Veighlan v. Essex (In re Essex)

Essex (defendant) filed for Chapter 13 bankruptcy with a $656,000-mortgaged home costing over $6,000 monthly, representing roughly 51 percent of his income, despite having paid no income tax since 2002 and owing the IRS over $256,000, roughly $136,000 of which was unsecured; his housing expenses were four times the IRS standard amount for his household size and region. Essex's proposed Chapter 13 plan let him retain the home while paying unsecured creditors only a 1 percent dividend. The trustee (plaintiff) objected that the plan wasn't proposed in good faith, but the bankruptcy court confirmed the plan as lawful without reaching the good-faith question, and the trustee appealed.