Cite as: Keith M. Lundin, Lundin On Chapter 13, § 12.10, at ¶ ____, LundinOnChapter13.com (last visited __________).
A Chapter 13 debtor’s budget often reflects contributions from spouses, parents, children or others who are not also debtors—for example, a grown child paying rent, buying groceries or contributing cash each month to help meet expenses.
Income from family or friends is often not supported by any contract, statutory obligation or court order. The regularity and amount of such payments is difficult to document and more difficult to project. But in the real world, help from family and friends is often every bit as reliable a source of income as employment at will or legislative largess in an entitlements program. A few reported decisions read regular income broadly to include the generosity of a friend or family member.1
Other reported decisions show courts reluctant to allow gratuitous contributions from family members to constitute regular income for Chapter 13 eligibility purposes.2 The courts have been only slightly more receptive when the source is a nonfiling spouse and the commitment is in writing3 or the payment is compensation for services supplied by the filing spouse.4 When the contribution comes from a nonfiling spouse, it must be detailed in Schedule I, Official Form 106I.5 Many courts have observed that it is appropriate to include the nonfiling spouse’s income in the family budget, though few concede that eligibility can be based entirely on the nondebtor spouse’s contribution.6 When the debtor is employed and has regular income, it has been held that an unemployed spouse who is without any income is still an individual with regular income eligible to file a joint petition with the employed debtor.7 On the other hand, an unemployed debtor bears a somewhat more difficult burden to prove that a nonfiling spouse’s income will be sufficiently regular and stable to render the filing debtor eligible.8
Contrast these “gratuitous contribution” cases with the many decisions that mandate including a nonfiling spouse’s income in the budget to determine whether a filing spouse satisfies the projected disposable income test at confirmation.9
Prior to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),10 one court held that even a nondebtor spouse’s Social Security benefits were included in projected disposable income at confirmation for the filing spouse.11 It is at least ironic that the courts were easily convinced to require Chapter 13 debtors to include a nonfiling spouse’s income in the budget calculation for purposes of the projected disposable income test at confirmation,12 but for eligibility purposes debtors faced trial by fire to prove the regularity of a nonfiling spouse’s income upon which the debtor was dependent.
Detailed elsewhere,13 BAPCPA convoluted treatment of the income of a spouse for purposes of the projected disposable income test at confirmation. The new platform for the income side of projected disposable income—current monthly income (CMI), defined in § 101(10A)—specifically includes in CMI income received by a debtor’s spouse in a joint case but does not include income of a spouse in a not joint case.14 BAPCPA then brings back into CMI any amount “paid by any entity other than the debtor (or in a joint case the debtor and the debtor’s spouse) on a regular basis for the household expenses of the debtor or the debtor’s dependents (and in a joint case the debtor’s spouse if not otherwise a dependent).”15 The net result is that in a not joint case, a portion of a nonfiling spouse’s income is captured for purposes of the projected disposable income test at confirmation but only the portion that is paid on a regular basis for the household expenses of the debtor or a dependent of the debtor. It has been held that even an uncooperative, nonfiling spouse must provide income information to determine whether the filing spouse satisfies the projected disposable income test at confirmation after BAPCPA.16
There is no analogous limitation on “regular income” to determine eligibility for Chapter 13 after BAPCPA. Though only a portion of a nonfiling spouse’s income becomes disposable income at confirmation after BAPCPA, regular income for eligibility purposes includes consideration of all of a nonfiling spouse’s income—consistent with pre-BAPCPA law.
When gratuitous contributions are not from a spouse, the debtor can expect a more difficult burden to prove eligibility. The debtor will need evidence that the source of the contribution is stable and that the amount is significant, regular and likely to continue for the life of the plan.17 It is helpful if the debtor also has some income from nongratuitous sources that can be used to fund the plan.18 In one case, gratuitous contributions from a relative were accepted as regular income when it was proved that the relative was wealthy, that the relative was willing to sign a written statement of intent to make a fixed contribution each month for the duration of the proposed plan and that there was a history of payments prior to filing.19 In contrast, citing “practical experience,” one bankruptcy court rejected the argument that the Chapter 13 plan would be funded from income contributed by the debtors’ two teenage children, ages 17 and 19.20
BAPCPA could influence the case law that is hostile to gratuitous contributions from unrelated donors in the determination of regular income for eligibility purposes. As just mentioned, BAPCPA reconstituted the income side of the projected disposable income test at confirmation to include amounts paid on a regular basis for the household expenses of the debtor or a dependent of the debtor.21 The amount included in CMI can be paid by “any entity.” The inclusion in CMI at confirmation of regular payments from any source, if paid for the household expenses of the debtor or a dependent of the debtor, will be seen by some courts to support including contributions from similar sources to determine regular income for eligibility purposes.22
Some of the most difficult eligibility cases involve income from a nondebtor living with, but not married to, the debtor. For example, notwithstanding a history of routine prepetition pooling of income and expenses, one court found that voluntary contributions by a nondebtor living with the debtor but not bound by marriage were unsupported by any legal obligation and thus were too uncertain to be regular income to the debtor.23 The bankruptcy court in In re Jordan24 denied eligibility when plan funding was dependent on “gratuitous contributions by the Debtor’s live-in boyfriend.” In Jordan, the debtor and boyfriend “lived together for 19 years, . . . they share everything and . . . [the boyfriend] has consistently given the debtor $1,100 per month to cover household bills.”25 The Jordan court conceded that there might be circumstances where “a portion” of the income needed for eligibility could come gratuitously “from family members . . . based upon moral and legal obligations” or from contributors “jointly liable for obligations” with the debtor.26 The court cited the boyfriend’s failure to appear and testify and the lack of “any written document in the record which legally obligates” the boyfriend to make contributions as facts conclusive of ineligibility.27
Contrast Jordan with In re Murphy.28 The debtor in Murphy shared a household for 11 years during which she took care of her boyfriend’s children and elderly parents and he supported her financially. The boyfriend filed an affidavit: “I hereby agree to make [the debtor’s] Chapter 13 plan payment on her behalf, in a timely manner, and in the court ordered amounts, until completion of the plan.”29 The boyfriend testified at the eligibility hearing, and there was no dispute regarding his ability to make payments. The court held the debtor was eligible, reasoning that the boyfriend’s commitment to fund the plan was at least as regular, stable and enforceable as employment at will or a public entitlement.
If there is a dependency relationship between the debtor and the source of the gratuitous contribution—for example, if the debtor is caring for a relative who makes a contribution toward family expenses—the argument can be made that the contribution is in the nature of payment for rent, food or services rendered.30
Scholarships, stipends, grants and other awards probably can constitute regular income if the amount and duration of payment is significant. It has been held that a research stipend is regular income when the amount of the stipend is sufficient to fund a plan.31 In contrast, loans to a student do not constitute regular income, especially when the proposed plan does not resolve how the debtor will fund the plan and pay back the loans.32
Creditors and trustees should consider the alternatives carefully before challenging eligibility based on contributions from friends or family. The commitment of a family member or an almost-spouse to the successful funding of a Chapter 13 plan may be a creditor’s best chance of repayment. Defeating Chapter 13 eligibility may be short-lived satisfaction if the result is a no-asset liquidation in Chapter 7 or nonbankruptcy collection efforts in which family and friends are beyond the creditor’s reach.
1 See, e.g., In re Small, No. K10-01027-DMD, 2011 WL 5508825 (Bankr. D. Alaska June 2, 2011) (MacDonald) (Sufficient regular income to fund plan could include commitment by ex-wife to make payments on debtor’s behalf. But plan as proposed was not confirmed because it would not pay substantial mortgage arrearage.); In re Baird, 228 B.R. 324, 329 (Bankr. M.D. Fla. Jan. 7, 1999) (Proctor) (Debtor has regular income based on payments by the debtor’s son. At the petition, the debtor was making $50,000 a year. Within eight months, the debtor lost his job, suffered a severe stoke and remained hospitalized. The debtor’s son made all payments required by the plan. “[T]his Court is of the opinion that payments due purely to ‘the generosity of a close relative’ may fall within the category of stable and regular income. . . . [S]imply because there is no legal obligation to continue the payments hardly proves absence of income for § 101(30) purposes. . . . To refuse to allow the Debtor the chance to reorganize because of the absence of a particular source of income which a court might deem ‘stable and regular’ would inject unwritten and improper elements into the Chapter 13 eligibility equation. . . . [T]he Trustee’s consistent receipt of the plan payments from Debtor’s son for the past five months is an acceptable source of ‘stable and regular’ income to render Debtor an ‘individual with regular income’ for purposes of 11 U.S.C. § 109(e).”).
2 See Gulley v. Depaola, 301 B.R. 361, 365 (M.D. Ala. Nov. 5, 2003) (Albritton) (Debtor not eligible to convert from Chapter 7 to Chapter 13 because Social Security income was insufficient to pay living expenses and contributions from son “do not constitute income of sufficient stability and regularity.”); In re Cherry, 411 B.R. 427 (Bankr. S.D. Fla. Nov. 19, 2008) (Ray) ($3,000 monthly contribution by debtor’s spouse was not regular income under § 109(e) when spouse was not jointly liable on any unsecured claims, spouse was not dependent on debtor for her income and spouse had no duty to make voluntary contribution.); In re Brock, 365 B.R. 201, 210 (Bankr. D. Kan. Mar. 8, 2007) (Nugent) (Case converted to Chapter 7 when debtor’s income is gratuitous payment from elderly mother for alleged rental property management services, a job begun one week before filing. “We have only the debtor’s word of [his mother’s] willingness to support him over the next five years of Brock’s plan.”); In re Porter, 276 B.R. 32, 38–39 (Bankr. D. Mass. Apr. 22, 2002) (Kenner) (“As a general proposition, gratuitous payments to a debtor by his family members do not constitute regular income for Chapter 13 purposes, although exceptions exist, particularly where the contribution comes from a non-debtor spouse, or is made pursuant to some contractual or legal obligation, or where there is evidence of regular contributions having been made in the past. . . . Here, there is no non-debtor spouse, no legally binding commitment to pay, and no history of any prior payments to the Debtor. On the other hand, the Debtor and his family have submitted affidavits to support their offer to contribute to a Chapter 13 plan, and they allege that, as defendants in the two pending adversary proceedings, they have an economic interest in facilitating the Debtor’s conversion to Chapter 13, and so encourage the Court to classify their contributions as non-gratuitous. . . . Although the family’s affidavits recite some recent income figures for the Debtor’s would-be contributors, the information therein is insufficient for the Court to be confident of their ability to provide the level of funding they promise over such an extended period as proposed by the Plan. . . . [T]he Court finds that the Debtor has not met his burden of proof in adequately demonstrating the likelihood of a sufficiently stable and assured source of income to fund the Plan as currently proposed.”); In re Smith, 234 B.R. 852, 854 (Bankr. M.D. Ga. June 2, 1999) (Walker) (Debtor’s attorney sanctioned under Rule 9011 for filing a Chapter 13 case for an unemployed debtor. “The representations that Debtor would receive financial assistance from her family were unreasonable and unsubstantiated.”); In re Tennis, 232 B.R. 403, 406 (Bankr. W.D. Mo. Apr. 21, 1999) (Venters) (“The Plan can not [sic] be confirmed for the additional reason that the Debtor does not have sufficient regular income to fund the Plan. . . . The Debtor has stated . . . that she relies on income produced by her two teen-age children (ages 17 and 19) to help her pay her household expenses, but concedes that this income is irregular ‘and is not her own.’ From practical experience, we all know that teenagers often do not earn a substantial income, that teenagers often seek to leave the family nest as soon as they are financially capable of doing so, and that (more often than not) they would prefer to spend their hard-earned money on themselves rather than on their parents’ household expenses. Accordingly, it would be unwise and perhaps even foolhardy to base the performance of a Chapter 13 Plan of more than three years’ duration on the uncertainty of one or two teenagers’ voluntary and irregular contributions.”); In re Hanlin, 211 B.R. 147, 148–49 (Bankr. W.D.N.Y. Aug. 7, 1997) (Kaplan) (Unemployed, able-bodied student whose parents are willing to contribute $650 per month to fund a Chapter 13 plan is not an individual with regular income. “Debtor has no income at all. . . . [I]t is his parents who have income . . . . [O]ne does not reach feasibility until one gets past ‘eligibility.’ An able-bodied unmarried debtor whose only source of sustenance is what he can borrow and how much his parents will ‘gift’ to him is not a person with ‘regular income’. . . . This case is not the case of a married homemaker who may lay legal claim to the income of the supporting spouse and whose spouse’s income and expenses are reviewable. . . . Nor is this the case of a debtor who needs a contribution from a roommate or a family member to be added to his own regular income in order to make the plan feasible. Rather this is a debtor who has no legal right to support from any source, no earnings. . . . In the Second Edition of the Random House Unabridged Dictionary, the prime definition of ‘income’ is ‘the monetary payments received from goods or services, or from other sources, as rents or investments.’ . . . If the Debtor obtains some regular income of his own, and thereby becomes ‘eligible,’ he may offer a plan by which ‘feasibility’ is obtained by means of contribution from friends or relatives.”); In re Felberman, 196 B.R. 678, 686 (Bankr. S.D.N.Y. Oct. 17, 1995) (Hardin) (On the debtor’s motion to declare a postpetition foreclosure sale void for violation of the automatic stay, proposed plan is not feasible because it is based on unsubstantiated contributions of income from family members. “It is incumbent on the debtor to satisfactorily establish that the contributions are sufficiently ‘stable and regular’ to enable the debtor to make payments under a Chapter 13 plan. . . . ‘[A]s a general proposition, gratuitous payments to a [Chapter 13] debtor by his relatives do not constitute regular income,’ although there may be unique circumstances when family contributions may be reliable enough to be considered ‘regular income.’ . . . [I]t is uniformly held that unsubstantiated expectations of financial contributions from family members or other third parties are not sufficient to meet the feasibility requirement for confirmation. . . . This is particularly so where there is a history of four and a half years of default, a foreclosure judgment, four scheduled foreclosure sales forestalled by four bankruptcy filings and a fifth foreclosure sale which was completed, without one dollar of financial aid to pay the mortgage from either family or friend. No financial undertaking from any family member was offered in evidence and no family member appeared at the hearing . . . to testify as to his or her willingness to help.”); In re Crowder, 179 B.R. 571, 574 (E.D. Ark. Mar. 22, 1995) (Scott) (Incarcerated debtor’s testimony that family members would contribute to a plan was not convincing. “Although it is clear that the debtor’s father wishes to assist his daughter, this cannot support either eligibility or the plan. There was no affirmation by him as to any specific amount to be provided or that any specific assistance would continue for the duration of the plan. Indeed, he stated that he was not prepared ‘right now’ to render assistance other than that currently being provided.”); In re Norwood, 178 B.R. 683 (Bankr. E.D. Pa. Mar. 3, 1995) (Raslavich) (In the context of feasibility under § 1325(a)(6), contributions from debtor’s mother and sister were not sufficiently stable and regular because the debtor failed to prove they had the “requisite commitment and ability” to fund the plan for its duration. Evidence of the mother’s and sister’s sources of income and expenses and a sworn affidavit or other testimony would have been appropriate.); In re Sigfrid, 161 B.R. 220 (Bankr. D. Minn. Dec. 6, 1993) (Dreher) (Unemployed debtor failed to prove that the nonfiling spouse had income sufficiently regular and stable to fund the debtor’s Chapter 13 plan.); In re Gestring, 91 B.R. 870 (Bankr. E.D. Mo. Oct. 20, 1988) (Barta) (Debtor’s spouse’s intention to fund plan is not regular income when the debtor is unemployed and the debtor’s spouse is a debtor in a separate Chapter 13 case.); In re Cregut, 69 B.R. 21 (Bankr. D. Ariz. Sept. 10, 1986) (Mooreman) (Monthly payments from father to the debtor, a student, were properly characterized as gifts and not as a source of regular income.); Vieland v. First Fed. Sav. Bank, 41 B.R. 134 (Bankr. N.D. Ohio June 6, 1984) (White) (“[C]ontrary to the spirit of Chapter 13” to fund plan with loan from parents.); In re Campbell, 38 B.R. 193 (Bankr. E.D.N.Y. Mar. 15, 1984) (Parente) (Citing In re Cohen, 13 B.R. 350 (Bankr. E.D.N.Y. Aug. 21, 1981) (Goetz), “as a general proposition, gratuitous payments to a debtor by his relatives do not constitute regular income, however, the unique facts and circumstances of the instant case justify departure from this rule.”); In re McGowan, 24 B.R. 73 (Bankr. N.D. Ohio Sept. 28, 1982) (Krasniewski) (Voluntary contributions from family member are not regular stable income.); In re Cohen, 13 B.R. 350 (Bankr. E.D.N.Y. Aug. 21, 1981) (Goetz).
3 See In re Bland, No. 06-1159, 2008 WL 901678, at *2 (Bankr. N.D. W. Va. Mar. 31, 2008) (unpublished) (Flatley) (Plan based upon contributions from nonfiling spouse is confirmed: husband’s affidavit provided evidence of commitment, and debtor had maintained plan payments for more than one year; husband was jointly liable on some debts, and his commitment to fund plan was “sufficiently rooted in his own self-interest and legal duty to qualify the contribution as stable and regular income to the Debtor under the eligibility requirement of 11 U.S.C. § 109(e).”); In re Antoine, 208 B.R. 17, 19–20 (Bankr. E.D.N.Y. Mar. 31, 1997) (Swain) (Unemployed debtor has income sufficiently stable and regular to fund a Chapter 13 plan based on nonfiling spouse’s affidavit. “[G]ratuitous payments by family members and other third parties have not, as a general rule, been held to constitute ‘regular income’. . . . The benchmark for determining whether an individual has ‘regular income’ for purposes of section 101(30) of the Bankruptcy Code is not the type or source of income, but ‘its stability and regularity.’ . . . Mrs. Antoine has significant earnings. . . . [S]he has promised to contribute to the payment of the Debtor’s expenses and Chapter 13 plan. . . . The parties have a long history of mutual support and a stable marital relationship. Furthermore, both ‘enlightened self-interest’ and a legal duty provide Mrs. Antoine with incentives to make good on her undertaking. Mrs. Antoine resides in, and is co-obligor on the mortgage covering, the marital residence . . . . Mrs. Antoine has a legal duty to provide spousal support.”); In re Varian, 91 B.R. 653 (Bankr. D. Conn. Nov. 1, 1988) (Shiff) (Husband’s voluntary contributions to recently separated but now reconciled wife may constitute regular income for eligibility purposes. “[W]here a family member dedicates income for the purposes of the plan, and is motivated by ‘enlightened self-interest and a duty,’ the debtor’s income is sufficiently regular and stable to confirm the plan. . . . The husband has provided the court with a letter confirming his commitment to pay $230 per month to the trustee to fund the plan.”).
4 In re Ellenburg, 89 B.R. 258 (Bankr. N.D. Ga. June 23, 1988) (Bihary) ($500 per month for “bookkeeping services to her husband” constitutes regular income.).
5 See Schedule I, Official Form 106I, discussed in § 36.16 Schedules I and J—Income and Expenditures.
6 See In re Saunders, 60 B.R. 187 (Bankr. N.D. Ohio Apr. 7, 1986) (Bodah) (Nonfiling spouse’s income is included.); In re Kern, 40 B.R. 26 (Bankr. S.D.N.Y. Mar. 26, 1984) (Buschman) (The ability of nondebtor spouse to contribute to family budget must be considered.); In re Sellers, 33 B.R. 854 (Bankr. D. Colo. Sept. 22, 1983) (Gueck); Georgia R.R. Bank & Trust Co. v. Kull, 12 B.R. 654 (S.D. Ga. July 16, 1981) (Bowen).
7 In re McLeroy, 106 B.R. 147 (Bankr. W.D. Tenn. Oct. 24, 1989) (Kennedy) (Unemployed spouse of an individual with regular income is eligible to file joint petition for Chapter 13 relief.). Accord In re Estalella, 101 B.R. 391 (Bankr. S.D. Fla. June 7, 1989) (Cristol).
8 See Singer Asset Fin. Co., LLC v. Mullins (In re Mullins), 360 B.R. 493, 500–01 (Bankr. W.D. Va. Feb. 12, 2007) (Krumm) (Although debtor was unemployed, nonfiling spouse had income sufficiently stable and regular to enable payments under the plan. “Payments are sufficient to support eligibility under Chapter 13 when payment comes from a non-filing spouse, is made pursuant to some contractual or legal obligation, or where there is evidence of regular contributions having been made in the past . . . . [T]he record supports the Debtor’s assertion that, based on the contributions of the non-filing husband, she has income that is sufficiently ‘stable and regular’ to meet the eligibility requirements . . . . While the non-filing husband has not evidenced his willingness to contribute the financing necessary to fund the Debtor’s Chapter 13 plan via an affidavit or testimony, he has evidenced such a willingness by enabling the Debtor to make her plan payments thus far. . . . The continuation of these payments throughout the duration of Chapter 13 is supported by the couple’s mutual support during their marriage.”); In re Sigfrid, 161 B.R. 220, 222 (Bankr. D. Minn. Dec. 6, 1993) (Dreher) (Unemployed debtor is ineligible notwithstanding an affidavit that the nonfiling spouse will fund the plan. The nondebtor spouse is not precluded from funding the debtor’s plan—“regular income” should be liberally construed. However, where the debtor is unemployed, the debtor must establish both the willingness and the ability of the nonfiling spouse to fund the plan. “When the debtor is unemployed, the debtor must establish that the source of the payment, or the nondebtor spouse’s income, is sufficiently stable and regular. This is a question of fact that must be decided on a case-by-case basis.” The debtor failed to prove the source or stability of the nondebtor spouse’s income.).
9 See § 91.2 Projected (Disposable) Income. See, e.g., In re Bottelberghe, 253 B.R. 256, 261 (Bankr. D. Minn. Oct. 3, 2000) (O’Brien) (In the context of disposable income test objection to confirmation, “a nondebtor spouse may supplant or supplement a debtor spouse’s income with his own income for purposes of funding the debtor spouse’s Chapter 13 plan, as long as the nondebtor spouse’s income is demonstrated to be sufficiently regular and stable.”).
10 Pub. L. No. 109-8, 119 Stat. 23 (2005).
11 In re Schnabel, 153 B.R. 809 (Bankr. N.D. Ill. Apr. 23, 1993) (Katz) (The nondebtor spouse’s Social Security payments are included in disposable income for § 1325(b) purposes. To hold otherwise would require the debtor’s creditors to subsidize the debtor’s spouse’s living expenses.).
14 See 11 U.S.C. § 101(10A)(A), discussed in § 36.19 Form 122C-1: Statement of Current Monthly Income, § 92.3 Current Monthly Income: The Baseline and § 94.3 Accounting for Spouses.
15 11 U.S.C. § 101(10A)(B), discussed in § 36.19 Form 122C-1: Statement of Current Monthly Income, § 92.3 Current Monthly Income: The Baseline and § 94.3 Accounting for Spouses.
16 In re Rodgers, No. 14-41824-13, 2014 WL 4988388, at *1, *1–*3 (Bankr. W.D. Mo. Oct. 7, 2014) (Federman) (Schedules must reveal nonfiling spouse’s income and expenses to determine what contribution nonfiling spouse makes to debtor’s current monthly income—even when nonfiling spouse refuses to cooperate. Married debtor scheduled no income or expenses for spouse but testified that spouse “chooses not to cooperate with the filing of the bankruptcy, including not turning over her paystubs or tax returns.” “Debtor and his wife are more like ‘roommates,’ in the sense that they do not pool income and pay household expenses from the pool. They file separate tax returns and she maintains a separate bank account . . . . Debtor’s counsel further conceded that, while the Debtor pays the lion’s share of the household and child care expenses, the nonfiling spouse does contribute some funds to the running of the household. Nevertheless, she apparently wants no involvement whatsoever in the Debtor’s bankruptcy case and refuses to cooperate in providing the Trustee with information about her financial circumstances. ‘. . . [D]isclosure of such information is mandatory. . . .’ . . . [D]isclosure of a nonfiling spouse’s income is not ‘voluntary,’ . . . . [Section] 1325(b) requires a Chapter 13 debtor to devote all ‘current monthly income’ to plan payments, and ‘current monthly income’ expressly includes ‘any amount paid by any entity other than the debtor . . . on a regular basis for the household expenses of the debtor or the debtor’s dependents.’. . . [T]he Debtor’s schedules show nothing about what the nonfiling spouse contributes to the household . . . . [W]ithout knowing what she contributes to the household and childcare expenses, there is no way of knowing whether he is contributing all ‘current monthly income’ to the Plan. . . . [A] Plan proposing to pay less than 100% to unsecured creditors cannot be approved without disclosure of regular contributions to the household by a non-debtor. . . . [W]ithout the requested information as to her income and expenses, it is impossible to tell whether the Debtor is, in effect, subsidizing his wife’s expenses at the expense of his unsecured creditors.”).
17 See, e.g., In re LaVictoire, Nos. 10-10076, 10-10325, 2011 WL 1168288 (Bankr. D. Vt. Mar. 29, 2011) (unpublished) (Brown) (Son had regular income for eligibility purposes when mother and son filed separate cases and son’s income depended on contributions from mother’s Social Security benefits. Mother was jointly liable with son to objecting bank. Son shared primary residence with mother for 10 years. Contributions from mother to son were sufficiently stable and regular to meet regular income requirement.). Compare In re Welsh, No. 02-21197, 2003 WL 25273855 (Bankr. D. Idaho Feb. 26, 2003) (unpublished) (Myers) (Debtors’ income from employment and Social Security is less than recurring expenses and would not satisfy regular income requirement without monthly contribution from “family friend” of $1,123; debtors failed to prove ability and motivation of family friend to make payments.).
18 See In re Ward, 129 B.R. 664 (Bankr. W.D. Okla. July 12, 1991) (Lindsey) (Fact that debtors received gratuitous assistance from church and from relatives did not disqualify debtors for Chapter 13 relief. Neither extent nor frequency of assistance was demonstrated, but debtors had sufficient regular income from other sources to fund plan.).
19 In re Williams, Bk. No. 380-00710 (Bankr. M.D. Tenn. July 29, 1980).
20 In re Tennis, 232 B.R. 403, 406 (Bankr. W.D. Mo. Apr. 21, 1999) (Venters). Accord In re Lynch, No. 1-08-46308-dem, 2009 WL 1955748 (Bankr. E.D.N.Y. July 6, 2009) (unpublished) (Milton) (When plan depended on $750 monthly contributions from children, debtor did not establish commitment and stability of contributions for eligibility purposes.).
21 See 11 U.S.C. § 101(10A)(B), discussed above and in § 36.19 Form 122C-1: Statement of Current Monthly Income, § 92.3 Current Monthly Income: The Baseline and § 94.3 Accounting for Spouses.
22 Divining the meaning of “regular income” for eligibility purposes by analogy to “disposable income” at confirmation is dangerous work, especially after BAPCPA. See § 11.1 What Is Regular Income?.
23 In re Fischel, 103 B.R. 44, 49 (Bankr. N.D.N.Y. Apr. 7, 1989) (Gerling) (“[A]bsent some affirmative action . . . such as filing a petition and moving for joint administration with the Debtor,” the nondebtor’s commitment of monthly income to funding the plan is not regular income within the meaning of § 101(30).). See also In re Loomis, 487 B.R. 296 (Bankr. N.D. Okla. Feb. 25, 2013) (Michael) (Income gratuitously paid by live-in fiancée was not regular income when fiancée had not made commitment to continue funding plan.); In re Heck, 355 B.R. 813 (Bankr. D. Kan. Oct. 24, 2006) (Somers) (Boyfriend’s contribution to living expenses and plan payment was not regular income because not supported by formal promise. Debtor could not meet living expenses—much less make plan payments—without help from boyfriend. Debtor was not eligible due to lack of regular income.); In re Gress, 257 B.R. 563, 568–69 (Bankr. D. Mont. Nov. 20, 2000) (Kirscher) (Debtor’s failure to schedule live-in girlfriend’s income is not bad faith. “As a general rule gratuitous payments to a debtor do not constitute regular income as defined at § 101(30). . . . The exception is where a nondebtor affirmatively acts or legally obligates himself or herself to dedicate his or her income to the debtor’s plan. . . . Since Wood was not Gress’s spouse, she had no duty to support or contribute to Gress’s household under Montana law. . . . Wood did not affirmatively act to legally obligate herself to contribute her income to Gress. . . . [S]he contributed nothing to his household expenses. . . . Gress’s failure to list her income does not establish his lack of good faith.”).
24 226 B.R. 117 (Bankr. D. Mont. Oct. 16, 1998) (Peterson).
25 In re Jordan, 226 B.R. at 118.
26 In re Jordan, 226 B.R. at 119.
27 In re Jordan, 226 B.R. at 119.
28 226 B.R. 601 (Bankr. M.D. Tenn. Oct. 29, 1998) (Lundin).
29 In re Murphy, 226 B.R. at 603.
30 See, e.g., In re Ganaway, No. 09-33038, 2010 WL 3168071 (Bankr. S.D. Ill. Aug. 10, 2010) (unpublished) (Grandy) (Debtor has regular income when plan will be funded by former spouse’s Social Security benefits. Former spouse was ill, lived in debtor’s home and was cared for by debtor. Former spouse consistently paid all Social Security disability benefits to debtor for eight years, as form of rent. Former spouse had ability and willingness to continue payments.).
31 Handeen v. LeMaire (In re LeMaire), 883 F.2d 1373 (8th Cir. July 5, 1989) (McMillian, Gibson, Magill), rev’d on other grounds, 898 F.2d 1346 (8th Cir. Mar. 26, 1990) (en banc).
32 See In re Kelly, 217 B.R. 273 (Bankr. D. Neb. Dec. 19, 1997) (Minahan) (That the debtor receives student loans each year to continue work toward a Ph.D. and proposes to use a portion of those loans to fund Chapter 13 plan is evidence of bad faith. Plan did not provide for repayment of student loans. Debtor failed to list $38,500 in student loans until the trustee objected to confirmation. Debtor elected to work part-time as liquor store clerk rather than teaching and earning a higher income. Debtor proposed to use the student loans to fund 8½% dividend.). See § 11.1 What Is Regular Income? for further discussion whether loans may be regular income. See, e.g., Pellegrino v. Boyajian (In re Pellegrino), 423 B.R. 586 (B.A.P. 1st Cir. Feb. 9, 2010) (Hillman, Deasy, Rosenthal) (Even if $8,000 loan from a friend is included in income, debtors fail regular income requirement when loan will not provide sufficient income to make payments for 36-month commitment period.).