BANKRUPTCY COURT REFUSES TO CONFIRM PLAN THAT DOES NOT INCLUDE INTEREST ON BANK OF HAWAII’S MORTGAGE

Nisha Parikh
8 hours ago
3 min read

The United States Bankruptcy Court for the District of Hawaii refused to confirm a chapter 13 plan to reorganize the debts of Robert Damian Fox (“Fox” or “Debtor”) based on objections raised by the Trustee concerning the non-payment of interest on Fox’s mortgage and uncertainties regarding the Debtor’s “projected disposable income.” In re Fox, No. 25-01159, 2026 Bankr. LEXIS 816, at *1 (Bankr. D. Haw. Mar. 31, 2026).

Fox sought to reorganize his debt, including a mortgage in favor of Bank of Hawaii (“BOH”), by filing a chapter 13 petition.i At the time of filing the petition, both he and his wife were living in the same house, but estranged. After Fox submitted his proposed reorganization plan the Trustee raised the following issues: (1) Whether the plan included payment of mortgage interest to BOH, and (2) Whether alleged mortgage payments made by Fox’s estranged wife must be included in Fox’s “projected disposable income[?]”

The court first addressed the mortgage interest and confirmed that Hawaii law required interest on principal in accordance with the terms of the mortgage note.ii The court noted that BOH had submitted a proof of claim based on an outdated form which did not differentiate between prepetition arrearage and the portion of the arrearage which consisted of principal. BOH filed an amended claim, and the court advised it would confirm Fox’s plan if he were to amend the plan to include mortgage interest on principal at BOH’s mortgage contract rate.iii

Lastly, the court addressed the Trustee’s concerns regarding whether alleged rent payments to Fox from his estranged wife (and housemate) should be considered as part of Fox’s projected disposable income. The court found Fox’s sworn declaration credible which indicated that only he paid the entire mortgage and any rent payments from his estranged wife were inconsistent, unreliable, and often non-existent.iv The court concluded the proposed plan did not need to be amended to account for alleged contributions from Fox’s estranged wife.

The court ordered the parties to modify the plan to incorporate mortgage interest payments and, if that was acceptable, the court would then confirm the plan. Alternatively, if Fox would not agree to pay mortgage interest to BOH, he could file an amended plan or convert his bankruptcy to chapter 7. v In the absence of one of those options, Fox’s bankruptcy would be subject to dismissal.

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The United States Bankruptcy Court for the District of Hawaii refused to confirm a chapter 13 plan to reorganize the debts of Robert Damian Fox (“Fox” or “Debtor”) based on objections raised by the Trustee concerning the non-payment of interest on Fox’s mortgage and uncertainties regarding the Debtor’s “projected disposable income.” In re Fox, No. 25-01159, 2026 Bankr. LEXIS 816 (Bankr. D. Haw. Mar. 31, 2026).
The court first addressed the mortgage interest and confirmed that Hawaii law required interest on principal in accordance with the terms of the mortgage note. The court advised it would confirm Fox’s plan if it were amended to include interest on principal at BOH’s mortgage contract rate. The court concluded the proposed plan did not need to be amended to account for alleged contributions from Fox’s estranged wife which payments were inconsistent, unreliable, and often non existent.
The court ordered the parties to modify the plan to incorporate mortgage interest payments to BOH and, if that was acceptable, the court would then confirm the plan. Alternatively, if Fox would not agree to pay mortgage interest to BOH, he could file an amended plan or convert his bankruptcy to chapter 7.vi In the absence of one of those options, Fox’s bankruptcy would be subject to dismissal.

i In re Fox, at *1. Future references to this case are to this citation until indicated otherwise.

ii In re Fox, at *3. Future references to this case are to this citation until indicated otherwise.

iii In re Fox, at *4.

iv In re Fox, at *4-5. Future references to this case are to this citation until indicated otherwise.

v In re Fox, at *5. Future references to this case are to this citation.

vi In re Fox, at *5. Future references to this case are to this citation.

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