Veighlan v. Essex (In re Essex)
United States District Court for the Western District of Texas
452 B.R. 195 (2011)
- Written by Ryan Hill, JD
Facts
Essex (defendant) filed for chapter 13 bankruptcy. Essex had a home with a $656,000 mortgage, a monthly mortgage cost of over $6,000, and very little equity in the home. The home expenses represented roughly 51 percent of Essex’s income. Essex bought the home in 2006 but had not paid income tax since 2002. The home expenses were four times the Internal Revenue Service (IRS) standard amount for housing and utilities for Essex’s household size in that region. Essex owed the IRS over $256,000, of which approximately $136,000 was unsecured. Essex’s chapter 13 plan proposed that he retain the home and allowed for only a 1 percent dividend to unsecured creditors. The trustee (plaintiff) objected to confirmation of the plan on the basis that it had not been made in good faith. The bankruptcy court confirmed the plan as lawful but did not reach the question of good faith. The trustee appealed.
Rule of Law
Issue
Holding and Reasoning (Rodriguez, J.)
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