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Bankr. E.D.N.C.: In re Rogers- Social Security Income not Available for Administrative Claims of Nursing Home

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By Ed Boltz, 19 April, 2024

Summary:

Bankruptcy Court  denied Brunswick Health & Rehab Center, LLC's application for the allowance of post-petition expenses as an administrative expense under 11 U.S.C. § 503. Brunswick sought to classify approximately $39,821 in expenses related to the ongoing care of debtor Sue P. Rogers as necessary costs to preserve the estate, asserting these costs support her ability to fund her Chapter 13 bankruptcy plan through her social security income. 

However, the Trustee and Debtor objected, arguing that these expenses are personal to the Debtor and do not benefit the bankruptcy estate. The court agreed with the objections, stating that the social security income, which is excluded from the debtor’s "Current Monthly Income," cannot be used to fund the plan, and hence, the post-petition expenses are not essential to preserving the estate. 

Despite the denial, the court noted that the Debtor’s plan might be supported by the sale proceeds of her real property, potentially covering pre-petition creditors, including Brunswick.

Commentary:

Ms.  Rogers was admitted to the nursing facility before filing Chapter 13 bankruptcy,  but this result could lead nursing facilities,  which obviously have tremendous day-to-day control over  access,  to attempt to prevent their residents  from consulting with bankruptcy counsel out of justified fears that they will be prevented from being paid from Social Security income. 

 

What if every resident of Brunswick Health & Rehab Center  (or at least those that could not be moved due to non-bankruptcy law) similarly filed Chapter 13 cases?  Those residents (even those without any other assets) would then retain their Social Security income.  Perhaps Chapter 13 is another tool for Medicare Impoverishment that the Elder Law section should keep in its toolbox.

To read a copy of the transcript, please see:

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