In re Grabarczyk, No. 10-37007, 2012 WL 909511, at *6–*8 (Bankr. N.D. Ohio Mar. 14, 2012) (Whipple)

“Unsecured creditors” in § 1325(b)(1)(B) means nonpriority unsecureds. “A literal interpretation of the statute would thus permit Debtors to use their disposable income to pay both priority unsecured creditors, the claims for which a deduction has been taken in calculating their disposable income, as well as general unsecured creditors. However, courts that have addressed the application of § 1325(b)(1)(B) . . . have persuasively concluded that priority claims and Chapter 13 administrative expenses deducted from CMI on Form B22C cannot be paid from the pot of funds that constitute a debtor’s disposable income. . . . Disposable income, . . . under § 1325(b)(1)(B), is to be paid to unsecured creditors . . . . Among the deductions allowed under 707(b)(2)(A) are deductions for a debtor’s payments on prepetition priority unsecured claims and for Chapter 13 administrative expenses. See 11 U.S.C. § 707(b)(2)(A)(ii)(III) and (iv). Because this calculation yields the presumptive projected disposable income of the debtor to be applied to payment of unsecured creditors, courts have generally concluded that the only reasonable interpretation of this process is that it is designed to determine the amount available to pay nonpriority unsecured creditors and, thus, that Congress intended the term ‘unsecured creditors’ in § 1325(b)(1)(B) to refer to nonpriority unsecured creditors . . . . [A]n interpretation of § 1325(b)(1)(B) that includes priority creditors in the definition of ‘unsecured creditors’ who must be paid from projected disposable income ‘obtains an absurd result.’ . . . [I]nterpreting the term ‘unsecured creditors’ in § 1325(b)(1)(B) to categorically exclude priority unsecured claims would leave below-median income debtors’ [sic] with no funds to pay those creditors. . . . [T]he only reasonable interpretation of the term ‘unsecured creditors,’ as used in § 1325(b)(1)(B), is one that refers to all unsecured creditors for whose claims the debtor has not included an expense deduction in calculating disposable income.”

No Author Biography has been linked to this Article.

Related Articles

August 23, 2020
By Cathy Moran, Esq. (Redwood City, CA) It started as a means test question: could emergency medical expenses be deemed non consumer debt. It ended up as a step back to get the bigger picture. Well-seasoned bankruptcy counsel brought the fact pattern to a list serve of colleagues. The prospective debtors’ income in a small consulting corporation is declining, his...
Members
March 20, 2022
“The trouble with retirement is that you never get a day off!” [Abe Lemons] There is no better way to describe Robert Wilson in his career as an attorney, as a trustee, in his life thus far, and surely in his retirement! He has filled and will continue to fill every second of every day with meaning and purpose and...
BEKOFSKE
October 8, 2023
How do you acknowledge such an accomplished man; especially one who is also the consummate gentleman; a man of integrity; a community leader; the sharer of wisdom and knowledge? Of course, you list his impressive biographical accomplishments. But you also think about his influence on you and others in your circle. You reach out to those you know who were...
Keith Rucinski
July 14, 2024
“The non filing and late filing of claims is a national issue with many jurisdictions struggling to address the issue.” Great article, particularly for creditors/creditor attorneys. Not a subscriber? Click here.
Members
March 21, 2021
By Cathy Moran, Esq. (Redwood City, CA) No matter how many hoops the client dutifully jumped through, without adequate inquiry and communication, the bankruptcy attorney was slammed for unbundling his services. The representation agreement at issue excluded representation in any adversary proceeding filed, as do most such agreements, I imagine. The client initialed every paragraph of the 19-paged representation agreement,...
Members
January 2, 2022
Attorney General Merrick B. Garland recently appointed Mary Ida Townson as the U.S. Trustee for Florida, Georgia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands (Region 21). Ms. Townson assumed her duties in June and replaced Nancy Gargula, who is the U.S. Trustee in Region 10 and who had served as the interim U.S. Trustee in Region 21...
November 8, 2020
By Cathy Moran, Esq., Moran Law Group (Redwood City, CA) For Californians, the CA Supreme Court’s decision in Brace this summer upended our understanding of joint tenancy and community property. For decades, we “knew” that a property couldn’t be . . . It looks like you are not signed in or registered! This content is only available to members. Join...
Members
June 14, 2020
By Henry E. Hildebrand, III, Chapter 13 Trustee (Nashville, TN) Chapter 13 debtor may exclude from disposable income amounts projected to be paid to an employer sponsored 401(k) where such payments are consistent with pre-filing contributions made to the retirement account. Davis v. Helbling, 2020 WL 2831172 (6th Cir. June 1, 2020) (Larsen) Case Summary In 2017, Camille Davis filed...
Members
May 3, 2020
On April 30, 2020, Frank M. Pees will retire from his position as the Chapter 13 Standing Trustee (Worthington) for the Southern District of Ohio, Eastern Division. Mr. Pees has been a Trustee since his appointment in 1978. Throughout his career, he has been actively involved in the National Association of Chapter 13 Trustees, serving as President (in 1987), and...
Members
DeCarlo01
October 2, 2022
So, what happens to post-petition appreciation of assets during a Chapter 13? Does the Debtor get to keep the money? Or does the Chapter 13 Trustee get it for the benefit of creditors? That was the question for the Court in In re Klein, 2022 WL 3902822 (Bankr. D. Colo. 2022). The question in Klein is a bit different than...
Members

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: