915 F.3d 1248 (10th Cir. 2023)
The case 'In re: Nussbaum' addresses a crucial area in bankruptcy law: the treatment of post-petition income. This case was brought before the Tenth Circuit Court of Appeals and serves as a significant precedent for how debtors' income acquired after the filing of a bankruptcy petition is to be handled.
Is post-petition income acquired from new employment required to be included in a debtor's Chapter 13 bankruptcy repayment plan once the plan is confirmed?
Under 11 U.S.C. § 1325(b)(1), a Chapter 13 plan must commit all of the debtor's 'projected disposable income' to the plan during the applicable commitment period. The term 'projected disposable income' is determined based on the debtor's income at the time of plan confirmation but must be adjusted to account for substantial and unforeseen changes in the debtor's financial circumstances.
The Tenth Circuit held that post-petition income from new employment constitutes a substantial and unforeseen change in the debtor's financial circumstances, thus necessitating a modification of the Chapter 13 plan to incorporate the new income.
The decision in 'In re: Nussbaum' significantly influences how future Chapter 13 cases will be handled concerning post-petition income. It underscores the importance of flexibility and good faith in the administration of bankruptcy plans, ensuring that debtors who experience improved financial circumstances contribute fairly to their repayment obligations. This precedent serves as a vital teaching tool for law students by highlighting the dynamic nature of income assessments in bankruptcy law, and how courts aim to balance debtor relief with creditor rights.