After the filing of a Chapter 13 bankruptcy, Mr. Nevils received a lump-sum Worker’s Compensation award of $235,000. Over the Trustee’s objection, the bankruptcy court previously allowed Mr. Nevils’ exemption of the proceeds, without ruling at that time on whether such constituted disposable income. The Trustee, supported by the Bankruptcy Administrator, then brought a motion to modify, arguing that even though exempt, the award constituted a substantial and unanticipated change in circumstances and should be considered in calculating Mr. Nevils’ disposable income.
The bankruptcy court rejected this argument, finding that 11 U.S.C. § 522(c) provides “property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such debt had arisen before the commencement of the case….” Relying on Judge Doub’s opinion from In re Daniels, the bankruptcy court held that “[t]he clear language of [§ 522(c)] protects exempt property, regardless of form, from prepetition debts…[t]his express limitation cannot be ignored for purposes of defining disposable income under [§ 1325(b)]”).… Read More
At issue in this case was first whether the Applicable Commitment period, as defined by 11 U.S.C. § 1325(b)(4), was a temporal requirement, i.e. 3 years for below median income debtors or 5 years for those with income above median, or was not applicable if the Debtors had no disposable income under § 1325(b)(1). Agreeing with now all of the Circuit Courts that have answered this question, the 4th Circuit held that the Applicable Commitment Period is, in fact temporal. This conclusion was based first on the language of the Bankruptcy Code, with the Court of Appeals, citing Tennyson from the 11th Circuit, that:
that “‘applicable’ and ‘commitment’ are modifiers of the noun, the core substance of the term, ‘period’.… Read More
Around the time of the Confirmation of the Debtors’ plan, the Male Debtor was injured in a motor vehicle accident. Subsequently, he amended his schedules to disclose the personal injury claim and his exemptions to claim the d claimed the full $10,379.35 settlement as exempt property per N.C.G.S. § 1C-1601(a)(8). The Trustee failed to object to the exemption but did seek to have this amount determined to be disposable income.
Relying heavily on In re Graham, 258 B.R. 286 (Bankr. M.D. Fla. 2001), the bankruptcy court disagreed, holding that had “Congress intended ‘disposable income’ to include post-petition exempt personal injury proceeds, Congress could and should have explicitly said so in §§ 1306 and 1325.… Read More