Recent Chapter 13 Procedure For Plan Confirmation By Texas Bankruptcy Courts

In re LeBlanc, Case Number 03-50477-RLJ-13 in the Texas Bankruptcy Court for the Northern District, Lubbock Division, decided May 11, 2004. FACTS: Husband and wife proposed a 44 month plan of reorganization under Chapter 13 of the Code. This plan proposed an estimated payout of 36.39% of debts owed to unsecured creditors. The monthly income earned by husband and wife was undisputed in the amount of $6,588.76. Based on claimed monthly living expenses in the amount of $4,753.93, the proposed plan payment was $1,820 per month. Stated similarly, the proposed plan payment represented 27.6% of net monthly income. Thereafter, the trustee appointed by the Texas Bankruptcy Court objected to confirmation on the grounds that the plan "fails to dedicate all the LeBlanc's projected disposable income for the forty-four month plan term." Further, the trustee contended that living expenses submitted were excessive for a family of four, and in particular, objected to monthly food expense in the amount of $800 per month, clothing of $150, and the life insurance premium payment for $220 for the benefit of a disabled child. HELD: The Texas Bankruptcy Court for the Northern District, Lubbock Division ruled in favor of the trustee's objection to confirmation. If the trustee or an unsecured creditor objects to conformation of the plan, the plan must dedicate all of the debtor's projected disposable income for the three year plan period. 11 USC 1325(b)(1)(B). The Texas Bankruptcy Court did not accept the debtor's previous month's receipts for food expenditures, because the receipts constituted only "some evidence the debtors purchase food" but did not prove the necessity of purchases.