Mort Ranta v. Gorman

Summarized by John Bollinger , Boleman Law Firm, PC
12 years 8 months ago

Citation:

Robert D. Mort Ranta v. Gorman, Trustee (In re Mort Ranta) Case No.12-2017 (4th Cir. July 1, 2013)

Tag(s):

Ruling:

Holding that “for both above-median income and below-median income debtors, Social Security income is excluded from the calculation of ‘projected disposable income’ under § 1325(b)(2)”, the 4th Circuit Court of Appeals VACATED the order of the district court and remanded the case to the district court with instructions to remand to the bankruptcy court for further proceedings consistent with the opinion.

Procedural context:

Mort Ranta, debtor, filed for Chapter 13 protection in the United States Bankruptcy Court, Alexandria Division. The bankruptcy court entered an order denying confirmation of the debtor’s Chapter 13 plan. The debtor appealed the bankruptcy court’s order to the United States District Court for the Eastern District of Virginia, Alexandria Division and the district court affirmed the bankruptcy court’s ruling. The debtor then appealed to the 4th Circuit Court of Appeals.

Facts:

Mort Ranta, debtor, filed for Chapter 13 protection in order to cure $20,000.00 in mortgage arrears, pay 100% on joint unsecured debts and a small percentage on his individual debt. Mort Ranta’s plan proposed plan payments are $525.00 per month for 60 months. Mort Ranta reported combined average monthly income on Form B22(C) as $3,097.46. Schedule I reflected the household’s current monthly employment income and additional Social Security income in the amount of $3,319.00. The Trustee objected to Mort Ranta’s plan, claiming that the debtor was not dedicating his full “projected disposable income” to the creditors as required by 11 USC § 1325(b)(1)(B).” The bankruptcy court agreed, stating that he could afford a higher payment because of the Social Security income. The bankruptcy court then went further and stated that the plan was not feasible. The bankruptcy court reasoned that if the debtor was not reporting the Social Security income as “current monthly income,” then the court should rely upon the “disposable income” and conclude that the plan is not feasible. The District Court affirmed the bankruptcy court’s ruling. Initially, the 4th Circuit Court of Appeals addressed the issue of whether the order denying confirmation was interlocutory or final and appealable. The 4th Circuit moved toward the more pragmatic approach and held that that the order denying confirmation is final and appealable even where the bankruptcy court does not dismiss the bankruptcy proceeding. J. Faber wrote the dissenting opinion in which he referred to the previous holding of In re Massey, 21 F.App’x 113, 114 (4th Cir. 2001) (per curiam), which stated “[a]n order denying confirmation of a proposed Chapter 13 plan, without also dismissing the underlying petition or proceeding, is not final for purposes of appeal.” The majority, however, focused on expanding it’s ruling in McDow v. Dudley, 662 F.3d 284 (4th Cir. 2011), which held that the bankruptcy court’s order denying the U.S. Trustee’s motion to dismiss was final and appealable. The 4th Circuit Court of Appeals then addressed the merits of the appeal, whether the bankruptcy court erred in denying confirmation of the plan because the Bankruptcy Code excludes Social Security income from the “projected disposable income” calculation and because his plan is feasible based upon the consideration of the Social Security income. The 4th Circuit also held that when evaluating whether a debtor can propose a feasible plan, the bankruptcy Court must take into account any Social Security income that the debtor proposes to rely upon and the bankruptcy court may not limit the feasibility analysis by considering only the debtor’s “disposable income.”

Judge(s):

Before Circuit Judge Gregory, Circuit Judge Agee and Judge Faber (United States District Judge for the Southern District of West Virginia, sitting by designation). Judge Gregory wrote the majority opinion, in which Judge Agee joined. Judge Faber wrote a dissenting opinion.

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!