Central District Consumer Bankruptcy Attorney's Association

As information.
Date: Tue, Mar 26, 2013 at 2:48 PM
Subject: BIG VICTORY FOR NCBRC AND CONSUMER DEBTORS IN THE NINTH CIRCUIT
To: attorneychristine@gmail.com
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* *The National Consumer Bankruptcy Rights Center (NCBRC),
NACBAs 501(c)(3) offshoot, scored an important win in the Ninth Circuit
yesterday. In *In re Welsh, 2013 U.S. App. LEXIS 5880 (9th Cir. 2013), *that
court of appeals joined the Fifth and Tenth Circuits in holding that it was
not bad faith for a debtor to decline to devote social security income to
paying unsecured creditors in a chapter 13 plan. The court rejected the
trustees argument that this allowed the debtor to have money left over
that could be used to pay creditors, stating that:******
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Congress chose to remove from the bankruptcy court's discretion the
determination of what is or is not "reasonably necessary. It substituted a
calculation that allows debtors to deduct payments on secured debts in
determining disposable income. That policy choice may seem unpalatable
either to some judges or to unsecured creditors. Nevertheless, that is the
explicit choice that Congress has made. We are not at liberty to overrule
that choice.****
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In fact, the court followed the Eighth Circuit in holding that the issue of
how much creditors are paid should not even be a part of the good faith
analysis, now that Congress has adopted the disposable income test.****
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Equally as important, the court rejected the trustees argument
that the debtors should not be permitted to continue to pay for luxurysecured debts (on two ATVs and an Airstream trailer) at the expense of
their unsecured creditors. Again, the court found that the statutory
language is clear: ****
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The calculation of "disposable income" under the BAPCPA requires debtors to
subtract their payments to secured creditors from their current monthly
income. In enacting the BAPCPA, Congress did not see fit to limit or
qualify the kinds of secured payments that are subtracted from current
monthly income to reach a disposable income figure. Given the very detailed
means test that Congress adopted, we cannot conclude that this omission was
the result of oversight. Moreover, even if it were, we would not be
justified in imposing such a limitation under "the guise of interpreting
'good faith.****
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The brief for NCBRC was written by Geoff Walsh of the National
Consumer Law Center. ****
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The results in this case show how much of a difference your contributions
to NCBRC make. You can contribute at our upcoming convention in San Diego,
through NACBAs donation

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