Keywords: cramdown . lien stripping .
Means Test > Expenses > Secured Debts > Chapter 13 Cram Down Secured debt: Can debtor take full amount of means test secured debt deduction if secured portion is to be crammed down or stripped off during Chapter 13 plan?7 Cases , IssueID 22 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:Can a debtor deduct the full amount of current monthly under-secured debt payment if debt will be crammed down in a Chapter 13 plan Lines of Cases:
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Debtors have chosen to value certain liens at zero and will not be making any payments under or outside their plans on the mortgages. Yet they are deducting these mortgage payments as expenses "necessary" for their support. Debtors cannot have it both ways. Either the expense is necessary or it no longer exists as a secured obligation for the purposes of their plans. Once Debtors opt to eliminate the secured claims, payment of those claims is no longer an expense that is necessary for their support under section 1325(d)(2). Consequently, there is no need to resort to section 1325(b)(3) and its dispatch to the mechanical formulas of section 707 (b)(2)(A) & (B).
The debtor may not deduct payments to a junior lien holder that will be stripped.
payments on debts secured by avoided mortgages are not included in calculating PDI
The debtor may deduct payments to a junior lien holder that will be stripped.
payments on debts secured by avoided mortgages are not included in calculating PDI
Debtors have chosen to value certain liens at zero and will not be making any payments under or outside their plans on the mortgages. Yet they are deducting these mortgage payments as expenses "necessary" for their support. Debtors cannot have it both ways. Either the expense is necessary or it no longer exists as a secured obligation for the purposes of their plans. Once Debtors opt to eliminate the secured claims, payment of those claims is no longer an expense that is necessary for their support under section 1325(d)(2). Consequently, there is no need to resort to section 1325(b)(3) and its dispatch to the mechanical formulas of section 707 (b)(2)(A) & (B).
The debtor may not deduct payments to a junior lien holder that will be stripped.
The debtor may deduct payments to a junior lien holder that will be stripped.
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