Trustee Blog

Judge Yun and Contributions Part 4

Posted by:

Judge Yun continued his analysis in his chapter 13 case discussing contribution declarations:

1. Contributions by Boyfriend

In the present case, the Debtor has failed to provide sufficient evidence to persuade the court that the contributions from Boyfriend meet the requirements to establish feasibility. First, the only evidence submitted regarding Boyfriend’s relationship to the Debtor and his motivation to make the contributions merely indicates that he lives with the Debtor. Boyfriend Decl. ¶ 1. Counsel’s representations at the confirmation hearing that Boyfriend is the Debtor’s boyfriend and that the relationship is relatively recent, while not admissible, actually imply that there is not a reliable relationship or strong motivation to continue making the contributions over the five-year length of the Plan.

Similarly, there is no long and undisputed history Boyfriend of making the contributions or otherwise supporting the Debtor. Boyfriend testifies that the contributions will only begin postpetition in November 2014. Boyfriend Decl. ¶ 3. At this time, the contributions have presumably continued for only five or six months, and this is a far cry from the numerous years that other courts have found persuasive.

The third factor also weighs against finding the contribution payments to be feasible. Boyfriend testified that he intends to contribute only for as long as he is financially able to. Boyfriend Decl. ¶ 4. This commitment is qualified and conditional, rather than the “firm commitment” or “unqualified commitment” that other courts

have required. According to Boyfriend’s testimony, the contributions could stop this very month if he feels that they impose a financial burden on him.

Finally, there is insufficient evidence of Boyfriend’s ability to make the contributions. He simply states conclusively that his income is regular and attaches two paystubs for October 2014 totaling $864.69 in net monthly income. Boyfriend Decl. ¶ 4, Ex. A. There is no evidence regarding what type of employment Boyfriend is engaged in or whether he is working on an at-will or contract basis. It appears from the paystubs that he is paid an hourly wage, but there is no evidence regarding the number of hours expected, guaranteed, or regularly received. There is no evidence of what other expenses or liabilities Boyfriend may have that could take precedence over the contribution payments. Since debtors are required to provide their income for the past two calendar years in the Statement of Financial Affairs (Official Form 7) and their average monthly income for the six full months prior to the petition date in the Chapter 13 Statement of Your Current Monthly Income and Calculation of Commitment Period (Official Form B 22C1), it seems only reasonable that a nondebtor contributing to a debtor’s chapter 13 plan provide at least six months of financial information to support the feasibility of their proposed contributions. Boyfriend has not done so in this case. Further, the low amount of income reported by Boyfriend and the fact that the amount varies between the two checks ($385.16 on October 3, 2014, and $479.56 on October 24, 2014) indicates that he might not be financially able to make the $700.00 monthly contributions for long. Boyfriend Decl. Ex. A. Substantially all of his income is being pledged to the contribution payments, and a modest decrease in income or increase in other expenses would render him financially unable to make the payment for one or more months.

Each factor the court considers to determine whether nondebtor contributions make a chapter 13 plan feasible is either inadequately supported by evidence or weighs in favor of a finding that Boyfriend’s contributions are not sufficiently reliable to render the Debtor’s Plan feasible as required by § 1325(a)(6).

Stay tuned for more….

0


About the Author: