Above Median income debtors With No Disposable Income Are Not Required To Make Payments To Unsecured Creditors For 60 Months
An above median debtor who has no disposable income only need propose a 36 month plan according to Henderson, David W. and Candice Y.; In re, 21 CBN 754 (Bankr. D. Idaho 2011), which means that the Kagenveama case is still good law. The court overruled the trustee's objection to confirmation of the debtor's plan in Henderson. The debtor proposed a 36 month plan because they had negative disposable income according to their Form 22C.
In re Kagenveama, 541 F.3d 868 (9th Cr. 2008) the court said, "if a trustee or unsecured creditor objects to plan confirmation for an above median income debtor with positive projected disposable income to unsecured creditors for a period of no less than five years, i.e., the applicable commitment period. ...If, however, that same above median income debtor has no projected disposable income, the Ninth Circuit holds that 'applicable commitment period' does not apply."
The trustee argued that Kagenveama was overruled by the Supreme Court case of Hamilton v. Lanning, 130 S.Ct. 2464 (2010), but the Henderson court rejected that argument citing that the Supreme Court adopted the forward looking approach. However, the Lanning decision did not directly address the issue here of whether Section 1325(b)(1)(B) requires an above-median income debtor with no disposable income to make payments to creditors over the applicable commitment period."
What this all means is that if you're an above-median debtor with no projected disposable income, your proposed plan payments do not need to continue for any set period of time, and certainly not for five years as suggested by the trustee in the Kagenveama case. Just remember to review this prior warning about that projected disposable income.
In a very difficult economy, many people are seriously considering bankruptcy as an option of financial survival. This catastrophe can really happen to anyone. Before considering such a drastic decision that can affect you future earnings and credit, it is wise to consider some alternatives to bankruptcy. Make sure and research all options. Great post.