## Facts

- Carol L. Waechter filed a Chapter 13 case without her husband, Joao Da Silva.
- Before marriage, Waechter and Da Silva signed a premarital agreement to keep property and financial obligations separate; it did not assign responsibility for shared household expenses.
- Waechter’s amended Schedule I listed combined monthly household income of $7,453.46, including Da Silva’s net monthly income of $1,348.
- Waechter’s Schedule J included a $1,309.46 line item labeled “Spouse’s prerogative, pursuant to premarital agreement, not to share income,” which offset nearly all of Da Silva’s disclosed income.
- The schedules effectively treated Waechter as paying essentially all marital living expenses, while leaving her with about $119 per month in disposable income.
- Waechter’s amended plan proposed no distribution to general unsecured creditors.
- The Chapter 13 trustee objected to confirmation, arguing the plan did not commit all projected disposable income and was not proposed in good faith.

## Issues

1. Whether the amended plan satisfied 11 U.S.C. § 1325(b)(1)(B) by committing all of the debtor’s projected disposable income to payments to unsecured creditors after the trustee objected.
2. Whether the amended plan was proposed in good faith under 11 U.S.C. § 1325(a)(3) given the debtor’s treatment of the non-filing spouse’s income and household expenses.

## Decision

- The court sustained the trustee’s objection and refused to confirm the amended plan.
- The court held the plan failed to commit the debtor’s true projected disposable income as required by § 1325(b).
- The court held the plan was not proposed in good faith under § 1325(a)(3) because it effectively subsidized the non-filing spouse while paying nothing to unsecured creditors.

## Legal Principles

- When a trustee objects, § 1325(b)(1)(B) requires a Chapter 13 plan to apply all of the debtor’s projected disposable income during the commitment period to payments to unsecured creditors.
- “Disposable income” under § 1325(b)(2) excludes only amounts “reasonably necessary” for the debtor’s maintenance and support; courts assess reasonableness in light of actual household economics.
- Courts may look past labels in schedules and private arrangements to the economic reality of household income and expense allocation when determining projected disposable income.
- A premarital agreement allocating property and debt liability between spouses does not justify expense allocations that depress a debtor’s disposable income to defeat § 1325(b).
- Under the totality of the circumstances, a plan may lack good faith under § 1325(a)(3) if it manipulates the disposable-income calculation to preserve a non-filing spouse’s income while offering no meaningful payment to unsecured creditors.

## Conclusion

The court denied confirmation because the debtor’s plan and schedules effectively shifted joint household expenses onto the debtor and treated the spouse’s retained income as an offsetting “expense,” improperly reducing projected disposable income and supporting a finding of lack of good faith.


In re Waechter, 439 B.R. 253 (Bankr. D. Mass. 2010)