In re Powers

507 B.R. 262, 2014 WL 1274067
CourtUnited States Bankruptcy Court, C.D. Illinois
DecidedMarch 28, 2014
DocketNos. 10-71700, 11-72448
StatusPublished
Cited by3 cases

This text of 507 B.R. 262 (In re Powers) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Powers, 507 B.R. 262, 2014 WL 1274067 (Ill. 2014).

Opinion

OPINION

Mary P. Gorman, Chief Judge.

The Chapter 13 Trustee has filed motions to modify the confirmed plans in each of these cases. The Trustee claims that the debtors in each case have had increases in their incomes since their plans were confirmed and, accordingly, their plans should be modified to provide increased payments to unsecured creditors. Because the Trustee has failed to meet his burden of proof and failed to establish that he is entitled to the relief requested, both motions will be denied.

I. Factual and Procedural Background

Because the same legal issues were raised in each of these cases, they have been consolidated for the purposes of this Opinion. The factual basis for the Trustee’s motion in each case is different, however, and the facts of each case must be set forth separately.

A. Myrick and Elvie Powers

Myrick and Elvie Powers filed their voluntary petition under Chapter 13 on May 24, 2010. At the same time, they filed their Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period and Disposable Income (“B22C”). The calculations on their B22C resulted in the Powers being identified as over-the-median-income debtors with a five-year applicable commitment period for their Chapter 13 plan. The Powers’ income was disclosed on their B22C and their Schedule I as consisting of about $5800 gross per month from Mrs. Powers’ employment, $1479 per month in Mr. Powers’ Social Security benefits, and $1129 per month in Mr. Powers’ YA benefits.

On March 1, 2011, the Powers’ First Amended Chapter 13 Plan (“Plan”) was confirmed. The Plan proposed that the Powers would pay $660 to the Trustee for seven months and then $758 per month for fifty-three months. From the amounts paid in, the Trustee was directed to pay the claims of several secured creditors and distribute “approximately $22,665” to unsecured creditors. The Powers’ B22C calculation had resulted in available monthly disposable income of only $18.43. The significant payment to unsecured creditors was required because the Powers owned a non-exempt unencumbered parcel of real estate valued at $29,900.

In February 2012, the Powers moved to sell their residential real estate for an amount less than what was owed against [266]*266it. They expected to complete the sale with financial assistance from Mrs. Powers’ employer. After the sale was approved and closed, the Powers moved to modify the terms of their Plan to remove the payments on their mortgage arrearage debt which had been fully satisfied through the sale. They also requested that their monthly payments to the Trustee be reduced to the amount necessary to fund the Plan with the mortgage arrears deleted. The Powers’ motion to modify was granted and their plan payments were reduced to $670 per month beginning in May 2012.

On June 17, 2013, the Trustee filed the motion to modify which is at issue here. The Trustee claims that the Powers’ 2012 income tax return disclosed a $50,000 increase in income over the amounts shown on their 2011 return. After providing an involved tax calculation, the Trustee suggests that the Powers now have a net increase in income of $2984.92 per month. He suggests that for the twenty-three months which remained at the time the motion was filed, the Powers should raise their payments by $746 per month resulting in a total increase in Plan payments of $17,158. He suggests that after his commission, this increase would result in a net additional dividend to unsecured creditors of $15,442.

The Powers filed an objection to the motion to modify. They claimed that some of the increased income came from moving and relocation benefits received from Mrs. Powers’ employer. Mrs. Powers was transferred by her employer to Florida. The Powers also claimed that they were divorcing and their expenses were changing and increasing due to the establishment of separate households.

The Trustee undertook discovery on the Powers’ financial situation. Subsequently, the parties filed a stipulation on the submission of agreed documents. The documents include amended Schedules I and J prepared by Mrs. Powers and alternate amended Schedules I and J prepared by the Trustee for Mrs. Powers. On her own amended Schedule I, Mrs. Powers says that she is divorced and that her fifteen-year-old daughter resides with her. She discloses net monthly income of $5108.64 which includes $766 of Social Security benefits for her daughter but also includes the deduction of an auto loan payment. The Trustee’s amended Schedule I for Mrs. Powers shows net income of $6509.76 per month. On her own amended Schedule J, Mrs. Powers claims $4546 in expenses. On the amended Schedule J prepared by the Trustee, expenses are listed as $4496 and the Trustee notes that he used “Means Test” figures for St. John County, Florida, for some of the figures. The parties’ stipulation says that the Trustee’s amended Schedule I accurately reflects Mrs. Powers’ income for the “six month period for which pay advices were provided.” Further, the parties agreed that the Trustee’s amended Schedule J accurately reflects Mrs. Powers’ expenses “with the exception of motor vehicle payments.”

With respect to Mr. Powers, an amended Schedule I was filed which the parties stipulated correctly discloses his current income. Mr. Powers now receives $1559 per month in Social Security benefits and $3088 per month in VA benefits for total monthly income of $4647. Mr. Powers prepared an amended Schedule J which claims $4712.56 in expenses. Another amended Schedule J was prepared by the Trustee showing $2856 in monthly expenses for Mr. Powers and noting that the Trustee used “Means Test” figures from St. John County, Florida, for “reasonably necessary” expenses. The parties agreed that Mr. Powers’ own amended Schedule J accurately reflects his current expenses.

[267]*267The stipulation also includes some pay advices, the Powers’ 2012 tax return, and Mrs. Powers’ 401k loan statement. Both parties rely on the stipulation for their factual presentation and waived the opportunity for an evidentiary hearing. Both the Trustee and the Powers’ attorney have briefed the issues.

B. David Powell

David Powell filed his voluntary petition under Chapter 13 on September 20, 2011. His subsequently-filed B22C showed that he was an under-the-median-income debtor with an applicable commitment period of three years. Although both Mr. Powell’s B22C and Schedule I disclosed gross income in excess of $7000 per month, he supports a spouse, a stepson, a daughter, and a grandson. His net income was shown as about $5200 per month and on his Schedule J, he claimed expenses of almost $5000 per month. The Trustee initially objected to the B22C, claiming that Mr. Powell had incorrectly completed the form and that if the form were corrected, Mr. Powell would have a five-year applicable commitment period. Mr. Powell filed an amended B22C which showed he was an over-the-median-income debtor but the Trustee subsequently conceded that Mr. Powell was, in fact, an under-the-median-income debtor.

After several failed attempts at plan confirmation, Mr. Powell’s Second Amended Chapter 13 Plan (“Amended Plan”) was finally confirmed on July 26, 2012. The Amended Plan proposed payments over a thirty-six-month term totaling $15,096. Of that amount, $10,507 was projected to be paid to unsecured creditors.

On June 17, 2013, the Trustee filed his motion to modify claiming that Mr.

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In re Matusak
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Cite This Page — Counsel Stack

Bluebook (online)
507 B.R. 262, 2014 WL 1274067, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-powers-ilcb-2014.