Johnson v. Fink (In re Johnson)

Johnson V. Fink, Case No: 11-6037 (BAP 8th Cir.)
The Bankruptcy Appellate Panel for the 8th Circuit affirmed the bankruptcy court's ruling.
Procedural context:
Appeal from bankruptcy court order overruling the debtors' objection to confirmation of their post-confirmation amended Chapter 13 plan. The court held that the debtors' could modify their plan to reduce payments under 11 USC Section 1329(a) due to a substantial change in financial circumstances, however, the modification must correlate to the change in circumstances. Here, the only change post-confirmation was that debtor lost a second job, conversely, there was no change to debtors' Social Security income, which was originally used to establish their pre-confirmation plan. As such, Debtors' could not exclude Social Security from their disposable income when the modifying their plan post-confirmation. The debtors' appeal that decision.
On December 18, 2009, Debtors (Mr. and Mrs. Johnson) filed for Chapter 13 Bankruptcy. On February 23, 2010, their plan was confirmed which required debtors' to pay $1,890 per month for 60 months, which included income from debtors's jobs and social security income. One year after filing, Mr. Johnson lost his second job thereby reducing his disposable income (based on amended Scheduled I and J) that his disposable income was $935.92. However, Debtor proposed a plan payment of $100 in their post-confirmation amended plan, arguing that the plain language of the Bankruptcy Code "specifically excludes Social Security income from the Debtor's required Chapter 13 plan payments." The chapter 13 trustee objected and the court sustained the objection indicating that the amended post-confirmation plan was not proposed in good faith since the "debtor's have chosen a lifestyle that exceeds their Social Security benefits." Debtors' requested a leave to file an interlocutory appeal, which was denied. Thereafter, the Debtors' amended their post-confirmation plan to that which the court would confirm and thereafter, objected to their own plan. The trustee also objected, and the court overruled both objections and confirmed the plan at a $500 monthly payment.
Kressel, Chief Judge Saldino and Nail.

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