Plain Language and Phantom Expenses Haunt Creditors
By Andy Miofsky, Illinois Bankruptcy Attorney on Jul 17, 2007 in Bankruptcy Cases & Legislation, Illinois
The bankruptcy means test is the turnstile that directs you to Chapter 7 or sends you down the aisle to Chapter 13, depending whether your bankruptcy income minus your bankruptcy expenses require payment of a certain amount of money to your unsecured creditors. At his Bankruptcy Beach blog, Dean T. Kirby writes “a chapter 7 debtor may deduct, for purposes of means testing, expenses which the debtor has sworn elsewhere in her bankruptcy papers she has no intention of paying.” In, Aiieeee!! Phantom Expenses Haunt Means Testing, Kirby details the case of In Re Wilkins, 2007 WL 1933591 (Bankr. C.D.Cal.) which permitted debtor to deduct a $1,994.07 home mortgage payment from the means test, even though she intended to surrender the property. This deduction reduced her income enough to qualify for a chapter 7. Kirby, a certified bankruptcy specialist representing mainly creditors, writes, “Wilkins is part of a crowded field of cases in which “plain language” reasoning is applied to reach a result which seems contrary to the purposes of BAPCPA.” Debtor lawyers refer to this phenomenon as “they [creditors] did not get what they paid for.”
You must be logged in to post a comment.