Chapter 13 Plan Which Excluded Social Security Income from Funding was Proposed in Good Faith

Chapter 13 Plan Which Excluded Social Security Income from Funding was Proposed in Good Faith

The Debtors proposed a Chapter 13 plan that excluded their Social Security income from the funding of the plan. The Chapter 13 Trustee objected, arguing that the plan was not proposed in good faith because of the exclusion of such income.

The Debtors’ Summary of Schedules lists total income in the sum of $3,394.62 and total expenses of $3,344.62, resulting in a monthly net income of $50. The couples’ financial assets
consist of a savings account totaling $14,000, $40 cash on hand and a monthly pension of $225.61. The Debtors’ Chapter 13 monthly income statement (form 122C-1) lists each spouse’s
monthly Social Security income, but these amounts were not included in their average monthly
income calculations pursuant to the form’s instructions. The Debtors did not list their Social
Security income on Schedule I of their bankruptcy petition for the purpose of calculating monthly income.

On January 10, 2018, the Chapter 13 Standing Trustee filed an objection to the Debtors’
plan, stating that the couple failed to list all assets or income in violation of 11 U.S.C. §§ 521(a)(1)(B)(i) and 521(a)(1)(B)(ii). Specifically, Debtors’ Schedule I reflects that $2,970 per month of Social Security income is not being contributed to the plan. The Trustee maintains that while Social Security income is not required to be included on Form 122C-1 under 11 U.S.C. §§ 101(10A)(B) and 1325(b)(1), the Debtors’ failure to devote this income to fund their Chapter 13 plan constitutes a lack of good faith under § 1325(a)(3).

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