§ 108.4     Income, Expenses, Lifestyle and Luxuries
Revised:  June 15, 2004
CASES UPDATED: January 24, 2020
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 108.4, at ¶ ____, LundinOnChapter13.com (last visited __________).

To satisfy the disposable income test in § 1325(b), the debtor typically has to commit all income that is not reasonably necessary for the support of the debtor’s family to funding the plan for three years.1 Applied correctly,2 this test prohibits confirmation of a plan that pays for luxury items, investments and other unreasonable or not necessary expenses.


Notwithstanding regulation of what the debtor can and cannot spend money on by § 1325(b), many reported § 1325(a)(3) cases demand a pound of flesh in the name of good faith. Few courts come right out and say it, but Chapter 13 debtors who cannot pay unsecured claim holders in full are expected to suffer during the plan. There is a sense in the good-faith cases that sincere debtors live frugally and make extraordinary efforts to pay their debts. Bankruptcy judges use lack of good faith to deny confirmation of Chapter 13 plans when the debtor is not making sufficient concessions in lifestyle, living conditions or effort at work.3


Chapter 13 debtors who insist on keeping investments, luxury items, new cars or new houses are not likely to pass good-faith review at confirmation.4 Keeping the country club membership is a lightning rod for intense good-faith scrutiny.5 Budget surpluses are addressed by the disposable income test in § 1325(b)6 but are often discussed as a factor indicating a lack of good faith under § 1325(a)(3).7


Debtors who propose to make substantial charitable contributions have had good-faith problems.8 As detailed elsewhere,9 in 1998 Congress amended the disposable income test in § 1325(b) to permit an expense deduction up to 15 percent of a debtor’s gross income for qualified charitable contributions. The allowable expense for charitable contributions in § 1325(b) is not conditioned by any history of charitable contributions or other proof of motive or sincerity. In contrast, the simultaneous 1998 amendment to § 707(b) specifically states that “the court may not take into consideration whether a debtor has made or continues to make charitable contributions” to determine whether a Chapter 7 filing is a “substantial abuse.”10


Given the explicit statutory exclusion from disposable income of qualified charitable contributions up to 15 percent of gross income in § 1325(b), the obvious next question is whether the 1998 amendment to § 1325(b) will affect use of the good-faith test in § 1325(a)(3) as a regulator of charitable giving by Chapter 13 debtors. Almost immediately after the 1998 enactment, a perfect test of the question reached the Bankruptcy Appellate Panel for the Ninth Circuit.


In Drummond v. Cavanagh (In re Cavanagh),11 the Chapter 13 plan did not allocate any money to charitable contributions, and the statement of financial affairs revealed no charitable contributions of $100 or more in the year preceding the petition. After filing the plan, the debtors moved to North Dakota, found a better job and found religion. Amended schedules showed an increase of $600 per month in net income and a corresponding $600-per- month increase in expenses, including a new $240-per-month charitable contribution to the Mormon Church. Disposable-income-test and good-faith objections to confirmation were raised.


The Bankruptcy Appellate Panel for the Ninth Circuit first held that the 1998 amendment to § 1325(b)(2)(A) deemed the contribution to the Mormon Church to be a reasonably necessary expense for disposable-income- test purposes. The BAP then found legislative history to support its conclusion that the 1998 amendment to § 1325(b)(2)(A) did not preclude good-faith analysis of the proposed charitable contribution:

Although the plain language of § 1325(b)(2)(A) does not restrict the timing of a debtor’s tithing or prevent a debtor from increasing the amount of a charitable contribution on the eve of bankruptcy or after a bankruptcy petition is filed, these are factors that ought to be taken into consideration when looking at the totality of the circumstances to determine whether a debtor has proposed a Chapter 13 plan in good faith and in compliance with § 1325(a)(3). Indeed, the 1998 Act’s legislative history indicates that “[w]e have tried desperately to craft language that would protect and avoid and prevent fraud. No one . . . wish[es] to lay any groundwork that would allow someone to fraudulently use the church or a charitable organization to make a contribution to avoid their creditors if they are going into bankruptcy.” In re Smihula, 234 B.R. 240, 243 (Bankr. D.R.I. 1999) (quoting Hearing on H.R. 2604 and H.R. 2611 Before the Subcomm. On Commercial and Administrative Law of the House Comm. On the Judiciary, 105th Cong. (Feb. 12, 1998) (statement of Congressman Packard)). Thus, a debtor’s purpose in commencing or increasing the amount of tithing on the eve of filing for bankruptcy or shortly after a petition is filed is relevant to a determination of whether egregious behavior is present that would tend to show that a chapter 13 plan was not proposed in good faith.12

Turning to the facts, the BAP found no evidence of bad faith based in part on testimony that the Mormon Church had helped the debtors during a period of hardship:

Kevin testified that Debtors chose to begin tithing after he had begun the process of becoming a member of the Mormon Church. . . . [T]he Mormon Church helped Debtors pay their utility bills . . . . [A]pproximately six months prepetition, Debtors’ daughter had been born prematurely . . . . This testimony amply supports the court’s finding that the Amended Plan was proposed in good faith. . . . There was no evidence that Debtors began tithing to prevent their creditors from receiving a distribution or that they had any motive in filing for bankruptcy other than seeking a fresh start after they encountered financial hardship.13

Applying the logic of Cavanagh, other reported decisions have found charitable contributions permitted by § 1325(b) to be indicative of a lack of good faith under § 1325(a)(3).14


Bankruptcy judges see a lot of sad cases. Good-faith cases quickly degenerate into jury arguments by creditors and tales of misery by debtors. But nobody dislikes genuine hard work, especially when mixed with just a little genuine contrition. There is a sort of sacrifice quotient in Chapter 13 cases. Debtors who make the extra effort to eke out a few more percentage points for the unsecureds are more likely to survive good-faith review.15


Don’t look for this effort yardstick in § 1325(a)(3). Perhaps intellectual honesty would counsel that the “reasonable and necessary” test applied to expenses by § 1325(b) is the proper statutory platform for this sort of subjective measure of the debtor’s sweat.16 The dilemma for bankruptcy judges inclined to require a lot of sweat from Chapter 13 debtors is that good faith under § 1325(a)(3) is often the only statutory vehicle available because there is no objection to confirmation from the trustee or the holder of an allowed unsecured claim for purposes of § 1325(b).17 The result is a huge collection of case law that distorts the good-faith inquiry to include an undisciplined second measure of the debtor’s income, expenses and lifestyle choices.


1  See discussion of projected disposable income test beginning at § 91.1  In General.


2  There is some controversy whether the disposable income test in § 1325(b) applies to all payments under the plan or only to recurring expenses for food, shelter and the like. The better view is that the test applies to all expenditures and all payments by the debtor. See §§ 163.1 [ In General ] § 91.1  In General and 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support.


3  See, e.g., New Jersey Lawyers’ Fund for Client Protection v. Goddard (In re Goddard), 212 B.R. 233, 242 (D.N.J. 1997) (On remand, good-faith consideration by bankruptcy court should include that the debtor artificially overstated debts and expenses, lowering plan payments, “enabling his wife’s income to be used for the family’s discretionary consumer spending.”); Beard v. United States Trustee (In re Beard), 188 B.R. 220 (W.D. La. 1995) (That the debtor left a high-paying job for a lower-paying job is one factor indicative of bad faith.); In re Stanley, 296 B.R. 402 (Bankr. E.D. Va. 2002) (Plan fails good-faith test that pays 10% dividend to unsecured creditors and 100% of mortgage on real property that is owed jointly with a nonfiling spouse.); In re Leone, 292 B.R. 243 (Bankr. W.D. Pa. 2003) (Bankruptcy court sua sponte denies confirmation of plan that would cure default and maintain payments on a $205,000 mortgage when the property is worth only $138,000 and unsecured creditors will receive only 11%.); In re Samadi, No. 02-30336-H2-13, 2002 WL 31833254, at *2–*4 (Bankr. S.D. Tex. Sept. 30, 2002) (unpublished) (Bankruptcy court denies confirmation of 60% plan based on “the impression that the Debtors were trying to justify maintenance of their lifestyle rather than making a real effort to repay debt.” The debtors’ budget showed living expenses of $94,300 from take-home pay of $100,000 per year. “The Court simply cannot find that this level of expenditures, on a $100,000 income represents a good faith effort to pay creditors.”); In re Lancaster, 280 B.R. 468, 480 (Bankr. W.D. Mo. 2002) (Although not convinced that the debtor was “manipulating his income so as to keep his plan payments low,” bankruptcy court considered as a good-faith factor that the debtor was 42 years old, had a bachelor’s degree, was working in a family business and in the past had earned larger incomes.); In re James, 260 B.R. 498 (Bankr. D. Idaho 2001) (Evidence that debtor paid more than his proportionate share of living expenses for home he shares with girlfriend is indicative of lack of good faith.); In re Hendricks, 250 B.R. 415, 421 (Bankr. M.D. Fla. 2000) (That the debtor has overstated many of her expenses, has inflated costs for everyday items and has “contrived to find a way to ‘spend’ all her monies other than to pay . . . creditors” indicates lack of good faith.); In re Bottorff, 232 B.R. 171, 173 (Bankr. W.D. Mo. 1999) (Denies confirmation on good-faith ground because debtor failed to completely account for separate income of nonfiling spouse. When combined with her nonfiling spouse’s income and after deducting all household living expenses, debtor could pay $1,345 per month into plan. Proposed plan would pay $434 per month. All unsecured claims were debtor’s separate debts, accumulated before her current marriage. Although $434 plan payment was larger than amount available if one-half of household expenses were attributed to the debtor, plan was not proposed in good faith because “Debtor in this case has not given adequate weight and consideration to her husband’s income, as well as his necessary and reasonable expenses.”); In re Petersen, 228 B.R. 19, 26 (Bankr. M.D. Fla. 1998) (“[T]he Court finds Debtor to have the potential to substantially increase his earnings over the life of the plan. Less than three years ago, Debtor’s yearly earning nearly exceeded the amount of Wall’s claim [$550,000]. Additionally, Debtor, a licensed attorney, could begin to practice law in Maryland or pursue employment in a similar capacity to his former position with Disney. Debtor’s lack of effort, ability to earn, and potential fluctuation of earnings support the Court’s conclusion that Debtor’s plan was not proposed in good faith.” In 1995, debtor earned $541,747 in salary, bonuses and stock options as an executive at Disney Corporation. In 1996, debtor earned $267,514 but claimed to have a mental breakdown. In 1997, debtor earned $15,792 derived solely from unemployment and disability.); In re Walsh, 224 B.R. 231, 238 (Bankr. M.D. Ga. 1998) (“Debtors’ three-year plan proposes no payments to unsecured creditors while funding the purchase of a second vehicle which is not necessary for an effective reorganization. The convenience of this second vehicle comes at the expense of the unsecured creditors. If Debtors propose to utilize Chapter 13 to pay for that nonessential vehicle, they should exert an effort in terms of a plan duration that is more than the minimum currently proposed.”); In re Kelly, 217 B.R. 273, 274–75 (Bankr. D. Neb. 1997) (“The debtor stated in a deposition that he is currently qualified to teach at the college or university level and could earn about $20,000.00 annually. However, he has elected to work part time as a clerk while he attends graduate school. . . . [I]t is simply not equitable for the debtor to voluntarily remain under-employed, to obtain the benefit of an advanced college degree, and to discharge his obligations to creditors upon payment of a nominal dividend.”); In re Zaleski, 216 B.R. 425 (Bankr. D.N.D. 1997) (Lack of good faith shown in part by budget that included many items that fail the disposable income test, such as private college expenses, a new car and substantial charitable contributions.); In re Jobe, 197 B.R. 823, 828 (Bankr. W.D. Tex. 1996) (“Mr. Jobe has made no effort to produce additional income from his farm, although he has testified he could do so successfully. . . . Mr. Jobe’s lack of, or minimal, effort is a factor in determining ‘good faith’. . . . Minimal effort combined with multiple misrepresentations . . . are unmistakable manifestations of bad faith.”); In re Clements, 185 B.R. 903, 907–08 (Bankr. M.D. Fla. 1995) (“The Court has not seen any motivation or sincerity on the part of the Debtors to actually fund a Chapter 13 plan designed to re-pay their creditors. . . . Debtors are financially secure. . . . It is obvious that they could afford to pay more than 2.9% to their creditors.”); In re Sitarz, 150 B.R. 710, 725 (Bankr. D. Minn. 1993) (The debtor embezzled money from a business he managed and brought financial ruin on the business owners. The debtor’s former employers will “have to live with the financial consequences of his wrongdoing for the rest of their lives. . . . [T]he Debtor has shown no compelling reason why he should not have to also, as a matter of both moral and legal responsibility.”); In re Henricksen, 131 B.R. 467, 473 (Bankr. N.D. Okla. 1991) (“These debtors cannot afford [college]; yet they propose to use bankruptcy law to make it affordable—in effect, they would use bankruptcy to make their creditors pay their son’s way in college. . . . A pattern of living beyond ordinary means, resorting to bankruptcy to cut debts rather than repay them and to force creditors to pay for . . . retirement and . . . higher education . . . is an attempt to use Ch. 13, not to get even, but to get ahead. Here is not ordinary prudence in search of a fair chance, but merely improvident ambition in search of an excuse.”); In re Hale, 65 B.R. 893 (Bankr. S.D. Ga. 1986) (Chapter 13 debtors who have not proposed to reduce their standard of living to maximize distribution under the plan are not eligible for confirmation.).


4  See, e.g., In re Rice, 72 B.R. 311 (C.D. Del. 1987) (13% plan fails good-faith test when debtors intend to keep new house and two relatively new automobiles.); In re Stanley, 296 B.R. 402 (Bankr. E.D. Va. 2002) (Facts indicative of a lack of good faith include that plan will pay only 10% to unsecured creditors while paying in full a mortgage on real estate that is owed jointly by the debtor and a nonfiling spouse.); In re Leone, 292 B.R. 243, 245 (Bankr. W.D. Pa. 2003) (“A good faith effort would require that Debtors find replacement housing for themselves and their two adult children at a cost of less than $2,347 per month, or it may require that Debtors give up the idea of paying more than $205,000 for a $138,000 house; neither of which would impose a significant burden. If Debtors elect to maintain their Property, it is they that should bear the cost of the unusual and improvident expenses which unfairly discriminate against unsecured creditors.”); In re Samadi, No. 02-30336-H2-13, 2002 WL 31833254, at *2–*4 (Bankr. S.D. Tex. Sept. 30, 2002) (unpublished) (The debtors proposed to keep a $28,000 Land Rover and “[a] number of other budget items are (at best) generous and (at some level) questionable. . . . $115 per month for recreation and clubs . . . $250 per month for transportation expense . . . $220 per month for a housekeeper . . . . House maintenance is shown at $290 per month, in addition to $46 per month for a home warranty. $104 per month  . . . for life insurance . . . . Telephone expense is shown at $225 per month. . . . $265 per month on clothing . . . . In summary, the Court computes that the Debtor’s take-home pay is about $8,370 per month, over $100,000 per year. The Debtors proposed budget for necessary living expenses is about $7,859 per month, or $94,300 per year. The Court simply cannot find that this level of expenditures, on a $100,000 income represents a good faith effort to pay creditors.”); In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998) (Applying strict scrutiny appropriate in Chapter 20 situation, bad faith when only purpose of Chapter 13 case is to strip down and acquire a car for the debtor.); In re Mathenia, 220 B.R. 427, 433 (Bankr. W.D. Okla. 1998) (Debtor and nonfiling spouse jointly bought $19,000 Isuzu Rodeo 11 days before nonfiling spouse filed Chapter 7 petition. Nonfiling spouse reaffirmed the Isuzu. Debtor filed separate Chapter 13 case four months later. “These are not the honest but unfortunate debtors which the Bankruptcy Code was designed to protect and to provide with a ‘fresh start.’ These debtors could be the poster children for the standard creditors’ argument, to which this court does not subscribe, that bankruptcy is too easy, is constantly taken advantage of by unscrupulous debtors, and operates against the interest of society in general, not to mention creditors in particular. . . . It is simply not right for debtors to voluntarily obligate themselves for the purchase of property which they clearly can not afford . . . and then expect to retain the property and force their unsecured creditors to pay for their folly.”); In re Tucker, 220 B.R. 359, 361 (Bankr. W.D. Tenn. 1998) (Bad faith to pay in full two claims secured by certificates of deposit that will be paid to the debtor in cash upon completion of payment when unsecured claim holders will receive only 30%. Debtor pledged certificates of deposit as collateral, one certificate for $5,500 and the other for $7,100. Plan proposed to repay in full the two claims secured by the certificates of deposit. The net effect of the debtor’s plan would be “to allow the debtor to fully repay herself as a creditor while paying her unsecured creditors less than 100%. Such activity would not only violate the spirit of the Bankruptcy Code, but would also go against the majority of case law interpreting similar repayment proposals.”); In re Cushman, 217 B.R. 470 (Bankr. E.D. Va. 1998) (Bad faith when Chapter 13 case filed two and one-half months after discharge in Chapter 7 case pays nothing to unsecured claims that were discharged in the Chapter 7 case and only acquires a car for the debtor at stripped-down value when the debtor is financially able to pay the car note according to its terms.); In re Zaleski, 216 B.R. 425 (Bankr. D.N.D. 1997) (Lack of good faith included acquiring a 1996 Blazer.); In re Pope, 215 B.R. 92 (Bankr. S.D. Ga. 1997) (Good faith precludes confirmation of a plan that would do little more than permit the debtors to acquire a $30,000 mobile home through the plan.); In re Fulton, 211 B.R. 247 (Bankr. S.D. Ohio 1997) (Confirmation denied on good-faith ground for plans that propose to pay retirement loans in full and less than 100% of other unsecured debts.); In re Smith, 200 B.R. 213, 218 (Bankr. E.D. Mo. 1996) (The filing of separate cases by husband and wife debtors demonstrates bad faith where the effect of the separate filings is a “blatant attempt to retain a large amount of nonexempt equity.”); In re McCall, 199 B.R. 173, 175 (Bankr. E.D. Ark. 1996) (“[B]ad faith is demonstrated by the debtors’ plan under which they retain land and other assets by ‘redeeming’ the property without making any payments.”); In re Barnes, 191 B.R. 963, 967 (Bankr. M.D. Ga. 1996) (Proximity of purchase of car to filing of Chapter 13 case indicates bad faith where the debtor’s proposed plan would cram down value of car from $6,080.45 to $4,000. Cramdown at debtor’s values would “create a virtual windfall for the Debtor.”); In re Kasun, 186 B.R. 62 (Bankr. E.D. Va. 1995) ($600 per month for slip rental, insurance and a loan secured by a luxury boat is bad faith where plan proposes to pay 34.9% of unsecured debt.); In re Norwood, 178 B.R. 683, 690–91 (Bankr. E.D. Pa. 1995) (Court denies confirmation on good-faith grounds where debtor proposes no payment of a $60,000 claim for sexual assault and the plan would pay a home mortgage on property acquired after the debtor committed the assault. “Debtor chose Chapter 13 as a means of absolving himself of liability from an otherwise nondischargeable debt without the need of making any payment thereon while still retaining the benefit for himself of the property he acquired after entry of the Judgment. On balance, it appears that the effort here is not toward financial rehabilitation but rather it is an effort to evade responsibility from ever having to pay the Judgment.”); In re Webster, 165 B.R. 173, 175–76 (Bankr. E.D. Va. 1994) (Confirmation is denied on good-faith and disposable-income-test grounds where debtor’s residence was destroyed before the filing of the Chapter 13 case, but the debtor proposes to pay $20,000 to a creditor with a mortgage on the remaining real property and nothing to unsecured creditors. “Here debtor proposes to pay nothing to her unsecured creditors; instead she wants to pay for a $20,000.00 asset which at this time may be considered investment property. The plan is thus discriminatory of debtor’s creditors and cannot be considered as filed in good faith.”); In re Cordes, 147 B.R. 498 (Bankr. D. Minn. 1992) (Confirmation is denied on good-faith grounds because plan will allow the debtor to build up equity in an expensive nonexempt luxury recreational boat while paying less than 50% to general unsecured claim holders.); In re Henricksen, 131 B.R. 467 (Bankr. N.D. Okla. 1991) (Court denied confirmation of plan that would pay between 30% and 64% of unsecured debt when debtors had substantial cash in IRAs, debtors included $220 per month for support of an adult child at college and the effect of the plan would be to pay for debtors’ retirement and the higher education of debtors’ children at creditors’ expense.); In re Dotson, 124 B.R. 836 (Bankr. N.D. Okla. 1991) (Court denied confirmation of 9.58% plan when 60% of the debtors’ payments would go to pay for a luxury motor vehicle and debtors took an expensive Caribbean cruise on the eve of bankruptcy, without any special prepetition effort to pay creditors.); In re Lindsey, 122 B.R. 157 (Bankr. M.D. Fla. 1991) (Plan was not in good faith when most of the payments during the first three years would be used to acquire equity in an investment property and to pay taxes. Luxury goods are properly measured against the good-faith standard in § 1325(a)(3).); In re Chrzanowski, 70 B.R. 447 (Bankr. D. Del. 1987) (Evidence of bad faith includes recent borrowing for a new car.); In re Rogers, 65 B.R. 1018 (Bankr. E.D. Mich. 1986) (Debtor intending to keep $17,000 Corvette “is pampering her own psyche at the expense of her unsecured creditors.”); In re Brown, 56 B.R. 293 (Bankr. N.D. Ill. 1985) (A recent debt for new automobile indicates lack of genuine intent.); In re Nkanang, 44 B.R. 955 (Bankr. N.D. Ga. 1984) (Expensive automobile is evidence of debtor’s lack of good faith.). But see In re Sharon, 200 B.R. 181 (Bankr. S.D. Ohio 1996) (Court rejects good-faith objection to 60-month, 24% plan that retains for the debtors a $24,737.50 car.); In re Smith, 196 B.R. 565, 572–73 (Bankr. M.D. Fla. 1996) (In the context of a 60-month, 100% plan, court finds it is not bad faith for an airline pilot with an annual income of $168,420 to pay $500 per month for telephone bill, to include expenses for an adult dependent child, to build equity in a 401(k) retirement plan and to pay tax obligations in excess of $147,000. “The Court finds that debtor’s retention of his investment property is not a bad faith attempt to deprive his creditors of the value of their claims. The plan provides that all claims will be paid in full, and the court finds that neither the IRS or the other creditors are harmed by debtor’s retention of the investment property. . . . [D]ebtor’s contribution to his savings plan is not a bad faith attempt to avoid payment to his creditors. Although debtor’s savings allotment could be used to increase his monthly plan payment, it would not increase the amount any creditor would receive under the plan. . . . Although this Court agrees that support of an adult child is not a legal obligation, in this case, the debtor’s creditors are not in any way harmed by debtor’s claimed expenses related to his dependent child.”).


5  See, e.g., In re Chrzanowski, 70 B.R. 447 (Bankr. D. Del. 1987).


6  See § 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support.


7  See, e.g., In re Sanabria, 52 B.R. 75 (N.D. Ill. 1985) (Court denies confirmation of 10% plan when budget indicates $175-per-month surplus.); In re Farmer, 186 B.R. 781, 783 (Bankr. D.R.I. 1995) (Debtor “assumes the heavy burden” of showing good faith with respect to a 0% Chapter 13 plan. Without objection from any creditor, court denies confirmation of 0% plan where budget shows an unexplained $150 monthly expense for “other.” If the $150 were committed to the plan, the debtor could pay all unsecured claims in full in less than three years.); In re Clements, 185 B.R. 903 (Bankr. M.D. Fla. 1995) (2.9%, 36-month plan was not filed in good faith where totality of the circumstances shows $364.74 not committed to funding the plan and $785 per month for payments to support adult “dependents” not living at home.); In re Sutherland, 161 B.R. 657 (Bankr. E.D. Ark. 1993) (Apparently on bad-faith grounds, court denies confirmation where plan failed to provide for payment of all disposable income to the trustee.); In re Dunning, 157 B.R. 51, 53 (Bankr. W.D.N.Y. 1993) (Court denies confirmation of 60-month, 1% plan “where there is evidence currently before the Court that the debtors’ net disposable income may have increased but no provision is made to share that benefit with creditors.”); In re Saglio, 153 B.R. 4 (Bankr. D.R.I. 1993) (Debtor’s plan is not proposed in good faith where debtor proposes to pay nothing to unsecured creditors but the evidence indicates that the debtor is able to pay some dividend to unsecured creditors. The debtor neglected without reasonable explanation to list a potential asset in the plan, and the liquidation of that asset would support some ability to pay unsecured creditors.); In re Henricksen, 131 B.R. 467 (Bankr. N.D. Okla. 1991) (Court denied confirmation of 36-month plan paying between 30% and 64% of unsecured debt when budget indicated excess of income over expenses of $908 per month, but debtors proposed to contribute only $800 per month to the plan.); In re Keiser, 35 B.R. 496 (Bankr. D. Del. 1983) (Court denies confirmation of $120-per-month plan paying less than 6.5% of unsecured debt when budget shows surplus of more than $1,000.); In re Sellers, 33 B.R. 854 (Bankr. D. Colo. 1983) (Court denies confirmation of $260-per-month payment from surplus income in excess of $1,000.); In re Weyand, 33 B.R. 553 (Bankr. D. Colo. 1983) (Payment of $200 per month out of an $800 surplus demonstrates bad faith.); In re Brown, 29 B.R. 360 (Bankr. N.D. Ohio 1983) (It is bad faith for debtors to keep surplus of $58 while paying only $43 per month to creditors.). But see In re Raines, 33 B.R. 379 (M.D. Tenn. 1983) ($69 surplus is not bad faith.); Illinois Dep’t of Pub. Aid v. Jones, 31 B.R. 485 (Bankr. N.D. Ill. 1983) ($80-per-month surplus is consistent with good faith for divorced debtor with four children.). See also § 198.1 [ Able to Make Payments and Comply with Plan ] § 111.1  Able to Make Payments and Comply with Plan for discussion of budget surplus as a feasibility consideration.


8  See, e.g., In re Zaleski, 216 B.R. 425 (Bankr. D.N.D. 1997); In re Curry, 77 B.R. 969 (Bankr. S.D. Fla. 1987); In re Chrzanowski, 70 B.R. 447 (Bankr. D. Del. 1987).


9  See § 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support.


10  See § 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support.


11  250 B.R. 107 (B.A.P. 9th Cir. 2000).


12  250 B.R. at 114.


13  250 B.R. at 114. Accord In re Kirschner, 259 B.R. 416, 424–26 (Bankr. M.D. Fla. 2001) (Although 15% of gross income is protected from disposable income analysis by the Religious Liberty and Charitable Donation Protection Act of 1998, a qualified charitable contribution is still subject to good-faith analysis under § 1325(a)(3). “The Court’s finding that Debtors’ charitable contributions do not violate the § 1325(b) disposable income test does not preclude successful opposition to Debtors’ plan on other grounds. Nor does the invocation of a Congressional ‘exemption’ prevent the use of the proposed ‘exempt’ expenditure as evidence of a lack of good faith under § 1325(a)(3). . . . [T]he Court finds relevant to the good faith inquiry the sincerity of a debtor’s intent to actually make the proposed charitable contributions. . . . The Court also finds it necessary to analyze a proposed charitable contribution expense in the context of the ‘totality of the circumstances’ good faith standard . . . . The relative size of the qualified charitable contribution expense alone cannot justify a finding of lack of good faith, much as the reservation of a valuable piece of exempt property or lucrative exempt income stream alone cannot justify such a finding.” Bankruptcy court confirms three-year, 21% plan that includes a $674-per-month charitable contribution from a gross monthly income of $7,147.19. No evidence was presented with respect to the sincerity of the debtors’ religious beliefs or the debtors’ history of charitable giving. A 21% distribution to unsecured creditors is “relatively large,” the debtors did not appear to be keeping any “extravagant assets” and the debtors did not propose to discharge any debts that would be nondischargeable under Chapter 7. “Trustee presented no evidence of a lack of good faith besides Debtors’ intent to make charitable contributions, the amount of unsecured debt to be discharged, and the length of the Third Amended Plan.”).


14  See In re Stanley, 296 B.R. 402, 409 (Bankr. E.D. Va. 2002) (Charitable contribution that fits exclusion from disposable income in § 1325(b) nonetheless is indicative of bad faith: “Even though debtor’s proposed charitable contribution is less than 15% of his gross income, the court cannot ignore that the $100.00 amount given to charity is more than one half of debtor’s proposed plan payment of $166.00. When combined with the mere 10% payout to unsecured creditors, the court finds that a charitable contribution of $100.00 is excessive.”); In re Lancaster, 280 B.R. 468, 480–81 (Bankr. W.D. Mo. 2002) (Bankruptcy court considered as a good-faith factor that “there are areas in his family budget where savings could be made and additional funds made available to creditors . . . charitable contributions ($200.00 a month).”).


15  See, e.g., In re Wilcox, 251 B.R. 59, 68 (Bankr. E.D. Ark. 2000) (One factor favoring good faith of 18%, 60-month plan that compromises a large claim that would probably be nondischargeable in a Chapter 7 case is that the debtors “have reduced their living expenses to basic necessities.”); In re Corino, 191 B.R. 283, 290–91 (Bankr. N.D.N.Y. 1995) (Court rejects good-faith challenge to fourth Chapter 13 case filed to deal with criminal and civil judgments for embezzlements. “[T]he present case concerns a widowed mother who is seeking financial redemption for an acknowledged misdeed committed more than ten years ago. . . . Debtor has already served time in prison, has forfeited a savings account and since 1989 has paid . . . approximately $6,500 pursuant to various wage garnishment orders. . . . Debtor offered credible testimony that she has attempted to negotiate a repayment plan . . . . [D]espite Debtor’s egregious pre-filing conduct, . . . Debtor has demonstrated a good faith effort to satisfy her creditors’ claims. Debtor not only appeared repentant, but her efforts in negotiation and her proposal to pledge all of her disposable income to a five year plan demonstrates [sic] a willingness to pay her debt.”); In re Anadell, 190 B.R. 309, 311–12 (Bankr. S.D. Ohio 1995) (Court rejects good-faith challenge to 60-month plan that pays 9% of a $72,302.57 judgment for misappropriation of client funds by a former attorney. Debtor was a practicing attorney with a substance abuse problem. Debtor lost his law license, spent a number of years in prison, and now works as a legal assistant in the office of the Ohio Public Defender. “[D]ebtor is now proposing to pay as much as he probably can pay . . . . [Debtor] has proposed a plan of maximum duration. . . . He appears . . . to be putting his life back together in as responsible a manner as possible. He has served his time in prison and has lost his professional license. Perhaps he is the sort of individual for whom chapter 13 relief is intended.”); In re Short, 176 B.R. 886 (Bankr. S.D. Ind. 1995) (20% plan that compromises a claim for embezzlement satisfies good-faith test where debtors voluntarily extended the plan to 48 months and Mr. Short joined in the Chapter 13 plan to help his wife pay her creditors notwithstanding that Mrs. Short is the only debtor liable for the embezzlement.); In re Coburn, 175 B.R. 400, 401 (Bankr. D. Or. 1994) (Good faith is found where debtors propose to “pay more to the trustee than their budget shows they can afford” and the plan will last for 46 months, longer than the debtor can be required to fund a plan.); In re Humphrey, 165 B.R. 508, 511 (Bankr. M.D. Fla. 1994) (38% plan satisfies good-faith test notwithstanding that debtors propose to pay first mortgage on nonresidential real property. That the debtors hold down three jobs is “credible evidence of debtors’ bona fides in dealing with their creditors.”); In re Harmon, 72 B.R. 458 (Bankr. E.D. Pa. 1987) (0% plan is proposed in good faith where debtor will pay secured claim holders in full, is working a second job, and is providing for three children.); In re Kazzaz, 62 B.R. 308 (Bankr. E.D. Va. 1986) (Court confirms 16% plan compromising $29,000 judgment following conviction for attempted grand larceny of insurance monies. The debtor’s financial situation and employment history and prospects were not favorable; one of the debtors could not read or write English; the debtors would not be able to work their way out of their financial situation absent the filing of a Chapter 13 case; the debtors had been forthright in presenting the facts of their case, and the proposed plan constituted an extraordinary effort.); In re Eppers, 38 B.R. 301 (Bankr. D.N.M. 1984) (Court confirms 16%, five-year plan compromising large nondischargeable claim when there is no reserve in the budget, no evidence that the debtor’s income will increase, no concealment of assets, plan includes any inheritances or bequests that might come to the debtors and debtors are otherwise judgment-proof.); Illinois Dep’t of Pub. Aid v. Jones, 31 B.R. 485 (Bankr. N.D. Ill. 1983) (Good faith is satisfied where debtor is divorced with four children and proposes to pay 10% of a debt that would be nondischargeable in a Chapter 7 case.).


16  See § 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support for discussion of the reasonable and necessary test in § 1325(b).


17  See § 163.1 [ In General ] § 91.1  In General for discussion concerning standing to object to confirmation under § 1325(b).