Chapter 13 Court Opinion

[unclerico]

http://milawyersweekly.com/wp-files/pdf/opinions/04-60247.pdf

Here is a link to an opinion in my district argued by my Trustee on another case in 2006. Since confirmation We decided to surrender the house since we will have significant negative equity and have been in a 100% payback plan over 5 years.

Our trustee objected to our plan modification saying that we could pay 600/wk and not 170/wk that we proposed. The reason for the decrease is two fold. We are leasing a house now and since we are 100% payback our plan was modified to cover unsecured plus 4%, the trustees 6%, and Ford Credits secured amount thereby paying our debts at 100%.

Our financial situation has greatly improved ( ) and the trustee wants more money over a shorter time. Our economy is fickle here and our income is somewhat unpredictable. I feel we are entitled to a reasonable plan that will get paid off rather than a plan that will be set up for failure should one bad thing happen to us. After all it is 100% PB. The link for the opinion seems to say that we can propose a 5 year plan since we are paying back 100%

Any thoughts?

http://milawyersweekly.com/wp-files/pdf/opinions/04-60247.pdf

[daytona]

I think your argument is logical...but the courts and TTee's don't seem to incorporate logic in many cases! I think they are going to argue that all disposable income needs to go into the plan and once you get to the 100% level the plan will end at that point...weather it is 2yrs or 4yrs. Essentially you will be done early should your income stay up. IF your situation changes and you can't maintain the payment levels, you can then petition to modify the plan payments to a lower level or convert to a CH7 if you meet the criteria. Every district (and court) seem to be different on the issue and it seem's ticky tacky since you are already in a 100% plan...but this ttee seems to be hell bent on pressing and I'm not sure there is anything you can do about it...did you have atty file for you? if so their thoughts..??

[unclerico]

Since I am paying for my attorney I will fight this one to the bitter end. I don't possibly see how the case could be cited and then the reverse logic applied to my case to suit what the trustee wants. If it goes that way then I will motion for dismissal.

[justbroke]

It may be "logical" but the bankruptcy code has been interpreted in different ways. You may have to fight the Trustee in your District. In any event, the code only reads that you must propose a plan of 36 months or 60 months IF you are both under or over the median income, respectively, and you propose a plan that pays less than 100%.

11 USC 1325(b)(4)(B) clearly reads that a plan "may be less than 3 or 5 years, whichever is applicable under subparagraph (A), but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period." So, by simple construction, this means that you may actually propose a plan of "any" duration if you're paying 100%. There was a recent case -- and I'm being lazy and not looking it up -- that found that someone proposing a 100% plan did not need to commit all disposable income to the plan.

The theory was that if you committed 100% of your DMI, then the plan could be finished earlier. True... but nothing in the code suggests that is the case. It only states that you must commit all your DMI... if... you are not paying 100% to the unsecured creditors.

Sounds like a fight and perhaps caselaw in your District, but you could actually use the cited case against them.

[jcj112562]

I know down here in GA that I did not need to commit 100% of DMI in my plan, since it paid off all debt at 100%. I did, as was required by the filing forms, propose a plan that was 5 years in duration, however anyone with a calculator could see that it would be for 30 months. I paid a reasonable chunk of my DMI (around 60%), which was sufficient to keep the payments on the secured debt at precisely what they needed to be and on time, and those got paid early, then all of the unsecured got their money. I even had enough in the bank at the end of 24 months to pay the balance in a lump, and now the case status says "about to complete"...and the waiting begins..*chuckles*

John

[justbroke]

Right, you don't need to commit it all if you propose a 100% plan, but some Trustees are just hornery. Personally, I'd put up a fight -- or enlist my attorney to do so -- if a Trustee tried to pull the 100% DMI, on a 100% plan. (This may be settled caselaw based on a recent Supreme Court ruling, but I can't remember.)