622 B.R. 859
Bankr. E.D. La.2020Background
- Four Chapter 13 debtors (Gilbert; Woodrow & Nadrine Hayden; Andrea Lucas; Tonja Masion Breaux) sought to modify confirmed plans under the CARES Act amendment to 11 U.S.C. § 1329(d).
- Each plan had been confirmed before March 27, 2020; each debtor fell behind on plan payments before that date and alleges the COVID-19 pandemic caused a material financial hardship that worsened or prevented cure of arrears.
- The Chapter 13 Trustee opposed modifications, arguing eligibility under § 1329(d) requires debtors to have been current as of March 27, 2020 (and that arrears be solely pandemic-caused).
- The statutory issue was whether § 1329(d) adds a pre-enactment "current" requirement or a sole-cause requirement to obtain a post-confirmation modification.
- The court concluded § 1329(d) requires only (1) plan confirmed before March 27, 2020, and (2) that the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to COVID-19 — it does not require prior current status or exclusive causation by the pandemic.
- The court found each debtor had shown a COVID-related material financial hardship, denied the Trustee’s dismissal motions, and granted the debtors’ modification requests subject to any further § 1329(b) objections to be filed by a set deadline.
Issues
| Issue | Debtors' Argument | Trustee's Argument | Held |
|---|---|---|---|
| Does §1329(d) permit modification if debtor was delinquent before March 27, 2020? | §1329(d) requires only a confirmed plan pre‑March 27 and a COVID‑related material hardship; prior delinquency does not bar modification. | §1329(d) should be read to require debtors to have been current as of March 27, 2020. | Court: No pre‑enactment "current" requirement; prior delinquency does not bar §1329(d) relief. |
| Must the pandemic be the sole cause of the debtor’s arrears to obtain §1329(d) relief? | COVID‑related material financial hardship suffices even if other factors contributed. | Relief should be limited to arrears solely caused by COVID‑19. | Court: §1329(d) requires a material hardship due directly or indirectly to COVID‑19; it does not require exclusive causation. |
| Interaction of §1329(d) with §1329(a)/(b) confirmation requirements | Debtors: §1329(d) adds the COVID hardship requirement but otherwise leaves §1329(b) confirmation standards intact. | Trustee: §1329(d) should be narrowly construed to avoid expanding post‑confirmation relief. | Court: §1329(d) adds the COVID hardship predicate; all other §1329(b) and §1325(a) confirmation requirements still apply. |
| Whether relief should be granted to the named debtors | Debtors: They demonstrated COVID‑related material hardships and are eligible for modification. | Trustee: Objected and moved to dismiss based on eligibility theory; reserved other objections under §1329(b). | Court: Found debtors met §1329(d)’s hardship test, denied Trustee dismissals, granted the debtors’ modification motions, and allowed the Trustee time to raise any remaining §1329(b) objections. |
Key Cases Cited
- In re Meza, 467 F.3d 874 (5th Cir. 2006) (no requirement of unexpected/substantial change to obtain §1329 modification)
- In re Witkowski, 16 F.3d 739 (7th Cir. 1994) (§1329 contains no threshold "change in circumstances" prerequisite)
- Lamie v. U.S. Trustee, 540 U.S. 526 (2004) (court must enforce plain statutory language unless absurd)
- In re Nowlin, 576 F.3d 258 (5th Cir. 2009) (statutory interpretation begins with plain language and context)
- In re King, 460 B.R. 708 (Bankr. N.D. Tex. 2011) (discussion of projected disposable income and plan payment "pot")