Bankruptcy Ct. did not err in confirming debtor’s proposed Chapter 13 repayment plan that required debtor to include prorated version of her annual earned income tax credit as monthly income on her Schedule I, but allowed debtor to offset said tax credit with reasonably necessary expenses to be incurred throughout year on her Schedule J. Tax credits must be included in CMI when calculating debtor’s disposable income, and instant debtor, who qualified for treatment as below-median income debtor, may prorate her annual income tax refund and associated expenses as part of her confirmed plan. Ct. rejected Trustee’s argument that entire income tax refund should be turned over to Trustee to make additional plan payments, and that debtor must then move to modify plan if he or she wanted to retain some or all of tax refund. It also rejected Trustee’s claim that instant approach of confirming plan based on projected tax refund would produce plan that was not accurate or proposed in good faith.
Federal 7th Circuit Court
Civil Court
Bankruptcy