Category Archives: 1322(b)(11)

7th Cir. Opinions

7th Circuit Opinion Summaries courtesy of

United States v. Rogan

Bankruptcy, Criminal Law, Government, White Collar Crime

River Road Hotel Partners, LLC v. Amalgamated Bank


Bloomfield State Bank v. United States

Bankruptcy, Real Estate & Property Law, Tax Law

Costello v. Grundon

Bankruptcy, Commercial Law, Securities Law

CDX Liquidating Trust v. Venrock Assocs., et al

Bankruptcy, Business Law, Securities Law

Reedsburg Util. Comm’n v. Grede Foundries, Inc.

Bankruptcy, Utilities Law

Kimbrell v. Brown

Bankruptcy, Injury Law


In re Lisa C. Davis, 08-16025 (ND IL ED)(J. Wedoff)

In re Lisa C. Davis, 08-16025
Issued December 16, 2010
By Judge Eugene Wedoff


The Issue: 11 USC 1325(b), introduced by BAPCPA in connection with the notorious hanging paragraph at 1325(a) – states that a plan of reorganization in Chapter 13 must commit all the debtor‘s discretionary income each month or pay creditors in full; or face dismissal. The issue in this case was whether 1325(b) requires the debtor to commit all discretionary income or pay all creditors in full when seeking to modify their confirmed Chapter 13 Plan.

The Upshot: No. 11 USC 1325(b) does not require the debtor’s full commitment of discretionary income or full payment of creditors when a confirmed plan is under consideration. When a debtor sought to modify her plan due to a change in circumstances that would have permitted her to pay less at the outset of the plan and shorten the plan’s commitment period if it had occurred before the initial plan was drawn up, the Court allowed her to use those lower numbers going forward regardless of whether the use of those figures satisfied 1325(b).
Ed. Note: Booyah! Chapter 13 debtors win.

Click here to view and download the Opinion in .pdf format.

Ransom v. FIA Card Services (U.S. S.Ct.)

Ransom v. FIA Card Services, N.A., f/k/a MBNA America Bank, N.A.
Certiorari from the U.S. Court of Appeals for the 9th Cir., Case 09–907
Argued October 4, 2010—Decided January 11, 2011

The Issue: Here the question was whether a Chapter 13 debtor could deduct the allowable auto payment from his monthly budget even though he did not have a car payment (i.e the vehicle was paid for). Put another way, is it fair for all debtors to be entitled to the maximum allowable deduction from their monthly disposable income, or must debtors establish what they actually pay?

The Answer: The Court ruled 8 to 1 (Scalia J. dissenting) that if a debtor makes more than the median income for his State then he must establish that he incurrs the amounts deducted from his monthly living expenses. No more automatic deductions if debtor cannot prove what he pays.

The Gist: To determine “disposable income” BAPCPA gave us the Means Test, which starts with gross monthly income then deducts living expenses – i.e. “amounts reasonably necessary for maintenance or support” of the debtor. In a Chapter 13 case the expenses considered “reasonably necessary” are identified in 11 U.S.C. §1325(b)(2)(A)(i) and include “applicable monthly expense amounts” as specified in National and Local IRS standards. Since BAPCPA was adopted, it has become common practice to include expenses at the maximum allowable level even if the debtor does not have, or pay for, that type of asset. This case appears to say that the party is over for Chapter 13 debtors.

See Also: this post from Chicago Attorney Steve Jacobowski on the Bankruptcy Litigation Blog regarding the Scalia dissent.


In re Anderson,10-3828 (J. Squires)

IBLB Exclusive!

Wheaton lawyer David J. Boersma recently took on the great and powerful Glenn Steans, Lisle Chapter 13 Trustee and … won? At least that’s how it looks. I just got off the phone with David and he was characteristically humble. The issue before Judge Squires in the matter of In re Anderson was this: Is social security part of the Debtor’s “income” for purposes of a Chapter 13 Plan? Judge Squires answered “No” in this case. Boo-ya. At the moment I’m still combing through David’s 2 massive briefs. He says he poured over 1,000 pages to win this argument and I believe him. Contact David at to congratulate him, then jump on Pacer and check out his briefs … so to speak Anyway, congratulations David.


Case Roundup Cir. 10


10th cir

Mosier v. Callister, Nebeker & McCullough, No. 07-4238 [Nov 13, 2008]

Suit was brought by trustee on behalf of estate against law firm and its attorneys alleging professional negligence, breach of fiduciary duty, vicarious liability, breach of the covenant of good faith and fair dealing, fraud, and civil conspiracy. The U.S. District court entered summary judgment for defendants. The Appellate court affirmed saying District Court did not err by imputing the conduct of selected officers to the defendant (a not-for-profit corp); correctly applied the doctrine of in pari delicto to hold that fault of the corporation was greater than that of its attorneys; and there was no error in applying the doctrine against a trustee in bankruptcy.

In re: Lanning, No. 08-3009 [Nov 13, 2008]

For purposes of calculating projected disposable income of an above-median Chapter 13 debtor under the BAPCPA, the circuit court adopts the forward-looking approach wherein a Chapter 13 debtor’s six-month, pre-petition “disposable income” (as defined by statute) is presumed to be the debtor’s “projected disposable income” for purposes of establishing the monthly sum that the debtor must commit to repayment of unsecured creditors in order to advance a confirmable payment plan and overcome objections to it. Amount of projected disposable income is rebuttable upon showing of “special circumstances” at the time of plan confirmation.

case updates – hometown, cir 3, cir 8

3rd cir

Windt v. Qwest Communications, 06-4662, 06-4808 [June 10, 2008]
In a lawsuit brought by bankruptcy trustees of a Dutch company asserting various claims against defendants who were allegedly responsible for the company’s insolvency, judgment dismissing trustee-plaintiff’s complaint on forum non-conveniens grounds is affirmed where the district court did not abuse its discretion in: 1) affording low deference to plaintiffs’ choice of forum in view of Netherlands’ substantial interest in resolving a dispute concerning alleged mismanagement of a Dutch company by board members and officers of that Dutch company; 2) concluding that avoiding problems in the application of foreign law favored dismissal; 3) balancing the public and private interest factors implicated in the case; and 4) determining that the convenience of litigating the dispute in New Jersey was outweighed by the oppressive or vexatious effect on defendants.


8th cir

US v. Mitchell, 07-3136 [June 10, 2008]
Conviction upon defendant’s retrial for knowingly and fraudulently making a false statement under penalty of perjury in a bankruptcy case is affirmed where the circuit court declines to revisit a double jeopardy issue, and there was sufficient evidence to sustain his conviction.


In re Weadley, 06-1854
Bibby Financial v. Weadley, 07-683
Issued June 11, 2008
Judge A. Benjamin Goldgar

case update: cir 5, 6

Cir 5

Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., Inc., No. 06-50720A judgment in favor of restaurant franchisor on claims against food distributor under Lanham Act is affirmed over the distributor’s claims that: 1) the Lanham Act was inapplicable; 2) an award of attorney’s fees and an injunction should be overturned; and 3) its counterclaims should be reinstated.

Cir 6

In re: Long, No. 06-6252

Construing a gap in the most recent amendment to the Code against the creditor, a bankruptcy court holds that the surrender of a vehicle should wipe out the underlying debt entirely (though greater than the value of the car). Bankruptcy court is reversed and remanded and the higher court holds that the gap in the Code should be construed in a manner consistent with prior judicial decisions and statutory law (which favored the creditor).