In re Kitson

David and Jane Kitson (debtors) had two children. The Kitsons jointly filed for bankruptcy under Chapter 13 of the Bankruptcy Code (code). The Kitsons submitted a plan that called for monthly payments of $150 for the first 12 months, $250 for the next 12 months, and $350 for 36 months. Per the plan, the Kitsons’ payments would be used to fully pay priority creditors and arrears on their home mortgage and to pay approximately 38 percent of their approximately $42,000 in unsecured debt. The Kitsons also proposed continuing to pay their $1,925 monthly mortgage for their 3,200 square-foot home and to pay for certain personal property outside the plan. Many of the nonplan payments related to debts that would be paid off over the course of the plan. The Kitsons’ monthly take-home pay was $6,062 per month, and their claimed monthly expenses were $5,422. The claimed monthly expenses included $600 in childcare expenses and $423 in miscellaneous expenses. The bankruptcy trustee objected to the Kitsons’ plan, contending that it did not comply with code § 1325(b)(2) because it did not require the Kitsons to use all their disposable income to pay their creditors. Per the trustee, the Kitsons’ claimed income exceeded their claimed expenses by $640 per month, and the Kitsons could reduce their expenses by moving to rental housing. The Kitsons responded that moving into rental housing would deprive them of a tax benefit and that they could not find adequate rental housing for their family for less than $1,000 per month.