Central District Consumer Bankruptcy Attorney's Association

This is just another manifestation of the problem caused by our District's
decision to adopt the plan we use. Some districts use a pot plan where the
amount going into the plan is fixed. Others require a percentage plan where
the amount paid into the plan changes depending on what claims are allowed
or disallowed. As long as we continue to have a plan form which requires
debtors to meet BOTH criteria, then we are going to have cases with multiple
MoMods and near constant adjustments.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
Message
This is just another
manifestation of the problem caused by our District's decision to adopt the plan
we use. Some districts use a pot plan where the amount going into the plan
is fixed. Others require a percentage plan where the amount paid into the
plan changes depending on what claims are allowed or disallowed. As long
as we continue to have a plan form which requires debtors to meet BOTH criteria,
then we are going to have cases with multiple MoMods and near constant
adjustments.

David A.
Tilem
Certified Bankruptcy
Specialist*
The post was migrated from Yahoo.

Again, we have a process in place in order to confirm cases and for
trustees to monitor cases. They get the tax returns every year and can
file a motion to modify to increase the payment. However, a blanket
statement that says that it is up to the debtor to file the motion
whenever the debtor believes the income to have increased 15% without
some parameters as I and others have suggested is not acceptable. As
stated before, the trustee can use this provision in the confirmed order
to dismiss a case. Congress has spoken on this issue and has stated that
the trustee is entitled an annual review of income and expense. The
trustees have chosen to implement this provision in the code by
requesting the tax return. I spoke to Aki about the fact that all of
their order request annual reviews of income and expenses. He stated
they have decided not to ask for Amended Schedules I & Js or any other
type of reports annually. They look at the tax return and if there has
been a substantial increase in the income, then they may request updated
information.
A couple of years ago I was in Santa Barbara and witnessed Tee trying to
increase a debtor's payment retroactively. The trustee had received a
recent tax return that showed a substantial increase in income. They
filed a motion to modify asking the court to allow them to increase the
plan payment retroactively. Counsel argued that the debtor had complied
with the confirmed plan by sending the returns every year. The Judge
asked what authority the tee had to apply this modification
retroactively. The tee stated that the debtor had acted in bad faith by
not informing the trustee of the substantial change in income. The Judge
ruled that the order confirming plan did not include such a provision
and there was nothing in the code that allowed the trustee to demand an
retroactive increase. The Judge stated that the trustee could increase
the payment moving forward but ordered that the debtor be given a chance
to file an Amended Schedule J.
Your statement that 15% provides clarity, predictability and removes
doubt seems misplaced in this context. Again as expressed by those who
have responded to this e-mail, what is the time frame, pay check to pay
check, month to month, etc. What if the debtor's income fluctuates
according to the seasons? They do well in the summer but not in the
winter and need the funds from the summer to get them through the
winter.
Frankly, annual review does provide more certainty than this arbitrary
15% increase. You receive the tax returns, evaluate income and expenses
and warn the client. My attitude is that I am an advocate for my client.
I would rather argue my clients case than have to deal with some
arbitrary number.
Nancy B. Clark
Borowitz, Lozano & Clark, L.L.P.
________________________________

The post was migrated from Yahoo.

Devil's advocate: this provides clarity when consulting with people,
answering their questions about Chpater 13, overall. As you all know, there
is a lot of insecurity and hesitate to commit to five years, particularly in
these times, and esp. if there's a business.
So, the question is: what about a change of circumstances and income during
the five years? Of course, they can reduce the plan payment or convert to a
Chapter 7 if income goes down.
But what about up? It's conceivble that people will earn more in year five
of a plan. And we submit tax returns to the trustee annually. Will the
trustee put in for annual increases, if necessary? So, to me, it helps to
counsel people that if they make "significantly" more than the confirmed
amount (assuming less than 100% plan), that the plan payment can go up.
It's fair. And what's the definition of "significant?" Fifteen percent
higher? I may quibble with the number, and want a higher one, but at least
it provides guidance, clarity and predictability and removes doubt,
uncertainty and arbitrariness.
Hale
nancybonaccorso
Sent: Tuesday, March 17, 2009 4:01 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] 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
Privileged/Confidential Information may be contained in this message. If you
are not the addressee indicated in this message (or responsible for delivery
of the message to such person), you may not copy or deliver this message to
anyone. In such case, you should destroy this message and kindly notify the
sender by reply email. Please advise immediately if you or your employer
does not consent to Internet email for messages of this kind. Opinions,
conclusions and other information in this message that do not relate to the
official business of my firm shall be understood as neither given nor
endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury Department
Regulations, we advise you that, unless otherwise expressly indicated, any
federal tax advice contained in this communication was not intended or
written to be used, and cannot be used, for the purpose of (i) avoiding
tax-related penalties under the Internal Revenue Code or applicable state or
local tax law provisions or (ii) promoting, marketing or recommending to
another party any tax-related matter addressed herein.
Yahoo! Groups Links

The post was migrated from Yahoo.

Jeff:
All excellent points.
Nancy
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
Privileged/Confidential Information may be contained in this message. If
you are not the addressee indicated in this message (or responsible for
delivery of the message to such person), you may not copy or deliver
this message to anyone. In such case, you should destroy this message
and kindly notify the sender by reply email. Please advise immediately
if you or your employer does not consent to Internet email for messages
of this kind. Opinions, conclusions and other information in this
message that do not relate to the official business of my firm shall be
understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury
Department Regulations, we advise you that, unless otherwise expressly
indicated, any federal tax advice contained in this communication was
not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the Internal Revenue Code or
applicable state or local tax law provisions or (ii) promoting,
marketing or recommending to another party any tax-related matter
addressed herein.
________________________________

The post was migrated from Yahoo.

Nancy:
I'm just curious; will the Chapter 13 Trustee agree in advance in the
confirmation order that a 15% reduction in income ENTITLES the debtors to a
plan reduction? Seems fair that if the trustee can require modification to
increase payments on facts that have not occurred, that she should be bound
by the same facts if they work in the debtor's favor. Such a reciprocal
provision might cut-off the Trustees right to oppose a modification later.
At least it might make the trustee and the court think a little harder about
the can-o-worms that is being opened.
-Jeffrey B. Smith
CURD, GALINDO & SMITH, L.L.P.
301 East Ocean Blvd. #1700
Long Beach, CA 90802
(562) 624-1177
(562) 624-1178 fax
(310) 993-6560 cellular

The post was migrated from Yahoo.

Pat:
The court and the trustee were not that specific. Our attorney tried to
get more details but the Court and Trustee did not explain. I guess we
will have to wait for the order. This is why I am so incensed. I believe
it is any time from confirmation to discharge. You have hit on the
problem. We asked for clarification but the Judge only stated that the
debtors were charged with the responsibility of keeping track and
informing counsel. I was not present at the hearing. Had I been, you can
guess from my response that I would have asked to brief the issue.
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
Privileged/Confidential Information may be contained in this message. If
you are not the addressee indicated in this message (or responsible for
delivery of the message to such person), you may not copy or deliver
this message to anyone. In such case, you should destroy this message
and kindly notify the sender by reply email. Please advise immediately
if you or your employer does not consent to Internet email for messages
of this kind. Opinions, conclusions and other information in this
message that do not relate to the official business of my firm shall be
understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury
Department Regulations, we advise you that, unless otherwise expressly
indicated, any federal tax advice contained in this communication was
not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the Internal Revenue Code or
applicable state or local tax law provisions or (ii) promoting,
marketing or recommending to another party any tax-related matter
addressed herein.
________________________________

The post was migrated from Yahoo.

Nancy:
What I mean from what period to what period? E.g. a change for the 12
months from date of confirmation over the 12 months prior to the date of
confirmation; the change from one taxable year to the next; a change from
one month to the next, etc.
If you have any questions or concerns, please contact me.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com

The post was migrated from Yahoo.

This happened to me this afternoon as well on one of my confirmation cases in SV. My client is unemployed and receiving unemployment income so it did not seem that unreasonable to me to require a MoMod if he finds a job paying 15% more than his unemployment check. For self employed it seems like arguing semantics over the 60 day calculation. There is no way to know if your income is going up 15% until you are near or at year end because income and expenses ebb and flow during the course of the year. Unless there is some huge income windfall for the self employed debtor earlier in the year I think annual review is the only practical way to analyze the debtor's income for a 15% gain. The client will just need to keep their business records orderly and compile the income and expense information before the end of February for the prior year. Other than the large income windfall, I do not see how the Chapter 13 trustee can make a sound argument to require an analysis more frequently than annually. Otherwise it would be speculation and we would constantly be filing MoMod to increase or decrease based upon the vicissitudes of each client's business cycle.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
NOTICE TO RECIPIENT: THIS E-MAIL IS MEANT FOR ONLY THE INTENDED RECIPIENT OF
THE TRANSMISSION, AND THIS COMMUNICATION IS INTENDED TO BE PRIVILEGED BY
LAW. IF YOU RECEIVED THIS E-MAIL IN ERROR, ANY REVIEW, USE, DISSEMINATION,
DISTRIBUTION, OR COPYING OF THIS E-MAIL IS STRICTLY PROHIBITED. PLEASE NOTIFY
US IMMEDIATELY OF THE ERROR BY RETURN E-MAIL AND PLEASE DELETE THIS
MESSAGE FROM YOUR SYSTEM. THANK YOU IN ADVANCE FOR YOUR COOPERATION.
On Tue Mar 17 16:04 , 'Nancy Clark' sent:

The post was migrated from Yahoo.

That is just it...according to our appearance attorney it is for the
life of the plan.
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
Privileged/Confidential Information may be contained in this message. If
you are not the addressee indicated in this message (or responsible for
delivery of the message to such person), you may not copy or deliver
this message to anyone. In such case, you should destroy this message
and kindly notify the sender by reply email. Please advise immediately
if you or your employer does not consent to Internet email for messages
of this kind. Opinions, conclusions and other information in this
message that do not relate to the official business of my firm shall be
understood as neither given nor endorsed by it.
IRS Circular 230 Disclosure: To ensure compliance with Treasury
Department Regulations, we advise you that, unless otherwise expressly
indicated, any federal tax advice contained in this communication was
not intended or written to be used, and cannot be used, for the purpose
of (i) avoiding tax-related penalties under the Internal Revenue Code or
applicable state or local tax law provisions or (ii) promoting,
marketing or recommending to another party any tax-related matter
addressed herein.
________________________________

The post was migrated from Yahoo.

Nancy:
A 15% change over what period of time?
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com

The post was migrated from Yahoo.