In re Falquist

• Court: U.S. Bankruptcy Court — District of Oregon
• Writing for the Court: HENRY L. HESS, Jr.
• Citation: In re Falquist, 85 B.R. 566 (Bankr. Or. 1988)
• Decision Date: 27 April 1988
• Docket Number: Bankruptcy No. 388-00644H13.
• Parties: In re Maryann Rose FALQUIST, Debtor.

85 B.R. 566 (1988)

In re Maryann Rose FALQUIST, Debtor.

Bankruptcy No. 388-00644H13.

United States Bankruptcy Court, D. Oregon.

April 27, 1988.

William Claussen, Salem, Or., for debtor.

Paul J. Garrick, Salem, Or., for the Oregon State Scholarship Com'n.

MEMORANDUM OPINION

HENRY L. HESS, Jr., Chief Judge.

At the hearing upon confirmation of the debtor's plan in this Chapter 13 case, the debtor appeared by her attorney William J. Claussen, of Portland, Oregon, and the Oregon State Scholarship Commission appeared by its attorney Paul J. Garrick, Assistant Attorney General, of Salem, Oregon.

The Chapter 13 Statement filed by the debtor lists no secured debts, no priority debt and $11,002.38 in general unsecured debts consisting entirely of student loans. The budget shows that the debtor has one 13 year old daughter, that she receives no support, that the debtor is and has been for two years employed as a groundskeeper, that she has monthly take home pay of $900, that her monthly expenses total $850 and that her net disposable earnings are $50 per month. The debtor's plan provides that she will pay to the trustee the sum of $50 per month for a period of 36 months. The payments are expected to return a dividend upon general unsecured claims of approximately 10%.

The debtor agreed that the plan be amended to require the debtor to file quarterly reports with the trustee of current income and expenses. The Scholarship Commission acknowledges that the present budget is reasonable and does not overstate the current monthly expenses. If the monthly income of the debtor increases during the life of the plan it will be appropriate for the Commission to file a modified plan under § 1329 calling for larger monthly payments to the trustee, which will result in a larger dividend upon unsecured claims. It appears that if the estate of the debtor were liquidated under Chapter 7 there would be no dividend to creditors.

The Commission objects to confirmation of the plan. The objections are based solely upon the provisions of § 1325(a)(3) which requires that "the plan has been proposed in good faith and not by any means forbidden by law." The grounds asserted are threefold: (a) all of the debt consists of obligations on student loans which might not be dischargeable in a Chapter 7 case; (2) the dividend to creditors is minimal; and (3) it can be expected that the debtor's earnings will increase in the future.

This court recently considered the question of good faith where student loans constituted...