09-24918 In re Kearney

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Bankruptcy
Modification; tax refunds

Where a debtor who proposes modification of her confirmation plan only has less disposable income because she has increased her expenses unreasonably, the motion for modification is denied.

“In reaching this conclusion, the Court is not creating an absolute rule that an above-median income debtor who modifies her plan and decreases the dividend to creditors must contribute tax refunds to establish good faith. Rather, the Court will continue to evaluate good faith on a case by case basis. See In re Love, 957 F.2d at 1357 (‘The fact is, the good faith inquiry is both subjective and objective.’). For example, if the Debtor truly had suffered a reduction in income, and had engaged in belt-tightening as demonstrated by reasonable expense deductions, yet still needed the tax refunds to get by, the analysis would be different. See In re McCrary, 172 B.R. at 158. But the facts in this case do not establish that the Debtor has reduced income, and in fact, she has misrepresented her income situation to the Court while manipulating her expense deductions to deprive the unsecured creditors of the dividend to which they are entitled. These facts prove a lack of good faith, and this plan modification cannot be confirmed.”

09-24918 In re Kearney

E.D.Wis., Kelley, Bankr. J.