Should Chapter 13 Plan Require ALL The Debtor’s Disposable Income

At the same time the bankruptcy community is pondering theLanning decision on what "projected disposable income" is in a Chapter 13, I read Judge Eugene Wedoff's thoughts on whetherChapter 13 plans ought to require the payment of all of that disposable income to the trustee. *

His point was that requiring payment of 100% of the calculated disposable income was a disincentive to choose Chapter 13.  He likened it to a 100% tax on all income above the median income. (Of course it's not 100% of "income", but 100% of "disposable income"  as figured on the B-22 form.) We would find an income tax that took 100% of any measure of wealth to be reprehensible.  But that's the Chapter 13 requirement.

I concur in those thoughts, but would come at the issue a bit differently.  A Chapter 13 debtor with above median income commits his earnings to the "supervision of the court" for five years.  What an opportunity to develop new spending habits!  Or, more precisely, new savings habits.   Instead, the current system requires thatevery penny not calculated as required for basic living be spent.

We squander this opportunity to have debtors practice saving, a habit that most have not regularly indulged in.  We require that they expend every cent that comes through their bank account.

No financial management class or counselor would see a budget with no provision for either the unexpected nor the inevitable old age as acceptable.  Why does a plan of reorganization for consumers mandate such a result?

(Unfortunately, the article is in the member's only portion of the Chapter 13 Trustees' marvelous site.)