In re Arnold (13-50412)

The Chapter 13 debtor’s plan separately classified and paid in full an unsecured debt guaranteed by his father while other unsecured creditors would receive a fourteen percent dividend. Some 51.5 percent of the “classified debt” was incurred to pay the debtor’s income taxes. The court held that although the debtor was paying all his disposable income into the plan, 11 U.S.C. § 1325(b)(1)(B), that the classified unsecured debt was not a “consumer debt” because a majority of it was incurred to pay an income tax debt. The court also held that the separate classification of the unsecured debt guaranteed by the father unfairly discriminated against other creditors. 11 U.S.C. § 1322(b)(1).

Thursday, August 15, 2013