[CLBS] Proposed Model Chapter 13 Plan

[Joseph Ammirati]

Thanks Alex, Kathleen and Commitee for your work.

I think the Lien Strip language in 5.4 is really helpful.  

I had some reservations about a couple items.  First, under section 2.2 (tax refunds), I believe it would be better to provide a blank to fill in so that debtors could line up their expected tax refund with their budget.  There seem to be a lot of cases where the EIC alone is more than $1,800.00.  Since each family is different, couldn't debtors look at past tax returns and provide a less arbitrary number?  It seems like the current language is going to require a very quick motion to modify for those families who know they will receive a larger tax refund.  I suppose one could always use the asterik option, however I am assuming that part of the purpose for the plan revision is to have less asteriks.

The other item is the new section 10 duty of debtor to report change in income.  The language begins "Pursuant to 521(f)(4)" but it seems like the language does not match up with the requirements of that statute.  Instead, it appears to create additional duties under guidlines that were not necessarily contemplated under 521.  In my view the duties imposed are not authorized by 521 and, while a debtor may want to voluntarily agree to them, they should not be compelled to by a model plan.  Some of the reasons for this section may be really good, but I question whether it should be part of the District's "model" plan.

But if it does become part of the model plan, then here are a couple specific concerns:  In the first paragraph, it looks like the key is to know when and if you hit the 10% threshold.  Which begs the question, "10% of what number?"  Is it 10% of monthly gross income or does it need to reach 10% of annual income.  It seems like the first paragraph targets income changes that will be permanent or at least of a significant duration and the second paragraph targets one time increases to income.   In other words, the first paragraph would give the trustee a good basis for long term plan modification and the second paragraph gives the trustee a good basis for a short term modification, such as asking for a portion of the identified bonus or inheritance in an agreed order or motion.   So for the first paragraph I think debtors should only be required to file an Amended I and J for a 10% change to income that is substantially certain to persist over the term of the commitment period.

The second full paragraph of section 10 is really broad as it includes reporting funds from "any source" over $1,800.  But it does not have any similar 60 day requirement to report or really much of any time limit to report.  If you are going to compel debtor to report in a different way than authorized by 521, then I think giving the debtor a time frame in which to report these sources would help.  Again, the enumerated "sources" of funds (inheritances, gambling winnings, and employee bonuses) are also types of income under the first paragraph.  But for example, a one time 10% annual bonus or dividend over $1,800 may not be a great reason for a long term plan modification or an Amended I and J.  But it might be a good reason for a short term modification.

Joe 







-----Original Message-----
From: clbs-bounces at admws.idaho.gov [mailto:clbs-bounces at admws.idaho.gov] On Behalf Of Alex Caval
Sent: Wednesday, June 13, 2012 1:45 PM
To: clbs at admws.idaho.gov
Subject: [CLBS] Proposed Model Chapter 13 Plan

Everyone:

Please see the attached memorandum and the proposed model Chapter 13 Plan that the Chapter 13 Advisory Committee has been working on for the last few months. We need input from the bankruptcy bar regarding whether or not the proposed model plan should be submitted to the Rule Committee for approval.
The Advisory Committee needs your input by July 3, 2012 for the next Rules Committee meeting that is scheduled for July 6, 2012. If you would prefer to email a specific member of the Advisory Committee rather than posting to the entire ListServ, then you may do so by clicking on the member's name in the attached memorandum.

 

Alexandra O. Caval

Staff Attorney

Office of Kathleen A. McCallister

Chapter 13 Trustee

P.O. Box 1150

Meridian, ID 83680

T: (208) 922-5100

F: (208) 922-5599

 


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