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Percentage increase of income as part of an order
Today in Woodland Hills the court discussed at the request of the trustee that debtors' confirmation order include language stating that debtors are obligated to do a MOMOD within 60 days of a 15% increase in income. The 13 Tee argued that they should be entitled to this provision when debtors are self employed or their income fluctuates. We opposed the provision but the Judge ruled against us. When asked how this would be implemented the Judge stated that it should be up to the debtor to contact their attorney when their income has increased 15%.
The Judge stated that this issue should be up for discussion on the CDCBAA site.
My position is that this is a terrible provision. With all due respect to the WH Tee, they always thing the debtors' income is fluctuating and continue cases at infinitum for recent paycheck stubs. Therefore, this could potentially be applied to all cases out there.
Debtors are in 13 most of the time because they cannot manage their finances. Now they would have to keep tallies of their income on a regular basis and sound an alarm when the income has gone up 15%. Not to mention, this does not address the issue of whether the debtors' expenses have increased as well. This provision is impossible to implement when you are looking at a three to five year plan. It is conceivable that at the end of the plan the tee could ask for every paycheck stub and refuse to issue the discharge due to the fact that the debtors did not file a MOMOD. In addition, the Code states that the tee is entitled to debtors tax returns every year during the plan. This annual review should be sufficient.
Nancy B. Clark
Borowitz, Lozano & Clark, LLP
100 N. Barranca Avenue, Suite 250
West Covina, CA 91791
Office: (626) 332-8600
Fax: (626) 332-8644
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