Matter of Curtis, Bankruptcy No. 79-01297-WE.

• Decision Date: 07 December 1979
• Docket Number: Bankruptcy No. 79-01297-WE.
• Citation: 2 BR 43
• Parties: In the Matter of James D. CURTIS, Jr., and Gail L. Curtis, Debtors.
• Court: U.S. Bankruptcy Court — Western District of Missouri

2 B.R. 43 (1979)

In the Matter of James D. CURTIS, Jr., and Gail L. Curtis, Debtors.

Bankruptcy No. 79-01297-WE.

United States Bankruptcy Court, W.D. Missouri, W.D.

December 7, 1979.

John R. Stonitsch, Kansas City, Mo., for debtors.

Rita A. Rhodes, Kansas City, Mo., for wage earner trustee.

ORDER CONFIRMING PLAN OF ARRANGEMENT UNDER CHAPTER 13 OF THE BANKRUPTCY CODE PURSUANT TO SECTION 1325, TITLE 11, UNITED STATES CODE

DENNIS J. STEWART, Bankruptcy Judge.

The debtors filed their petition herein and a plan of arrangement under chapter 13 on October 10, 1979. The plan of arrangement proposed payments to two classes of unsecured creditors: (1) 100% payments of past due child support to the former wife of the debtor and (2) 10% payments of other unsecured creditors whose total debts are about $1,990. This is proposed to be accomplished by payments of $75 per month over a period of some 18 months.

On November 26, 1979, the wage earner trustee filed her written objection to the confirmation of the plan of arrangement thus proposed, generally complaining that "the plan has not been proposed in good faith" and further contending that payments to the second class of unsecured creditors is of a ratio too small in comparison to the total indebtedness due them. This defect, it is suggested, might be remedied by "leaving the plan payment in the same amount and thereby extending the plan within the 36 month time limit."

There is no contention, nor does it appear from the files and records of the court, that the proposed plan of arrangement does not meet the other requisites for confirmation under § 1325 of the Bankruptcy Code. The division of the unsecured creditors into classes is expressly permitted by the terms of § 1322(b)(1) of the Code so long as the terms and provisions of the plan of arrangement do not "discriminate unfairly against any class so designated." And, although there is a great difference in the percentage of the claims to be paid between those of the first class and those of the second, the former claims all amount to child support payments which would not be dischargeable in bankruptcy. See § 523(a)(3)(A), (a)(5) of the Bankruptcy Code. From this, it appears that there is a rational basis for the discrimination between the two classes and that it must therefore be regarded as "fair" within the meaning of the above section. For the obvious import of the nondischargeability section is that child support payments are generally to be regarded as having a status higher than the ordinary indebtedness under the law of bankruptcy.

The only issue for the court to determine as one of fact and law, therefore, is whether "the plan has been proposed in good faith and not by any means forbidden by law" as provided in § 1325(a)(3) of the Bankruptcy Code. On this issue, it must necessarily be of paramount importance whether the payments, periodic and total, represent the best effort which the debtor can apply against the scheduled indebtedness. The question promises to be particularly acute in cases such as that at bar, in which the debtor does not propose to make payments from recurring and regular wages for the three-year period during which payments are ordinarily allowed to be made under § 1322(c) of the Bankruptcy Code, but rather proposes to make payments for a significantly shorter time — one half that time in the case at bar.

The debtor offered his testimony in the course of the confirmation hearing conducted on December 4, 1979, to the effect that his take-home pay is $743 per month; that this is supplemented by $40 per month which his wife earns from babysitting; that, given their average monthly expenditures for the barest and starkest of necessities,¹ the amount remaining narrowly permits the payment of $75 per month to the wage earner trustee under the plan of arrangement²; that, furthermore, the debtor's wife is expecting another child shortly³; that the debtor will have to pay at least 20% and possibly 100% of the costs of child-birth⁴; that the expenses of living will accordingly be greatly increased and, simultaneously, the debtor's wife may have to stop the babysitting chores by...