I started off this week feeling really optimistic about the future of my Chapter 13 practice. Haha. April Fools.
No, in reality, I started out this week dreading the fact I had a Chapter 13 341a on Tuesday. I will not say where, but let's say it is approximately 47 miles east of my residence in Huntington Beach. That was the bad news. The good news was the individual adjudicating the confirmability of the plan, has at least of today not issued a manifesto regarding Chapter 13 plan procedure.
A little background on this case, my Debtors have a pretty solid income and there legit 22C spits out about $125 a month, and with a 401k step, their plan looks something like -
$275 for 30
$850 for 30
15% - there are a bit of taxes, a little arrears, and of course counsel's cut
I had all my docs in and got my lien avoid granted on the tentative. So, the optimist in me figured a little negotiating and I'd be back in the office by 11 with a plan on consent maybe somewhere around $375 / $1000. Obviously, if it worked out that way I wouldn't be writing this post.
First, some of the people involved in the bankruptcy universe have no fucking sense of humor. None. I am going to re-tell my joke from Tuesday here it is -
Trustee Counsel - Next calling the case of (totally botched the name, clients are Cambodian)
(we shuffle up to the table)
Faler - Good morning, I'd like to start off by saying there has been a big change of events in this case....
Trustee Counsel (scowling) - appearances please
Faler - Oh, Matt Faler for the debtors - anyway, the big change of events is Mrs. Debtor just found out on Sunday she inherited $400,000 so we can pay this plan in full
Trustee Counsel (glaring at me and about to speak)-
Faler- April Fools! But, I did get the lien strip granted and that isn't a joke.
My joke got my clients to laugh, the assistant, a few random people in the room, but nothing but stern looks from Trustee attorney.
Anyway, we got down to business and utilizing some sort of mathematical formula requiring an abacus and the number pi taken to the 3rd power, the trustee had concluded my Debtors could pay $600 per month before the step. More specifically, the trustee had concluded that we had (1) taken an illegit expense for 401k contribution (2) overstated our insurances expenditures and (3) didn't believe our charitable contribution expense.
Regarding point (2) - there wasn't a real dispute as to the amount of incurred but rather whether the numbers were in fact reasonable. It was implied the Debtors should have done more comparison shopping for their insurance numbers. Regarding point (3) it was implied my clients didn't actually donate to charity.
My response was we will provide you actual invoices for insurance and I used the average number from the last 3 years of itemized deductions for the charitable deduction number and I didn't think Buddhist Temples gave receipts for donations.
Anyway, it was agreed I would provide evidence of the following in advance of our continued hearing. To top it off, the trustee counsel took the time to briefly lecture my clients on their spendthrift ways and promised to go through their budget with what could best be described as double-secret strict scrutiny.
This rather unpleasant experience did leave me with a golden oppurtunity to finally argue a factoid of law that is well settled in the Ninth Circuit but little enforced in places and that is :
BAD FAITH IS MORE THAN A FEW SUBJECTIVELY UNREASONABLE EXPENSES. IF YOU THINK OTHERWISE READ IN RE GOEB 675 F.2D 1386 (9TH CIR. 1982). I HAVE EVEN INCLUDED A HYPERLINK FOR YOU. IF YOU STILL DONT UNDERSTAND WHAT BAD FAITH IS THEN READ IT AGAIN AND AGAIN AND AGAIN UNTIL YOU UNDERSTAND.
I promise to post my brief when I file it.
And another Chapter 13 event of this week was I had a client dissatisfied with the amount of a fee application for some extra Chapter 13 work. It went in front of the judge, and as to the Judge's ruling, all I would tell my clients is LOL (and pay up).
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