Kramer v. Bankwoski

BAP No. MS 13-037
Bankruptcy Appellate Panel affirmed bankruptcy court's order denying confirmation of the chapter 13 plan.
Procedural context:
Bankruptcy court sustained the standing trustee's objection to confirmation. The debtors appealed. Because the issue was a controlling issue of law as to which bankruptcy courts are divided, the BAP granted leave to appeal.
The debtors filed a chapter 13 plan that proposed, inter alia, to strip off a second mortgage and treat it as unsecured. In the means test, they included the "contractually due" payments on that mortgage for purposes of the "monthly disposable income" calculation. On schedules I and J, however, they did not include that expense because of the strip off. The bankruptcy court held that the debtors could include the payment for purposes of the §707 determination, but not for purposes of the §1325 determination. The BAP affirmed, holding that the bankruptcy court's decision was consistent with the Supreme Court's decision in Lanning because Lanning required a forward-looking approach. Since the debtors would not be making direct payments to the mortgagee on the stripped-off 2nd mortgage, that expense could not be considered for means test purposes.
Kornreich, Tester & FInkle (author)

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