Brian Scott Baughman, Sr. and Kristine Marie Baughman

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
IN RE:
BRIAN SCOTT BAUGHMAN, SR.
AND KRISTINE MARIE
BAUGHMAN,
Debtors.
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CHAPTER 13
CASE NO. 07-63208
JUDGE RUSS KENDIG
MEMORANDUM OF OPINION
(NOT FOR PUBLICATION)
The chapter 13 trustee, Toby L. Rosen (“Trustee”), moves to dismiss Debtors’ chapter 13
case for their failure to comply with the terms of the amended plan confirmed on December 18,
2008. 	Debtors contend that their failure to comply is justifiable and has not resulted in prejudice
to their creditors. 	The court held a hearing on August 29, 2012. 	Following the hearing, each
party submitted a post-hearing brief.
The court has jurisdiction of this case under 28 U.S.C. § 1334 and the general order of
reference entered in this district on July 16, 1984, now superseded by General Order 2012-7 dated
April 4, 2012. 	In accordance with 28 U.S.C. § 1409, venue in this district and division is proper.
This opinion is not intended for publication or citation. 	The availability of this opinion, in
electronic or printed form, is not the result of a direct submission by the court.
BACKGROUND
When Debtors filed this case in 2007, they owned a 1994 Chevrolet Astro van free and
time and date indicated, which may be materially different from its entry on the record.
of this court the document set forth below. This document was signed electronically at the
The court incorporates by reference in this paragraph and adopts as the findings and orders
Dated: 11:35 AM November 29, 2012
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clear. 	On the means test, they took an ownership deduction for the vehicle. 	In an opinion dated
September 30, 2008, the court allowed the deduction subject to a good faith review of how the
money was to be allocated in Debtors’ monthly expenses. 	In re Baughman, Case No. 07-63208
(Bankr. N.D. Ohio Sept. 30, 2008). 	Under their original plan and budget, the court concluded that
“Debtors [were] claiming the legal right to keep $19,920.00 over five years for living expenses that
bear no relation to the purpose for which Congress, through the IRS Local Standards, permitted
debtor to carve out some of their income from the disposable income available to creditors” and
refused to confirm the plan. 	Id. at 9. 	In their amended plan, Debtors proposed to “put $332.00
per month into a savings account for a vehicle.” 	(Am. Plan, ECF No. 41) 	The plan was
confirmed on December 18, 2008. 	(Order Confirming First Am. Ch. 13 Plan, ECF No. 43)
Consequently, Debtors were expected to save $332.00 per month.
On April 20, 2012, Trustee moved to dismiss the case based on alleged failure to fulfill the
savings obligation. 	Upon request of an accounting of the savings account, Trustee was informed
that the account had a balance of $1,688.23. 	Her calculations showed that the account should be
approximately $13,000.00.1
Debtors do not deny the balance of the account or their failure to save the amount specified
in the plan. 	Rather, Debtors suggest that the failure to save was justified by substantial medical
expenses for themselves and their daughter resulting from conditions requiring on-going medical
treatment. 	According to Debtors, the money was applied to legitimate, necessary expenses. 	As
a result, the creditors have fared no worse than anticipated under the plan. 	Instead, Debtors
suggest they bear the burden of their failure because they have no savings to fall back on and are
forced to continue to repair and operate older vehicles, including the 1994 van with nearly 200,000
miles.
Debtors budget, at the time their plan was confirmed, provided $163.00 per month for
out-of-pocket medical expenses.
Since the time of its decision allowing the transportation deduction, the Supreme Court has
ruled that a debtor who does not actually have an ownership expense is not entitled to take the
deduction. 	Ransom v. FIA Card Servs., N.A., 131 S.Ct. 716 (2011). 	As a result, if this case was
filed today, Debtors’ disposable income would include the $332.00 at issue here.
DISCUSSION
Trustee does not reference any bankruptcy code or rule in her motion to dismiss but her
brief cites § 1307(c)(6) as the basis for dismissal. 	Under this section, the court may convert or
dismiss a case, “whichever is in the best interests of creditors and the estate, for cause, including –
. . . (6) material default by the debtor with respect to a term of the confirmed plan.” 	Id. 	There is
no dispute that Debtors defaulted under the plan by not establishing the savings account. 	The
question is whether Debtors’ “justification” arguments render the default immaterial.
Debtors’ brief alleges that Debtors incurred out-of-pocket medical expenses in excess of
1 The court’s calculations show the figure is closer to $12,000.00: 	$332.00 x 41 months (November 2008 through
March 2012) = $13,612.00. 	$13,612.00 - $1,688.00 = $11,924.00.
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$7,000.00 for the the identified periods. 	The court finds this figure is wrong. 	The brief alleges
that Debtor-wife alone incurred $2,643.00 for 2009 and 2010. 	(Debtors’ Brief, ECF No. 78, p. 1.)
Looking at the exhibit attached to the motion, the court finds this is inaccurate. 	The $2,643.00
figure is the total for all three family members. 	(Id. at 22.) 	Debtor-wife’s share totaled only
$708.96. 	(Id. at 17.)
Debtors’ attachments from their insurance company show the following out-of-pocket
medical expenses:
Date: 	Deductible 	Co-Insurance
01.01.2009 to 31.12.2010 	$1,357.66 	$1,285.72
01.01.2011 to 09.07.2012 	$1,137.18 	$1,085.24
The total for the time period from January 1, 2009 through September 7, 2012 is $4,856.80. 	This
is a monthly average of $111.00 for the forty-four month period.
In addition, Debtors provided eye and dental statements indicating that they were
responsible for $793.52 for services provided in 2011 and 2012. 	For a two year period, this is an
average of $33.00 per month. 	Consequently, the information provided by Debtors demonstrates
out-of-pocket medical expenses totaling approximately $144.00 per month. 	Considering their
budget accounted for monthly out-of-pocket medical expenses totaling $163.00, the court cannot
conclude that medical expenses were the reason for Debtors’ inability to save the $332.00 each
month as required by the plan.
Debtors offered no other explanation for the dissipation of the monies that were to be
directed to the savings account. 	Instead, it appears that Debtors did exactly what the court found
objectionable in its denial of confirmation of their first plan – they took the money and used it for
purposes other than for which it was intended. 	The court cannot overlook the fact that Debtors
accomplished what was intended, and rejected by the court, in their first plan.
Their argument that the creditors are no worse off is unavailing because it is misleading.
While it is true that if Debtors had saved the money, the creditors would be in no better position,
this ignores the key reality. 	If Debtors had not proposed an acceptable use of the $332.00 per
month, it would have gone to the creditors. 	Squandering the money was never an acceptable use
of the funds.
If Debtors found themselves unable to comply with the terms of the plan, modification of
the plan was an option. 	Debtors did not avail themselves of this opportunity.
Debtors’ failure to save approximately $12,000.00 is a material default under the terms of
the confirmed plan. 	Consequently, the court will grant Trustee’s motion to dismiss by separate
order to be entered immediately.
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It is so ordered.
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Service List:
John H Hornbrook
1400 N Market Ave
Canton, OH 44714-2608
Toby L Rosen, Trustee
400 W Tuscarawas St
Charter One Bank Bldg
4th Floor
Canton, OH 44702
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