Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.
By Daniel Gill
An incarcerated felon wasn’t eligible to be a debtor in a Chapter 13 bankruptcy, an Illinois bankruptcy court decided when it dismissed the case ( In re Durov , Bankr. C.D. Ill., No. 16-71699, 3/10/17 ).
It must be the debtor’s own income that is considered when determining debtor eligibility—that a parent or someone else is willing to make plan payments is not sufficient to save the case from dismissal, the decision by Chief Judge Mary P. Gorman of the U.S. Bankruptcy Court for the Central District of Illinois said.
This was true even though the parents entered a contract agreeing to make the plan payments.
Tristan Durov was convicted of aggravated DUI from a July 2014 incident. He left a party intoxicated and crashed his vehicle, killing two passengers.
Although apparently the estates of his victims from the accident never sued nor indicated any intention of suing him, Durov was also the defendant in another wrongful death action, arising from an alleged sale of drugs.
Before that plaintiff could get a default judgment against him, Durov filed a Chapter 13 case. Chapter 13 allows individuals to obtain debt relief while retaining their property. To do so, the debtor must propose a plan that uses future income to repay all or a portion of his debts over a three to five year period.
In order to qualify to be a debtor in Chapter 13, the individual must have a regular income sufficient to make payments for this plan. Durov made only about $14 a month from the Illinois Department of Corrections, a sum insufficient by itself to fund a plan. However, the debtor’s parents agreed to commit $25.00 a month for a 60 months plan.
The court decided that because the parents’ promise to make the payments was “purely gratuitous,” it did not qualify as regular income of the debtor.
The court therefore ordered the dismissal of the case. The order, however, does give the debtor the option to convert his case to one under Chapter 7 of the Bankruptcy Code. In Chapter 7, a debtor’s nonexempt assets (those he cannot keep) are liquidated by a trustee, and the proceeds are distributed to creditors.
John H. Germeraad, the Chapter 13 trustee who moved to dismiss the case, was represented by Kenneth Takis Siomos, Springfield, Ill. Devvrat Sinha, Weissberg and Associates, Ltd., Chicago, represented Durov.
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