jolly judge to this good morning i'm keith welsh i'm live tourney for missed in this book are used in this book are filed a thirteen about two years ago a chapter thirteen they had become behind on their t v because they were both working at the time they were both drawing so security both mr booker was seventy six at the time they had very little bit it's not a but of money involved in this case they had a debt to twenty something thousand dollar vehicles they were paying for they had a small furniture loan they were paying back about twenty three hundred and about five thousand of unsecured debt and they had a and a finance company debt first heritage with about four thousand secured value that was negotiated down to thirty one hundred and that thirty one hundred was being paid along with about twelve hundred of the five thousand dollars at the i mean you didn't know it was going to be five thousand you listed twenty five twenty four thousand right that's correct you're on the we tend to list all debts that are potentially they are we listed many of those debts is disputed because we believe they were prescribed or maybe they were in some cases might have been duplicate well anyway i just know you're absolutely correct and in the end it was just over five thousand that were allowed debts  booker we're paying more than that's required by law they were paying they were paying more than is required by chapter seven their pay more than liquidation value they were using all of their social security income to fund the plan and not unlike they weren't using just a small portion of their social care that we're dedicating all of their income and all of their so scared to come to be able to fund this point the plan with longer with fifty nine months i believe the proposed plan that we wanted to prove  it paid those those debts we believe the court is in a but it's obvious from the transcript itself to use the wrong legal standard we believe the court adopted a per se approach to good i think that's absolutely wrong i'm not saying i'm whether i'd agree or disagree with the court's finding aflac of good faith but you argued every bit of the appropriate criteria to the court the court is no schmo he knows what the law is and i think we would be misinterpreting his view to say that he didn't know the standard and sir i did not say he did not know the standard well or that he didn't matter of appearance do we let debtors have a third car or have a boat when they're in chapter thirteen let me ask you a question i mean what struck me about this particular matter and i'll agree with you it's not one hundred thousand dollars credit card debt but  people in their seventy's have into late model cars late model low mileage cars people in their seventy's having a riding lawn mower a nine acres chute that's a pretty pretty nice lifestyle having a fifty two inch  things these days late model cars they had with the time they took five thousand each on and that was about right it at the time they were both working full time there they were both older than one hundred a month as full time  i believe mr booker was working full time i believe ms but my recollection anyway that ms booker may have been working part time mr booker was a supervisor course there's some water of the bridge now because they have now no longer able to work and they've surrendered one of the cars but the at the tell them they were they had both they were they had different schedules had surrendered one of the cars when they filed chapter thirteen they probably the judge mind if not  diversion records kind of thing that they made these points and from these points i can see where the judge found in bad faith i'm there for you failed bad faith in my opinion your honor because not so you are inferring a policy from one statement you have no no ma'am that's an officer of the court you are you permitted to do that as as an officer of the court you are like to answer the question it is that for four years the judge that was there at the time is not here there now that's not the question i ask you now sir i apologise to him what did he in for bad faith he said that it didn't comply with the only words that i know of is that he said that they were keeping a boat and it didn't comply with the spirit of the bankruptcy code and you can't keep all the goodies he also said you can't keep the goodies that he said that before the hearing he said that before the here and the lean included the boat the trail in the motor the riding lawnmower and all the v s all of those things together were negotiated value of thirty one hundred dollars so the question is is it was it reasonable to keep a that forty one hundred and to answer judge dennis's question there never was there hasn't been any argument about the debtors ability to pay they were dedicating all of their disposable income plus non disposable income by look to it was no objection from the creditor there's no objection from the trustee that that's correct as it's a anything one of its allies in good faith except he keeps pointing to the policy and that wasn't just in this case in the family i'd say a third car would definitely be excess and in most cases i would agree with you in practicing in almost all cases but you still have to use of the towel do the circumstances analysis and that's what i don't think he ever did was i was and i know about this yes ma'am do you have any other cases and i'm you know i'm not detracting from the position of these particular individuals but do you have any other case where a circuit court has overturned a finding a lack of good faith i didn't put a factual because that's what we'd have acted right before the baps minutes and in that case it was another per se where the where the district court basically excuse me the bankruptcy court of the district court essentially said well as per se you're trying to discharge a non to chargeable death and that's per se not in this court said well we review that because it was a per se approach to something we read that as a did novo review not clear or did i suggest of the court this was clear air but also suggest the court they used he used the wrong legal stand i also look to your schedules and if i understood them correctly you're saying they committed every bit of their not disposable income including their social security but i didn't i mean some of this in some of their schedule said one hundred fifty dollars a month for clothing several hundred dollars a month for food and you time that an elderly couple from which i know a little bit and you know i mean some of those allowances seem quite generous to me those are all equal to or lower than in most cases the iris collection standard allowances which are considered reasonable for above median debtors and below median debtors don't eat less than above this is not an issue about disposable income or money or how much is being paid that was never the issue and he said they didn't need the fish to car to live on money for food and he said you don certainly these people had a well they've had two more years of their boat they still using it they are still using it i did check with them just earlier this last week seventy eight years old how do you how do you take it down to the boat ramp and get it out that requires some physical exertion doesn't he's i would suggest that not withstanding the stroke he's in remarkably good health remarkably clear minded he has some hearing issues you may have picked up on the transcript but he he regularly use the boat his wife goes with him he doesn't have his truck anymore so his son is allowed to use no pickup truck to keep it to haul the boat but they still do what they're doing and they were in but but for the generosity of the attorney representing the first heritage they would be without the boat they would be out there running along more i don't know what it would be doing a flat screen t v s yes ma'am but thirteen is is not a vehicle for punishment of debtors it's if you're paying that the disposable income for the commitment period and you're paying more than it was otherwise required so you're saying we should have a person a rule that a four percent plan because it looked like a four percent plan and the time it i s is acceptable and you can keep whatever you can keep of course not in it and that would be that's a problem i have no no i say we should you should not have such a person a role you should not have you should have you should analyze every one of these cases in the totality of the circumstances are they meeting the economic requirements of the plan of the code yes they are and they're exceeding them are they are they acting in good faith these are some reason to believe they've misrepresented the facts if there's some reason to believe they're acting with malice towards the court really anything like that they were behind on a lot of things they were living above their means arguably at the prior to that time i think there's much question about but but but they with the budget going forward was not disputed by the court by the trustee by the creditors or by anyone the question really is does a seventy something year old man who'd who gets his the only recreation he has and that is he allowed to keep an old of the statutory language of so scared i mean i i appreciate your taking at the heartstrings and all that but that this couple with thirty five would probably look at this case a lot differently and the main reason i say so is you say has a you know i've never owned a boat i never thought of we could afford a boat but you can you know it's different this is this boat are i maybe so but i don't have nine acres either and you're telling me the man has no exercise and no way to to enjoy life when he has three t v s and nine acres and a riding lawn mower that he can get on to his heart's content because you again that's something that requires some physical used to have a riding understand it's a double wide but you get to listen to the birds in the morning i got the sun in the morning and moon at night and i'm not a good idea i'm really trying to ask him i'm trying to put trying to put him i'm trying to put but i'm just trying to put the equity in perspective ok that's all it's possible your utter that if you hadn't had a stroke his wife had suffered depression and if you'd been thirty eight years old is possible i wouldn't be here today because these cases allow the debtor to keep these items pending the appeal that they didn't have to do that would be two years ago they would have given all the stuff back and i think that would have been wrong a made that clear is i think that for the for the use of the boat particular the empower important it was for their health but the testimony that mr booker said was it was very very you know i have one other technical question did any did any of that unsecured debt constitute above the value of the collateral yes ma'am ok leverage your others first here the first here to just dead if i remember right about eight hundred dollars of that was transferred over to that five thousand so that the debt was actually less so a certain portion of the  unsecured that they have the six hundred that they've agreed to pay would would go to heritage but don't know maybe it's first was twelve hundred something dollars and that was always the amount that it your way the plan was dead at that time you had t telling now now now there's five thousand dollars of unsecured debt five thousand and thirty eight or something and some of that is said to heritage but about eight hundred of that is for here is so there's forty to an eight hundred roughly that's all put into a pot and then the twelve hundred dollars it's distributed goes pro rata into the i understand that what i'm saying is that the you faded that it is the case that part of that unsecured distribution goes to heritage yes ma'am ok that's all i mean thank you you have time for about pelee in this matter this is an unusual case because in this case the trustee recommended confirmation to the bankruptcy court to make matters more complicated i was not the chapter thirteen trustee at the time the judge norman did rule that this case was followed but there was another trustee recommended that yes your honor to see sites was a chapter thirteen trustee at the i believe the objection no your honor and it is not my intention to defend judge norman's ruling that the book of plan was fought in bad faith i believe it would be disingenuous of me to make that argument when the chapter thirteen trustee healed from judge norman in which the trustee did not have an objection to the plague there are a lot of these cases give me a good i'm sorry go ahead and i can give an example for example there's in last week i provided two additional cases to this court one of them is the british versus johns case and that's a case that is similar to this case in that case the trustee i was a trustee of in that matter recommended the case for const confirmation judge norman also said that matter independently to determine whether the case should be confirmed and mr welch was the debtors counsel also appealed that matter in those matters the trustee has been named the appellee as far as their position as far as what they're supposed to do with those cases honestly have never been involved in a case i'm sorry to joe's well you so you're saying the judge norman has been tougher on debtors and new have is at the bottom line in this particular matter up i have lost i'll also many cases regarding whether a case should be confirmed or not in front of judge norm there were certain issues where creditors she took in the holes all the factors that mr watches wait a minute if you're appearing here is happily when we have no reason to hear you but you're not you're appearing as the chapter thirteen trustee who is supposed to distribute money to  secured creditors that it is also the judge's duty under the bankruptcy law to see that the terms of them are complied with is that not correct that is correct all right and you know i don't think you have i don't think you have any you can state your personal opinion here but you are defending the order of the court which was that the plan was not confirmed in good faith and therefore this other plan would be in this matter and if you are of you mr watches brief there would not be any additional money to distribute to unsecured creditors that was one of the arguments that mr welch made too but that doesn't mean you're not the fiduciary for the unsecured and that unsecured creditors there were no one more unsecured creditors if the boat was abandoned that was going on that was going to make a difference of course and that was argued to him at what point was that argued that argument made to the that is correct is that there was not a strict that this involves social security income in because of that this this case should be on this case is simple is whether judge norman applied the correct to tell you of circumstances test in the fifth circuit to determine whether the book or a play was found in good faith and you know he's a smart enough guy that he got moved to houston so you know he analyzed the book first testimony in the facts of the case but for the play it was the thing that we were the review this is a matter of fact or fact finding a lack of good faith or a matter of law i believe judge jones you've already indicated it's your belief that i don't care about my belief what your plea is for is a matter of testing as far as the as far as whether he applied the correct standard that would or the clock correct test that would all you would be allowed to analyze it and of as far as whether he applied the totality of circumstances just correctly that would be a clearly erroneous statement and what do you think your hon know presumably you've appealed but you've appeared in front of him numerous times yes sure there have been several cases in several cases that on this two options or argue where judge norman did apply the totality of circumstances test there some of those cases where he applied factors that were part of the staley factors however judge norman in his rulings did understand how the totality of circumstances a case of the seventh circuit that circuit a closet totality of circumstances to suggest that it's my opinion judge norman did understand how to apply the totality of circumstances just as to whether he would if i could move on as of the factors that mr welch signs of as far as whether the trustee or the creditor did object at this point you would hope that judges would take great deference to that they the trustees that i work for i mean to be quite blunt about it twenty two hundred dollars for living room furniture that's a lot of money i understand you and you know the flat screen you don't have to argue i mean you don't have to keep talking unless you want to people and i think i've made all my points there were there were some other issues that mr watchmaker but i think the judge and the courts addressed to as far as the judges actual right to independently review this case for did say i believe that he does have an independent right to review this case for good faith i think that's just one of the staley factors as far as whether the trustee or the creditor objected but as i said this matters is whether replied t correct standard and if you did apply the correct standard whether he was clearly surat iranians in making that if you know stanley seems to be the accepted law but it's an unpublished non presidential fifth circuit decision so is there what's the goes over two or three factors and then you get to the shaving case and it adds a few cycles of the by the time you get to the stanley factor if you get all seven factors that now most courts use in analyzing cases in the says circuit so is this is been a kind of  other cases and i thought you were citing those to show that a lack of good faith was affirmed in other cases like a good faith is a front was affirmed in the other cases in the briggs case lack of good faith was not a firm in the briggs case mr watch had brought up an argument and he did not discuss today about whether the judge did have an independent right he cites the united  espinosa i've been fairly a little bit more aggressive in analyzing bankruptcy cases judge put in the brakes versus john's matter goes over there spinoza case and also brings up the point that the judge bankruptcy judges northern district case it was decided to fridays confirmed that he said it on his own ok independent thank you thank you and i do want to correct one thing that i believe so security is not included in current monthly income by definition and sometimes we brigade that is non c m i income and i did argue to judge norman that we had non c i'm a incoming that he knew i meant by that i was referring to the social security and company knew that how come you didn't know he was applying the stanley factors no he knows about the stanley factors but if you look at my brief you'll see that in the past when he has used the totality of circumstances both before this case and after this case one of them is the briggs case we just mentioned that was after the other one is minor both them went to bat for a judge but foot in both of them he used the eleventh circuit pre eighty four to tell to give circumstance a when he uses the totality of circumstance test goes to it he has historically used in the eleventh circuit standards which is more comprehensive in predates the the one nine hundred eighty four amendments what the other point is the court asked about that the the dividend in this case the dividend that the judge found acceptable was a dental two the dividend that he found bad faith that the only difference being not the payment not what was paid out but the term instead of fifty nine months he went back to fifty six months so by dropping those three months and surrendering or having the sacrifice that's what the court wanted me he was sacrificing but heritage was getting its collateral back obviously heritage didn't want their collateral back if they had they wanted the money more than the collateral or i wouldn't still be here with the debtor still having possession of this or maybe they did it is probably wanted even less that may be true and there may have been an element of cooperating with me that allowed the death of the kid to keep that collateral for this period of time and i believe they did disagree with the judge as to thing but a none of the stamp the problem here is none of the stanley factors or the basic good faith factors apply in this case i don't think one can reasonably argue a single one of them applies judge norman said there was there was a you had to apply or you had to be able to comply with the spirit of the code well first of all if that's not exactly what the s that says if it stanley factors ask you did you attempt to abuse the spirit of the good slight difference but i think an important difference there is none of the other factors applied can go through a stately never meant to be at all exclusive list but i can suggest us what they were contributing contributing was to keep them late model cars is minimal they both worked they both had different schedules collateral and he was a supervisor and to keep the furniture they didn't give up anything did about twenty three hundred dollars of furniture it's this is the kind of thing that i see routinely people don't have cash to buy for they they end up they end up financing their furniture they get behind the in that with payday loans they go when they put their boat in their riding lawnmower both of which they desperately need as collateral to get a little bit of money to try to get back they find themselves behind on their behind on their vehicle but i don't they're behind on some of these loans and they come into a bankruptcy lawyer because they're about to lose something at that point it never was about their budget it was never about you know what i mean yes or and and judge norman has seen almost as many of these as you have right in his