The Court held that the above-median-income Debtor who has no rent or mortgage expense but who pays for cell phone service and seasonal fuel costs is entitled to deduct the entire amount of the IRS Local Housing and Utilities Standard in computing disposable income. The Chapter 13 Trustee objected to confirmation of Debtor’s chapter 13 plan asserting that the IRS Local Housing and Utilities Standard is not “applicable” to Debtor because she has no mortgage or rent expenses and, therefore, she is not entitled any deduction under the IRS Local Housing and Utilities Standard. Her fiancé pays the mortgage on the home that he owns and where they jointly reside. The Court found that the IRS Local Housing and Utilities Standard is “applicable to Debtor” because she has as least one expense covered by the Standard.

The Court then addressed the division of the IRS Local Housing and Utilities Standard on Official Form 122C-2, which is mandatory. Form 122C-2 divides the Standard into “Mortgage or Rent Expenses” and “Insurance and Operating Expenses,” with separate deductible limits, in accordance with the UST’s division of the Standard. The Court found that the IRS Local Housing and Utilities Standard as adopted by the IRS is a single category and that mandating Debtor’s use of the separate categories for “Mortgage or Rent Expenses” and “Insurance and Operating Expenses” would impermissibly conflict with the Code. Nevertheless, the Court found that Form 122C-2 is valid because Line 10 allows a debtor without a mortgage or rent expense to claim the entire amount of the IRS Local Housing and Utilities Standard if the debtor claims that the UST’s division of the IRS Local Housing and Utilities Standard is incorrect and it affects the calculation of the debtor’s monthly expenses.

Ex wife moved for stay relief in ex-husband’s chapter 13 case so she could return to state court and finalize the division of ex-husband’s retirement account. Debtor ex-husband opposed the motion, arguing that ex-wife did not get a property interest in the account, only a debt he owed her for half the value of the account. The court ruled that the divorce decree divided the retirement account so ex-wife’s half did not go into the bankruptcy estate. Stay relief granted.

Debtor sought a fifth extension to file a subchapter V plan. Under § 1189(b), an extension to file a subchapter V plan may only be granted if the need for the extension is due to “circumstances for which the debtor should not justly be held accountable.” The caselaw is split on whether the standard is an equitable inquiry or limited to whether the circumstances were “beyond the debtor’s control.” The Court applied the reasoning of the U.S. Supreme Court in Pioneer, which resolved a similar split in the context of “excusable neglect” in favor of an equitable inquiry, based on bankruptcy courts having broad equitable powers to balance the interests of the affected parties while guided by the overriding goal of ensuring the success of the reorganization. The Court determined that an equitable inquiry is the appropriate standard under § 1189(b) as well. The equitable inquiry should consider whether the need for the extension was within debtor’s reasonable control and may also include such things as potential prejudice to the parties, the length of the extension, the debtor’s good faith, the debtor’s progress in formulating a meaningful plan, and the views of creditors and the subchapter V trustee. After making an equitable inquiry in this case, where among other things, Debtor is participating in a mediation with major creditors, the Court concluded that circumstances existed for which Debtor should not justly be held accountable and granted the extension. 

The Court disallowed a portion of the fees requested in chapter 13 debtor’s counsel’s first fee application, and approved counsel’s second fee application. Even though Court previously approved compensation requested in counsel’s first fee application, the Court may reexamine interlocutory interim fee applications at any time prior to final approval. Counsel’s request for compensation for work to correct counsel’s own mistakes was unreasonable and non-compensable under 11 U.S.C. § 330(a)(4)(B) notwithstanding benefit to the debtors. Charging to correct counsel’s own mistakes can subject counsel to sanctions.