December 22, 2007
10th Cir BAP Rules on "Projected Disposable Income"
In re Lanning, --- B.R. ---, 2007 WL 4348055 (10th Cir. BAP December, 2007 (Kansas))
Issue: Can an over-median debtor confirm a chapter 13 plan paying less than the B22C net income by showing “special circumstance”?
The debtor is an over-median chapter 13 debtor whose B22C shows a net of $1,114 because of two one-time payments by her employer in the last six months. Her “I and J” net income is $149. The bankruptcy court confirmed the chapter 13 plan of $149 (for 60 months apparently).
The BAP affirmed. “[W]e agree with the courts that have found ‘disposable income’ to be only the starting point in determining ‘projected disposable income’ under section 1325(b)(1)(B). Where it is shown that Form B22C disposable income fails accurately to predict a debtor’s actual ability to fund a plan, that figure may be subject to modification.” The BAP looked for “guidance” in Section 707(b)(2)(B)(i) which “allows debtors to rebut that presumption [of abuse] ‘by demonstrating special circumstances . . . that justify additional expenses or adjustments of current monthly income for which there is no reasonable alternative.” “Therefore, parties contending that a debtor’s Form B22C disposable income figure does not accurately project the debtor’s future ability to fund a plan must present documentation similar to that required by section 707(b)(2)(B)(ii) in support of their claim. However, we emphasize that deviation from the Form B22C determination of disposable income will be the exception rather than the rule.”
By the way, the debtor did not participate in the appeal (why should she?). The court asked the UST to file an amicus brief which it did supporting the debtor and the position. I guess they don't hate debtors after all. (lol)
December 18, 2007
Mark Scarberry Testimony Before Congress
Prof. Mark Scarberry testified before the Senate on December 5, 2007 about two pending bills dealing with the problem of chapter 13 debtors trying to modify their home loans. His testimony can be found here. He argues that homeowners should not be able to strip down the loans because of the potential detrimental effect on the home lending industry.
In a subsequent email, Mark discussed the issue of whether PMI will cover the lenders losses.
"One point I brought out that seemed important to Senator Durbin was the possibility that losses to mortgage holders due to strip down of mortgages may not be covered by private mortgage insurance. Many borrowers are required to get PMI when their down payment is small (less than 20%, often), and PMI apparently pays only when there is a foreclosure. If a chapter 13 modification of a mortgage under one of the proposed bills caused the amount of the mortgage to be stripped down and also prevented a foreclosure, the mortgage holder effectively would be denied the protection of the insurance for which it bargained. I'm not a fan of foreclosure, but one of the points often made in favor of amending the law to allow strip down of home mortgages in chapter 13 is that the mortgage holder is no worse off, because on foreclosure all that the mortgagee would receive is the value of the property. The PMI issue is one reason for questioning that argument. I pointed out that I am not an expert on PMI but had been told by people in the PMI business that no payment is due under the insurance absent a foreclosure. Perhaps other list members will know more."
Finally, Mark has updated his chart tracking the various bills in Congress which can be found here.
December 16, 2007
NACBA Meeting on Capitol Hill January 29 and 30
Dear NACBA Member:
I write to encourage you to participate in NACBA's upcoming Capitol Hill Meeting, which will be held in Washington, DC on Tuesday, January 29 and Wednesday, January 30. The timing of the event is designed to coincide with the return of Congress to business after the State of the Union address, the weekdays on which lawmakers and their staff are most likely to be available for meetings, and the upcoming votes on the mortgage modification bills.
The Capitol Hill Meeting is a two-day event that consists of a half-day of training, followed by a full day of meetings with members of Congress and their staff that are arranged by NACBA. The training session on Tuesday will fully prepare you to advocate on behalf of debtors to your Senators and Congressman on Wednesday.
This is a unique opportunity to learn about how to participate in the legislative process, and to maximize your own ability to directly affect future legislation.
NACBA has played a leading role in initiating the home mortgage modification legislation. As you know, bills are currently pending in the House and Senate and are due for a vote early in 2008, but the lobby to prevent this legislation from becoming law is out in force.
We are ready to meet the challenge from the creditor lobby. But without the active involvement of as many NACBA members as possible, we will not be successful in getting the legislation passed. So, register now at https://www.nacba.org/ecomm/user/lobbyday.php?ld=2 and help educate your congressional delegation about how such a change in the bankruptcy code will help families in their district and state stay in their homes.
The training session will be held at the Four Seasons Hotel, which is located in Georgetown. There are several affordable near-by hotel options, including the Georgetown Suites (phone: 800.348.7203) and the Latham (phone: 888.587.2377). The Georgetown Suites is offering a NACBA rate of $160/night/single, based on room availability. Make sure to use the code "NACBA" when you phone.
The Capitol Hill meeting is schedule is as follows:
Tuesday, January 29, 2008
Four Seasons Hotel , Washington, D.C., 2800 Pennsylvania Avenue NW, Washington, D.C. 20007
Noon - 1 p.m. Luncheon
1 - 2 p.m. Review of NACBA's recent legislative activity and pending bills in Congress
2 - 2:30 p.m. How to conduct a successful meeting with your representative
2:30 - 2:45 p.m. Break
2:45 - 5:15 p.m. Preparing for legislative meetings:
? NACBA's message for Congress
? Connecting the Message with your Representatives
5:30 - 6:30 p.m. Reception
6:45 - 7:45 p.m. State Chairs' Meeting
Wednesday, January 30, 2008
Capitol Hill Hospitality Room - to be announced
8:30 a.m. - 5:30 p.m. NACBA member appointments with Senators, Congress Members, and staff, arranged by NACBA
This is a critical time for the collective voice of NACBA's membership to be heard in Congress. Please consider joining us for this important event.
Barbara Andelman, Executive Director