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UST Motion to Dismiss Chapter 7 for Abuse [1 Attachment]
We did not include voluntary 401k contributions on the Means Test, but
rather it is reported only on Schedule I.
In this matter, the UST does not cite any law to support its position.
On Fri, May 16, 2014 at 2:13 PM, Clifford Bordeaux
cliff@bordeauxlaw.com[cdcbaa]
wrote:
>
> [Attachment(s) from Clifford Bordeaux
> included below]
>
> I agree that debtors *may *have an argument re: 541(b)(7) in a Chapter
> 13 case. Unfortunately, though, there is a recent 9th Circuit BAP decision
> interpreting 541(b)(7), which says that postpetition retirement
> contributions are not allowable as deductions. See Parks v. Drummond,
> attached. Granted, it is a BAP opinion, so not necessarily binding on
> bankruptcy judges. But it still creates an obstacle for debtors' counsel.
>
> Even if retirement contributions are allowed in Chapter 13 (which seems
> debatable), I don't see how that would relate to a Chapter 7 means test.
> Hypothetically, a presumption of abuse could arise in a Chapter 7 case
> (due to the inability to deduct retirement contributions on the Chapter 7
> means test), but debtor could still have a negative DMI in a Chapter 13
> case (allowing for retirement contributions). Just my personal opinion,
> but I don't think that the futility of a low-percentage Chapter 13 plan,
> without more, would persuade most judges that the debtor could rebut the
> presumption of abuse in the Chapter 7 case. Especially if the low
> percentage is traceable to a voluntary retirement contribution.
>
> Clifford Bordeaux
> Bordeaux Law, P.C.
> 3731 Wilshire Boulevard, Suite 600
> Los Angeles, CA 90010
> T: 323-762-5529
> T: 626-405-2345
> F: 626-628-1820
> E: cliff@bordeauxlaw.com
>
>
>
> On Fri, May 16, 2014 at 12:50 PM, Catherine Christiansen
> christiansenlaw@yahoo.com [cdcbaa] wrote:
>
>>
>>
>> Cliff: The B22's are different for Ch 13 & 7. One allows the 401K
>> deductions and the other doesn't. If the debtor presents the outcome to
>> the court of a conversion to Ch 13 showing it will pay nothing, and going
>> forward there is no disposable income so the debtor can present a 0 payment
>> plan but administration of the plan is silly. So has anyone argued that
>> line of reasoning and if so was it successful and if so, in front of who
>> did the argument succeed?
>>
>>
>> Law Office of Catherine Christiansen
>> 17011 Beach Blvd. Ste 900, Huntington Beach, CA 92647
>> Tel: (714) 375-6651 Fax: (562) 490-8572
>> attorneychristiansen@gmail.com
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>>
>>
>>
>> On Friday, May 16, 2014 10:06 AM, "Clifford Bordeaux
>> cliff@bordeauxlaw.com [cdcbaa]" wrote:
>>
>>
>>
>> It is possible that some of our local Chapter 13 trustees may not
>> object to the continuation of reasonable prepetition retirement
>> contributions on Schedule I--on the theory that *Hamilton v. Lanning*gives courts discretion to use I & J, instead of the means test, to
>> determine the required monthly payments (maybe we can ask about this at the
>> upcoming Chapter 13 program). But Lanning did not explicitly address the
>> issues raised in Egebjerg (and Form B22C contains the same instruction as
>> form B22A regarding discretionary retirement accounts), so I think that a
>> Chapter 13 Trustee could easily object if they think that the proposed plan
>> is unreasonable under the totality of the circumstances (ie: maxing out
>> retirement contributions in a 0% plan).
>>
>> Even if the retirement contributions are allowed on Schedule I (or the
>> Trustee does not object to them), you still can't deduct these
>> contributions on Form B22C.
>>
>> Clifford Bordeaux
>> Bordeaux Law, P.C.
>> 3731 Wilshire Boulevard, Suite 600
>> Los Angeles, CA 90010
>> T: 323-762-5529
>> T: 626-405-2345
>> F: 626-628-1820
>> E: cliff@bordeauxlaw.com
>>
>>
>>
>> On Fri, May 16, 2014 at 9:28 AM, Christine Wilton
>> attorneychristine@gmail.com [cdcbaa] wrote:
>>
>>
>> If the debtor converts to Chapter 13, then she would be permitted to
>> make 401k contributions.
>>
>>
>> On Thu, May 15, 2014 at 6:10 PM, Clifford Bordeaux cliff@bordeauxlaw.com[cdcbaa]
>> wrote:
>>
>>
>> The holding in *Craig *related to retirement contributions as
>> reasonably necessary in order to maintain a minimal standard of living
>> under 523(a)(8) and the Brunner test. The court did not address the
>> permissibility of retirement contributions for purposes of 707(b)(2)--the
>> court distinguished the Egebjerg case, which held that retirement loan
>> repayments are not allowed as means test deductions per 707(b)(2). See *Egebjerg
>> v. Anderson* (In re Egebjerg), 574 F.3d 1045 (9th Cir.2009).
>>
>> Also, note that the means test form itself, at line 26, instructs the
>> debtor as follows: "Other Necessary Expenses: involuntary deductions for
>> employment. Enter the total average monthly payroll deductions that are
>> required for your employment, such as retirement contributions, union dues,
>> and uniform costs. *Do not include discretionary amounts, such as
>> voluntary 401(k) contributions. * [Emphasis in original.]
>>
>> Clifford Bordeaux
>> Bordeaux Law, P.C.
>> 3731 Wilshire Boulevard, Suite 600
>> Los Angeles, CA 90010
>> T: 323-762-5529
>> T: 626-405-2345
>> F: 626-628-1820
>> E: cliff@bordeauxlaw.com
>>
>>
>>
>> On Thu, May 15, 2014 at 5:08 PM, Christine Wilton
>> attorneychristine@gmail.com [cdcbaa] wrote:
>>
>>
>> Voluntary 401k contributions are within the courts discretion to allow:
>>
>> The Ninth Circuit has set forth factors a court should consider in
>> determining whether a debtors voluntary retirement contribution is a
>> reasonably necessary expense. Bankruptcy courts have discretion to
>> determine whether retirement contributions are a reasonably necessary
>> expenses for a particular debtor based on the facts of each individual
>> case. See *Craig v. Educational Credit Management Corporation* (In re
>> Craig), 579 F.3d 1040, 1046 (9th Cir. 2009). The Court in Craig
>> continued, describing factors for courts to consider, holding that:
>> In making this fact-intensive determination, courts should consider a
>> number of factors, including but not limited to: the debtors age, income,
>> overall budget, expected date of retirement, existing retirement savings,
>> and amount of contributions; the likelihood of stopping contributions will
>> jeopardize the debtors fresh start by forcing the debtor to make up lost
>> contributions after emerging from bankruptcy; and the needs of the debtors
>> dependents.
>>
>>
>>
>> On Thu, May 15, 2014 at 3:19 PM, cliff@bordeauxlaw.com [cdcbaa] > cdcbaa@yahoogroups.com> wrote:
>>
>>
>> My input:
>> 1. What did debtor say on Statement of Intentions? Are they trying to
>> cure the arrearages? Contemplating a Chapter 13 after completion of the 7?
>> Trying to get a loan mod? If their stated intention is to stay in the
>> house (even if they are behind on payments), then they may draw some
>> support from In Re Jensen (Judge Robles case from 2009--available on
>> CACB website).
>> 2. I think your debtor will lose on this point. Retirement account
>> contributions are not allowed as means test deductions in Chapter 7 unless
>> the contributions are mandated by the employer. Voluntary 401k
>> contributions are not permitted.
>> 3. You need a debtor declaration explaining why the expense is
>> reasonably necessary.
>> 4. I think your debtor will lose on this point.
>> 5. See response to #1, above.
>>
>>
>>
>>
>> --
>> Christine A. Wilton, Esq.
>> Law Office of Christine A. Wilton
>> 5011 Argosy Avenue, Suite 3
>> Huntington Beach, CA 92649
>>
>> Office: 714-533-9210
>> Fax: 714-489-8150
>> Email: attorneychristine@gmail.com
>> Web: www.attorneychristine.com
>> Blog: www.losangelesbankruptcylawmonitor.com
>> ***************************
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>>
>>
>>
>>
>> --
>> Christine A. Wilton, Esq.
>> Law Office of Christine A. Wilton
>> 5011 Argosy Avenue, Suite 3
>> Huntington Beach, CA 92649
>>
>> Office: 714-533-9210
>> Fax: 714-489-8150
>> Email: attorneychristine@gmail.com
>> Web: www.attorneychristine.com
>> Blog: www.losangelesbankruptcylawmonitor.com
>> ***************************
>> Confidentiality and Privilege. This e-mail message, including
>> attachments, is intended solely for review by the intended recipient(s) and
>> may contain confidential and privileged information. Any unauthorized
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>> Tax Advice Disclosure. Any tax information or written tax advice
>> contained in this email message, including attachments, is not intended to
>> and cannot be used by any taxpayer for the purpose of avoiding tax
>> penalties that may be imposed on the taxpayer. (The foregoing legend has
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>>
>>
>>
>>
>>
>
>
Christine A. Wilton, Esq.
Law Office of Christine A. Wilton
5011 Argosy Avenue, Suite 3
Huntington Beach, CA 92649
Office: 714-533-9210
Fax: 714-489-8150
Email: attorneychristine@gmail.com
Web: www.attorneychristine.com
Blog: www.losangelesbankruptcylawmonitor.com
***************************
Confidentiality and Privilege. This e-mail message, including attachments,
is intended solely for review by the intended recipient(s) and may contain
confidential and privileged information. Any unauthorized review, use,
disclosure, or distribution is prohibited. Review by anyone other than the
intended recipient(s) shall not constitute a waiver of any ATTORNEY-CLIENT
PRIVILEGE or ATTORNEY WORK PRODUCT PROTECTION that may apply to this
communication. If you are not the intended recipient, please contact the
sender by return e-mail and destroy all copies of the original message.
Tax Advice Disclosure. Any tax information or written tax advice contained
in this email message, including attachments, is not intended to and cannot
be used by any taxpayer for the purpose of avoiding tax penalties that may
be imposed on the taxpayer. (The foregoing legend has been affixed pursuant
to U.S. Treasury Regulations governing tax practice.)
We did not include voluntary 401k contributions on the Means Test, but rather it is reported only on Schedule I.In this matter, the UST does not cite any law to support its position.
On Fri, May 16, 2014 at 2:13 PM, Clifford Bordeaux cliff@bordeauxlaw.com [cdcbaa] <cdcbaa@yahoogroups.com> wrote:
[Attachment(s) from Clifford Bordeaux included below]
I agree that debtors may have an argument re: 541(b)(7) in a Chapter 13 case. Unfortunately, though, there is a recent 9th Circuit BAP decision interpreting 541(b)(7), which says that postpetition retirement contributions are not allowable as deductions. so not necessarily binding on bankruptcy judges. But it still creates an obstacle for debtors' counsel.
Even if retirement contributions are allowed in Chapter 13 (which seems debatable), I don't see how that would relate to a Chapter 7 means test. Hypothetically, a presumption of abuse could arise in a Chapter 7 case (due to the inability to deduct retirement contributions on the Chapter 7 means test), but debtor could still have a negative DMI in a Chapter 13 case (allowing for retirement contributions). Just my personal opinion, but I don't think that the futility of a low-percentage Chapter 13 plan, without more, would persuade most judges that the debtor could rebut the presumption of abuse in the Chapter 7 case. Especially if the low percentage is traceable to a voluntary retirement contribution.
Clifford BordeauxBordeaux Law, P.C.3731 Wilshire Boulevard, Suite 600Los Angeles, CA 90010T:
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