JIM D. PAPPAS, Bankruptcy Judge
Chapter 13
A hearing on Trustee's motion was held February 7, 2012, after which the Court took the motion under advisement. Having considered the evidence, testimony, parties' submissions, and applicable law, this Memorandum sets forth the Court's findings of fact and conclusions of law. Rule 7052, 9014.
When Debtor filed her chapter 13 petition on August 18, 2009, she was a single mother of triplet sixteen-year-old daughters ("Debtor's triplets"). Dkt. No. 1. According to her original Schedule I, Debtor worked as a mortgage loan officer earning average monthly income of $4,454.16. Id. After deducting her living expenses, Debtor's original Schedule J monthly net income of was $829.16. Id.
After nine months, and multiple attempts, Debtor was finally successful in obtaining confirmation of her fifth amended plan on May 11, 2010 (the "Plan").
Debtor updated her Schedules I and J when she filed her proposed fifth amended plan, on March 18, 2010. Dkt. No. 59. At that time, she continued to work as a mortgage loan officer, but for a new employer, and her Schedule I average monthly income had now declined to $3,583.
Debtor's Schedule I also indicated she did not anticipate any change in income within a year of March 18, 2010. Id. However, within weeks of filing that schedule, there were significant changes in Debtor's life. On April 17, 2010, Debtor and Patrick Osborne ("Osborne") were married.
Debtor did not personally appear at her confirmation hearing, and did not inform the Court, Trustee, or even her own attorney about her changed marital status and financial circumstances prior to Plan confirmation.
In the meantime, both Debtor and Osborne were employed until September 2011. Debtor's income declined during that period due to difficulties in the mortgage industry;
In September 2011, Debtor and Osborne decided that, given Debtor's declining earnings and other family considerations, she would no longer work. Debtor's October 31, 2011, amended Schedules I and J thus reflect Osborne as the household's sole wage earner. Dkt. No. 79. Per the Schedule I, Debtor indicated Osborne's average monthly income was $5,489.09, with $3,489.09 being Osborne's net monthly take home pay.
Debtor's October 31 Schedule J indicates monthly expenses of $5,339. Id. Among those expenses is $600 of monthly support provided to Debtor's triplets, who now all attend college and no longer live at home.
When she learned of Debtor's changed marital status and financial situation, Trustee moved to modify Debtor's Plan to increase her monthly payments. Dkt. No. 78. At the February 7, 2012, hearing, Trustee urged that Debtor's modified plan payments should be $750 per month.
The Code provides that the chapter 13 trustee may move to increase the amount of the payments in a debtor's confirmed plan at any time between confirmation and the completion of plan payments. § 1329(a)(1). The trustee bears the burden of showing facts to support a proposed modification. See Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430, 434 (9th Cir. BAP 1997).
A modified chapter 13 plan is viewed as a new plan, and must meet many of the same criteria as the originally confirmed plan. See § 1329(b); Profit v. Savage (In re Profit), 283 B.R. 567, 574 (9th Cir. BAP 2002) (citing Powers v. Savage (In re Powers), 202 B.R. 618, 623 (9th Cir. BAP 1996)). Per § 1329(b), the requirements applicable in a plan modification are those found in §§ 1322(a), 1322(b), 1323(c) and 1325(a).
Of particular relevance here is the requirement that the modified plan:
§ 1322(a)(1). At first glance, it appears Debtor's current Plan requires more than her anticipated future earnings, which is, frankly, $0. Thus, it would seem, a plan modification requiring Debtor to pay even more is inappropriate.
Simply because Debtor is not earning income herself, however, does not mean she will have no future income. See § 1322(a) (requiring consideration of not only a debtor's "future earnings," but also her "other future income"); Moen v. Hull (In re Hull), 251 B.R. 726, 732-33 (9th Cir. BAP 2000) (recognizing distinction between future earnings and other future income). "Other future income" includes a debtor's community property interest in her non-filing spouse's earnings.
In Idaho, all property acquired after marriage by either a husband or wife, including income from wages or a salary, is community property. Idaho Code § 32-906(1); In re Martell, 349 B.R. 233, 236 (Bankr. D. Idaho 2005) (citing Martsch v. Martsch, 645 P.2d 882, 887 (Idaho 1982)). Both spouses, including the "non-earning" spouse, are entitled to management and control of that community property, and community property is available to satisfy a spouse's antenuptial debts. See Idaho Code § 32-912; Bliss v. Bliss, 898 P.2d 1081, 1084 (Idaho 1995) ("Parties often marry with separate antenuptial debts, and those debts are payable from community property."). Absent bankruptcy, if a woman with debt marries, her pre-marital creditors may pursue her community property, including her new husband's earnings, to satisfy her pre-marital debts. See Bliss, 898 P.2d at 1084.
In effect, Trustee desires the same result for the creditors in Debtor's bankruptcy case. Debtor filed her bankruptcy petition as a single woman in August 2009, and later confirmed a chapter 13 Plan under which her creditors were limited to recovery from her separate property and earnings. Debtor is no longer single, however, and now has a marital community that includes her spouse's substantial earnings. Trustee essentially argues that Debtor's creditors are entitled to payment from Debtor's community property, and that her confirmed Plan should be modified to allow them to do so. Section 1322(a) requires all of Debtor's "other future income" to be devoted to her Plan, and, in Idaho, that income includes Debtor's interest in Osborne's community property earnings.
On these facts, the Court agrees with Trustee on this point. Consideration of Osborne's earnings is appropriate in evaluating Trustee's proposed modification. Debtor's average monthly income, including her interest in Osborne's earnings,
Debtor's October 31 Schedule J includes a monthly $600 expense to support her eighteen-year-old college freshmen triplets. While there is some division among the courts, the majority do not allow a debtor to pay for a child's college expenses when unsecured creditors are not paid in full through a debtor's chapter 13 plan. See In re Baker, 400 B.R. 594, 598-99 (Bankr. N.D. Ohio 2009) (comparing the different approaches taken by the courts). Those courts allowing a debtor to include an adult child's college expenses have only justified doing so where that child has "not yet `left the nest.'" Id. (quoting In re Gonzales, 157 B.R. 604, 610-11 (Bankr. E.D. Mich. 1993)).
The Court concludes that Debtor's payments to support her adult children away at college are a discretionary expense, and the Court will not allow them to be deducted from Debtor's available income because her Plan does not pay her creditors in full. Put another way, Debtor's daughters have all found new nests.
Debtor's allowable Schedule J monthly expenses thus amount to $4,739.
According to her confirmed Plan, beginning this month, Debtor is required to make Plan payments of $442 a month, an amount which is well beyond what her current Schedule I and J show she has available to pay her creditors. Trustee's motion to modify Debtor's Plan will be denied in a separate order.
