In re: Small, No. K10-01027-DMD (Bankr. D. Alaska, June 2, 2011).
It is not uncommon for a creditor to object to a debtor's Chapter 13 plan. Often, they argue that the plan does not pay all of the debtor's disposable income to creditors, or that it treats the creditors differently in an unfair manner. However, a trustee can also object to a plan on the grounds that the debtor lacks the income to fund it. In a recent 9th Circuit bankruptcy decision, this was the matter at issue.
Under section 109(e) of the Bankruptcy Code, Chapter 13 relief is available to an individual with regular income. An individual with regular income is further defined as one whose income is sufficiently stable and regular to enable such individual to make payments under a plan. As a general matter, courts interpret this broadly, and permit debtors who receive income from a spouse, or even from those whose families offer assistance.
In this case, the trustee challenged the debtor's eligibility for Chapter 13 on the grounds that he did not have sufficient regular income. However, the debtor's ex-wife committed to making payments on his behalf, and the court found that was sufficient to make him qualified for Chapter 13.
