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In re McPherson (Case No. 06-60243) 07/31/2006

The Chapter 13 Trustee objected to confirmation of the debtors' Chapter 13 plan on the grounds that it does not provide for the payment of all of the debtors' projected disposable income during the five-year term of the proposed plan, as required by 11 U.S.C. § 1325(b).  Section 1325(b)(1)-(3) provides the calculation method that an above-median income debtor must use to determine the minimum monthly amount that he or she must pay unsecured creditors under a proposed plan.  The Court held that the "amounts reasonably necessary to be expended for support" as used in Section 1325(b)(2) are "future-oriented."  Thus, the "amounts" referred to in Section 1325(b)(2) are amounts that a debtor will make in the future as provided in the plan; they are not amounts that are provided for in pre-petition contracts that give rise to both secured and unsecured claims.  Accordingly, any deduction from income based on a secured claim that no longer exists may not be allowed.  The Court sustained the Chapter 13 Trustee's objection to the debtors' plan.

Date: 
Monday, July 31, 2006
Category: 
Confirmation of Plan
Disposable Income
Chapter: 
13