Keywords: mortgages . surrender . IRS standards . means test .
Although debtor is allowed to deduct surrendered home on means test form 22C, ability to pay a Chapter 13 plan relevant in determining whether to deny discharge under 702(b)(3). Reduced mortgage payments sufficient for finding of abuse under 703(b)(3). Good history of Sixth Circuit law on 703(b)(3) "totality of circumstances" cases.
Although debtor is allowed to deduct surrendered home on means test form 22C, ability to pay a Chapter 13 plan relevant in determining whether to deny discharge under 702(b)(3). Reduced mortgage payments sufficient for finding of abuse under 703(b)(3). Good history of Sixth Circuit law on 703(b)(3) "totality of circumstances" cases.
Although debtor is allowed to deduct surrendered home on means test form 22C, ability to pay a Chapter 13 plan relevant in determining whether to deny discharge under 702(b)(3). Reduced mortgage payments sufficient for finding of abuse under 703(b)(3). Good history of Sixth Circuit law on 703(b)(3) "totality of circumstances" cases.
Means Test > Secured Debts > Mortgage Expense Deduction > Surrender Secured Debts: Mortgage Payment Deduction where Property is to be Surrendered11 Cases , IssueID 13 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:This issue comes up in three contexts. Lines of Cases:
Topic Background / Overview:Before the 2005 bankruptcy amendments, judges relied on Schedules I and J to determine whether a debtor was abusing the bankruptcy system and whether they had enough monthly income to fund a realistic Chapter 13 repayment plan. |
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"...The Court prefers the common-sense interpretation given to the Code in Smith, an approach that is seemingly encouraged in Ransom, albeit arguably at odds with the more mechanical application of the Code adopted earlier by the court of appeals in Kagenveama. In other words, like in Smith, Debtors have determined that their home is not reasonably necessary for their support by virtue of their decision to surrender it through their plan. Because the Code dictates that only reasonably necessary expenses may be deducted, Debtors should not be able to deduct phantom first and second mortgage payments when calculating their monthly disposable income. Simply put, like the Ransom court, this Court declines to allow Debtors to significantly reduce payments to their unsecured creditors based upon fictitious expenses."
the Court has determined that the Debtors' line 42 deduction for their mortgage payments should be allowed. Besides, a debtor's ability to deduct a mortgage payment which he is contractually obligated to pay on his bankruptcy petition date should be no more suspect than a debtor's ability to deduct transportation ownership expenses for a car he owns free and clear as of the petition date. See, In re Ross-Tousey, 549 F.3d 1148 (7th Cir. 2008).
Although debtor is allowed to deduct surrendered home on means test form 22C, ability to pay a Chapter 13 plan relevant in determining whether to deny discharge under 702(b)(3). Reduced mortgage payments sufficient for finding of abuse under 703(b)(3). Good history of Sixth Circuit law on 703(b)(3) "totality of circumstances" cases.
Secured debt payments for collateral to be surrendered may be deducted.
mortgage expense is contractually due and, therefore deductible, notwithstanding intent to surrender
secured debt payment for non-necessary items are deductible as contractually due
mortgage expense is contractually due and, therefore deductible, notwithstanding intent to surrender
(surrender of residence
"...The Court prefers the common-sense interpretation given to the Code in Smith, an approach that is seemingly encouraged in Ransom, albeit arguably at odds with the more mechanical application of the Code adopted earlier by the court of appeals in Kagenveama. In other words, like in Smith, Debtors have determined that their home is not reasonably necessary for their support by virtue of their decision to surrender it through their plan. Because the Code dictates that only reasonably necessary expenses may be deducted, Debtors should not be able to deduct phantom first and second mortgage payments when calculating their monthly disposable income. Simply put, like the Ransom court, this Court declines to allow Debtors to significantly reduce payments to their unsecured creditors based upon fictitious expenses."
the Court has determined that the Debtors' line 42 deduction for their mortgage payments should be allowed. Besides, a debtor's ability to deduct a mortgage payment which he is contractually obligated to pay on his bankruptcy petition date should be no more suspect than a debtor's ability to deduct transportation ownership expenses for a car he owns free and clear as of the petition date. See, In re Ross-Tousey, 549 F.3d 1148 (7th Cir. 2008).
Although debtor is allowed to deduct surrendered home on means test form 22C, ability to pay a Chapter 13 plan relevant in determining whether to deny discharge under 702(b)(3). Reduced mortgage payments sufficient for finding of abuse under 703(b)(3). Good history of Sixth Circuit law on 703(b)(3) "totality of circumstances" cases.
Secured debt payments for collateral to be surrendered may be deducted.
mortgage expense is contractually due and, therefore deductible, notwithstanding intent to surrender
secured debt payment for non-necessary items are deductible as contractually due
mortgage expense is contractually due and, therefore deductible, notwithstanding intent to surrender
(surrender of residence
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