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Summarizing by Amir Shachmurove

Drummond v. Welsh (In re Welsh)

Case No. 12-60009 (9th Cir. March 25, 2013)
In AFFIRMING the judgment of the Bankruptcy Appellate Panel, which affirmed the bankruptcy court's judgment confirming a chapter 13 plan as proposed in good faith, the Ninth Circuit held that under BAPCPA, a debtor's Social Security income and payments to secured creditors cannot be considered as part of the inquiry into good faith under 11 U.S.C. 1325(a).
Procedural context:
The trustee objected to the chapter 13 debtors' proposed plan on the basis that it was not proposed in good faith. The bankruptcy court overruled the objection. The trustee appealed to the Bankruptcy Appellate Panel for the Ninth Circuit, which affirmed the bankruptcy court's decision.
The debtors' schedules listed several secured debts, including real property valued at $400,000 and several "luxury" vehicles. On Form 22C (Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income), the debtors did not list Social Security income of $1,165, and deducted future payments on secured claims from their disposable income. The debtors proposed a plan providing for monthly payments of $125 per month until the secured claims on the debtors' several vehicle loans were paid off, then increasing to $500 per month for the last 30 months of the plan. The proposed plan would pay off approximately $14,700 of the debtors' scheduled $180,000 unsecured debt. The trustee objected, contending the plan was not proposed in good faith because the debtors did not include its Social Security income in their disposable income calculation, and because the debtors should not be permitted to retain "luxury" items while unsecured creditors receive a minimal distribution.
Kenneth F. Ripple, Stephen S. Trott, and Richard A. Paez

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