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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove

Booker v. Johns (In re Booker)

Per curiam opinion shows that chapter 13 plans aren’t required to be punitive.

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Case Type:
Case Status:
Reversed and Remanded
18-30526 (5th Circuit, Feb 11,2019) Not Published
Bankruptcy court clearly erred by finding that a Chapter 13 plan was not offered "in good faith" because it allowed elderly debtors to retain a 20-year-old fishing boat that served as part of the collateral for a loan being repaid through the plan.
Procedural context:
Debtors appealed district court order affirming bankruptcy court's orders denying confirmation of their second proposed Chapter 13 plan and confirming a less-favorable plan.
Debtors proposed a Chapter 13 plan that allowed them to keep a fishing boat with its motor and trailer, three televisions, and lawnmower - all of which served as part of the collateral for a secured loan being repaid through a plan that offered unsecured creditors a 4% dividend. The Bankruptcy Court determined that the plan was not offered in good faith and refused to confirm it, despite the absence of an objection from the Chapter 13 Trustee or any creditor. Debtors confirmed a more onerous plan and preserved their right to appeal. The Fifth Circuit found that the Bankruptcy Court (and District Court) overlooked several critical facts, including: lack of objections to the plan, including no objection by the affected secured creditor; Debtors' commitment of a portion of their Social Security income to the plan, although they were not legally required to do so; no problems with credibility or intent to follow the plan; and that the confirmed plan that was substantially identical to the rejected plan, including the same proposed payments to unsecured creditors, with the exception that it required Debtors to surrender their boat, televisions, and lawnmower.
Jolly, Jones, Dennis

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