Debtor is a 59-year-old Ford Motor Company employee — and single father of two daughters — who plans to retire in the next six years. Debtor makes more than the state median income for his household size. Despite his income, Debtor’s schedules reflect an ongoing monthly financial deficit after deducting his expenses. This is attributable, in large part, to his payroll deductions — which include a $2,500.00 monthly domestic support obligation. Debtor says he relies on family and friends to make ends meet. Seeking a fresh start, he filed Chapter 7 bankruptcy.
The UST argues that the totality of the circumstances demonstrate Debtor should not be in a Chapter 7: Debtor received a 2016 income-tax refund in the amount of $8,359.00, and he anticipates a 2017 refund of approximately $5,000.00; post-petition, Debtor has been working on a voluntary overtime project in Canada (but the extra pay was not included in his income calculation); and Debtor has historically made $559.06 voluntary monthly contributions to his employer’s qualified 401(k) retirement plan, which continue post-petition — but should now be re-directed to pay his creditors. Debtor’s petition-date 401(k) account balance was $13,375.46. Debtor is also repaying a 401(k) loan at the rate of $218.52 per month.
The UST’s motion does not question the honesty of the Debtor, but focuses on his ability to repay creditors and argues that — after an adjustment to his financial affairs — he would have sufficient disposable income to make substantial payments toward his debts. The UST’s arguments can be distilled to three parts: (i) Debtor’s income calculation should include overtime; (ii) Debtor is over-withholding income taxes; and (iii) Debtor’s 401(k) loan payments and voluntary contributions are not appropriate in the context of Chapter 7. The UST believes that these funds should be used to pay creditors.
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