.

By way of explanation, Section 707(b)(2)(A)(ii)(1) states that when determining disposable income, the debtors in an over-median situation are permitted to deduct their monthly expenses. Those monthly expenses are the applicable monthly expense amounts specified under the Internal Revenue Service’s National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides, as in effect on the date of the order for relief, for the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent.

The Trustee in this case claimed that the Debtors wrongfully deducted expenses of $200 a month for their daughter who is a freshman in college in line 59 on their B22C means test form.

Mrs. Boyd testified that her nineteen year old daughter was attending a state university and was paying for her tuition and room and board through loans. She stated that although the loans covered room and board, it did not cover her daughter’s books, supplies, a portion of her meals, nor did it cover other small necessities like toothpaste and toiletries. Mrs. Boyd further testified that her daughter was taking a full course load and that she was unable to maintain a job because of the rigorous schedule.

The court looked to Section 707(b)(2)(A), which includes a provision allowing the actual expense, up to $1500 per year, for educating a minor child in a public or private elementary or secondary school. Using this as a starting point, the court decided that Congress would not deem that expense necessary, considering that the statutorily approved expenditure is a smaller amount than the requested amount, deals with a dependent minor child rather than an adult, and references those critical elementary and secondary school years, as opposed to undergraduate education.

It’s useful to remember that these debtors were requiring their daughter to attend a state university (less expensive than a private one) and to take out the maximum amount for student loans. She took a full courseload, and had not time to work part-time. So this wasn’t a case of parents buying their daughter a super-luxury education and allowing her to live like a queen. The family wasn’t trying to game the system, they were looking to work within it. For their honesty and frugality, they got slapped by the bankruptcy system.

There’s an old saying that one should not revisit the sins of the father on the son, but that’s exactly what happened here. The parents went into bankruptcy court with the intention of paying back what they could afford, and instead were told that they could not avail themselves of the system unless their daughter either dropped out of college (for $240 a month!) or sacrificed her studies by working in addition to a full schedule of classes.

Not a great way to ensure that our children are prepared for life in the working world, is it?

The Debtor in the case was a student at Penn, financing her education through student loans granted or guaranteed by Penn. The principal amount of the loans was in excess of $33,000. The Debtor became delinquent in the repayment of her Penn student loans and has transcript was placed “on official hold.” Several months after the filing of her Chapter 13 case, the Debtor requested that Penn provide her with a certified copy of her transcript so that she could apply to a masters degree program in clinical psychology commencing in the fall of 2007. The debtor’s request was referred to Penn’s lawyers, and a lengthy letter-writing campaign ensued.

The court sided with the majority of courts that hold a university’s refusal to release a debtor’s transcript due to the existence of a default on a nondischargeable student loan owed to the university violates the automatic stay.

For other cites holding this view, you may look to In re Merchant, 958 F.2d 738, 741 (6th Cir.1992) (holding that refusal to provide chapter 7 debtor transcript because of default on student loan was a violation of the automatic stay based on the plain language of 11 U.S.C. § 362); In re Hernandez, 2005 WL 1000059, at *1 (Bankr.S.D.Tex. Apr. 27, 2005) (concluding that denial of transcript to chapter 13 debtor because of outstanding student loans was a violation of the automatic stay); Loyola Univ. v. McClarty, 234 B.R. 387, 386 (E.D.La.1999) (university’s act of withholding chapter 13 debtor’s transcript violated automatic stay); In re Scroggins, 209 B.R. 727, 730 (Bankr.D.Ariz.1997) (act of parochial school withholding transcript of chapter 13 debtor’s minor child violated the automatic stay); In re Carson, 150 B.R. 228, 231 (Bankr.E.D.Mo.1993) (holding that college violated stay by not delivering transcript to chapter 7 debtor when debt had not yet been determined dischargeable); In re Gustafson, 111 B.R. 282, 288 (9th Cir.BAP1990), rev’d on other grounds, 934 F.2d 216 (9th Cir.1991) (holding that university violated the automatic stay by withholding chapter 7 debtor’s transcripts because the debts were not yet determined nondischargeable); In re Parham, 56 B.R. 531, 534 (Bankr.E.D.Va.1986) (holding that university violated automatic stay by withholding chapter 13 debtor’s student transcript, but that such action at bar did not rise to the level of contempt). See generally In re Parker, 334 B.R. 529, 536, 538 (Bankr.D.Mass.2005) (concluding that university’s act of refusing to allow chapter 7 debtor from registering for class and from graduation was both violation of the automatic stay and the discharge injunction); In re Walker, 336 B.R. 534, 536 (Bankr.M.D.Fla.2005) (considering whether private university violated 11 U.S.C. §§ 362 and 525 by withholding chapter 13 debtor’s transcript); In re Reese, 38 B.R. 681, 683 (Bankr.N.D.Ga.1984) (holding that state university violated 11 U.S.C. §§ 362 and 525 by withholding debtor’s transcript where debt was dischargeable); In re Ware, 9 B.R. 24, 25 (Bankr.W.D.Mo.1981) (on objection to confirmation found that 11 U.S.C. § 525 was inapplicable but that college violated automatic stay by denying transcript to chapter 13 debtor); In re Howren, 10 B.R. 303, 305 (Bankr.D.Kan.1980) (on motion requesting order for immediate release of transcript, held that state university was in violation of 11 U.S.C. §§ 362 and 525 for withholding chapter 7 debtor’s official transcript for purpose of debt collection); In re Heath, 3 B.R. 351, 354-55 (Bankr.N.D.Ill.1980) (state university act of refusing to issue academic record to chapter 13 debtor frustrated fresh start policies of the Bankruptcy Code and violated both 11 U.S.C. §§ 362 and 525).