Laws 2325

Kim Huggins

Module 8

                                                                                                                                      2-7-2022

2. No, I do not believe Nicole will be able to continue prevail if a challenge is made, regarding her Chapter 13 Bankruptcy repayment plan. After all, when she created the repayment plan, the payments were to be made by her, not a boyfriend or anyone else for that matter. Nicole is not an employee of her boyfriend; therefore, she is only receiving money, not receiving wages. So, after reading through the case matter discussed in this question, re Loomis, 487 B.R. 296 (Bankr. N.D. Okla. 2013)., this situation also shares the same drawbacks as Loomis, as just noted.

Additionally, Nicole knew her unemployment benefits would eventually end, and she knew she was in a Chapter 13 Bankruptcy filing case, which required her to have regular income to repay her debts. Perhaps she could not obtain employment in IT. However, she could have found a job in some other field while she was in this situation. I refer to the following quote from Loomis.

“Pursuant to § 109(e), “[o]nly an individual with regular income ... may be a debtor under chapter 13 of this title.”  The term “individual with regular income” is defined in § 101(30) as an “individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under chapter 13 of this title, other than a stockbroker or a commodity broker.”  As one of the finest bankruptcy judges this judge has ever had the privilege of knowing once stated, “[o]ur determination of what constitutes ‘regular income’ is not limited to the date of filing the petition, but may properly be viewed prospectively.” - Loomis, 487 B.R. 296 (Bankr. N.D. Okla. 2013)

3. At first, I did not think it would be possible for Nicole to compel her now ex-boyfriend to continue making payments for her Chapter 13 Bankruptcy plan, since she was the sole debtor; plus, the couple was not married. However, then I reread the question and saw that my office had contacted the Chapter 13 Bankruptcy Trustee giving them notice Nicole’s then-boyfriend would be making the payments for the reorganization plan.

That said, there must have been documentation filed with the Trustee, which included the boyfriend’s name/contact info as the responsible party. Plus, I would think his signature would be included on this documentation as well, since he agreed to making payments. With this official documentation, I would agree Nicole could sue the ex-boyfriend for damages under a breach of contract since he had agreed to initially do so. The ex-boyfriend breached the contract when his decision not to pay made it impossible for Nicole to keep up with her Chapter 13 payments. https://www.allbusiness.com/when-can-you-sue-for-breach-of-contract-4141-1.html However, I believe Nicole would only be able to do this if she had written documentation with the ex-boyfriend agreeing to pay.

However, even though I do think Nicole could have a case against her ex-boyfriend for breach of contract, this type of scenario is discussed in the following § 12.10 Contributions from Family, Friends, Nonfiling Spouses and Former Spouses; Grants and Awards https://lundinonchapter13.com/NACTT2020/Chapter13CaseLawUpdateSection/12.10. The following sections, which applicably apply in this situation, are from that article.

“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”

“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”

In regard to Nicole’s ex-boyfriend’s promise to make payments on her Chapter 13 Bankruptcy payment plan, this is comparable to In re Murphy. As noted in Murphy,

“Mr. Hambrick’s promise to fund this plan together with continued performance by this Debtor may generate rights and obligations that are every bit as enforceable as an employment contract. Reported decisions from many jurisdictions confirm that on theories of unjust enrichment, quantum meruit, restitution and express or implied contract, unmarried individuals sharing a household have successfully enforced financial commitments by their significant others.⁵ These cases are not based on marital support obligations found in statutes. Rather, recoveries typically are allowed on contract theories.”

Just as Mr. Hambrick promised the Debtor in Murphy, Nicole’s ex-boyfriend also promised her. In this case scenario, my supervising attorney could use the theory that a “promise is a promise” against Nicole’s boyfriend. This may have not been a marital support obligation; however, like Murphy it was a contract theory. Thus, the ex-boyfriend could still be liable for Nicole’s bankruptcy payment obligations.

Reflection Questions:

1. This module was interesting to read about how closely related Chapter 7 and 13 were in nature. I was not sure which type would be best for debtors to file; however, I found out that you had to be within a certain income bracket to file either one. I think Chapter 13 is probably one of the more interesting types of bankruptcy, regarding its repayment plan. It just seems like it would draw the process out longer and the debtor might end up repaying more than he or she originally owed.

2. As far as ethical issues, I am sure there are situations where someone needs to file bankruptcy and is just on the edge of qualifying for Chapter 7; however, they do not qualify and need to file Chapter 13. In that case, I think that could be more of a social issue, than an ethical issue. Plus, I know why the requirements are I place, otherwise people would abuse the system. Still, I think for those people who are just on the edge of qualifying, that is unfair to them. Unfortunately, this is a situation that cannot be remedied, and the debtor must deal with the repercussions of filing for bankruptcy. I did read through the following web site https://www.nerdwallet.com/article/finance/chapter-7-vs-chapter-13, which gave me a better understanding as to how Chapter 7 and 13 compare and can benefit both the Chapter 7 and Chapter 13 debtors.

I found the following quote from the noted web site interesting:

“Chapter 13 bankruptcy may be better for those who don’t qualify for a Chapter 7 filing, for instance, if their income is too high. And some who qualify for Chapter 7 may still choose to file for Chapter 13 because they want to retain certain assets or get caught up on their mortgage payments. However, Chapter 13 repayment plans are challenging: All disposable income after certain allowances has to be directed toward repaying debt over three to five years.”

3. Of all the modules we have worked on, this was one was probably the easiest to understand. Most likely since now that we have been studying this information for several month, it’s all coming together to see how it works. The case discussion above was an interesting read. I am sure this situation happens often with couples who are living together or in a situation such as the one above.