From the Editor – Best Interests of Creditors Test

By The Honorable William Houston Brown (Retired)

Debtors’ attorney fees are not deductible costs for hypothetical liquidation. The debtors valued nonexempt assets and deducted their Chapter 13 attorney fees, and the trustee’s objection to confirmation asserted that the fees were not part of the hypothetical Chapter 7 liquidation calculation. The court agreed, after reviewing factors in the best interests test. The plan proposed to pay Chapter 13 attorney fees and nothing to unsecured creditors. Although Chapter 7 administrative expenses are included in the hypothetical calculation, subtracting Chapter 13 attorney fees would be contrary to Tenth . . .

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