Stripping lien in Ch. 13/eligibility
Posted: Mon Jun 02, 2008 10:43 am
Agree with Lou, can have a zero-percent plan but don't think you can have a zero-payment plan. Here's a pertinent excerpt out of a brief I drafted a while back:
11 U.S.C. 109(e) provides, in pertinent part, that "[o]nly an individual with regular income . . . may be a debtor under chapter 13 of this title." "Individual with regular income" is defined in 11 U.S.C. 101(30) to be an ". . . individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13 of the title . . .."
The issue here, therefore, is whether a debtor whose income is insufficient to make plan payments meets the statutory definitions of eligibility. The cases that are on point conclude that the statutory language requires the ability to make payments. A leading case on the question is In re Terry, 630 F.2d 634 (8th Cir. 1980). In Terry, the court concluded that 11 U.S.C. 101(30) "contemplates that a debtor make payments, . . .." Noting that the "key statutory language is 'make payments,'" the court held that debtors who have "no excess income out of which to 'make payments,'" are not eligible for Chapter 13 relief. Id. at 635.
Joseph E. Caceres, Esq.
Caceres & Shamash, LLP
8383 Wilshire Blvd., Suite 1010
Beverly Hills, CA 90211-2409
Tel: (323) 852-1600, x102
Fax: (323) 852-9009
E-mail: jec@locs.com
----- Original Message -----
To: cdcbaa@yahoogroups.com
Sent: Saturday, May 31, 2008 11:55 PM
Subject: [cdcbaa] Re: Stripping lien in Ch. 13/eligibility
I do not think that you can, in good faith, do a Chapter 13. The case
law has not changed, but do some scanning of more recent case law to
determine any different. Lou Esbin
--- In cdcbaa@yahoogroups.com, "Mark JM" wrote:
>
> Just assume no disposable income and no arrears.
>
>
>
> ----- Original Message -----
> To:
> Sent: Saturday, May 31, 2008 6:21 AM
> Subject: [cdcbaa] Re: Stripping lien in Ch. 13/eligibility
>
>
> > Mark,
> >
> > There needs to be more facts than what you gave, and usually the
> > debtor is in arrears to the first, so that there is disposable income
> > adequate to cure the first, only, making a zero percent plan to the
> > unsecured creditors, including the wholly undersecured second. A zero
> > percent plan may fly in the Valley, but it is my understanding that
> > among the LA and Riverside judges, such a plan may not be confirmable.
> > Not sure what the Santa Ana judges will do. Maybe some else can
> > weigh in on those divisions.
> >
> > Lou Esbin
> >
> > --- In cdcbaa@yahoogroups.com, "Mark JM" wrote:
> >>
> >> Can a Chapter 13 be filed by a debtor who does NOT show any
> > disposable income (i.e. he DOES qualify for a Chapter 7) but wants to
> > do a LAM/Lien Strip of the 2nd mortgage on his property?
> >>
> >> In other words, this would be a zero percent plan with no monthly
> > payments. Is that possible?
> >>
> >> As a 2nd fact scenario: Same as above, but debtor has $40,000 cash
> > in a bank account (but still has no disposable income). Change
anything?
> >>
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