616 B.R. 505
Bankr. E.D. Mich.2020Background
- Debtor Ebony Gresham filed Chapter 13 on December 4, 2018 and received monthly VA combat‑related disability benefits.
- The court confirmed her Chapter 13 plan on March 27, 2019; plan required biweekly $300 payments and promised 100% to unsecured creditors.
- Congress enacted the HAVEN Act on August 23, 2019, adding an exclusion for certain VA benefits from "current monthly income" (CMI) under § 101(10A).
- Debtor filed a plan modification on October 29, 2019 to reduce biweekly payments to $250 by excluding $1,789 of VA benefits from projected disposable income.
- The Chapter 13 Trustee objected, arguing the HAVEN Act cannot be applied retroactively to a plan confirmed before the Act; parties resolved other objections and litigated only the HAVEN Act issue.
- The court held the HAVEN Act governs CMI determinations made after its enactment but may not be applied retroactively to invalidate confirmation; nonetheless it can justify a post‑confirmation plan modification under § 1329 going forward.
Issues
| Issue | Debtor's Argument | Trustee's Argument | Held |
|---|---|---|---|
| Whether the HAVEN Act applies to cases filed before enactment | HAVEN Act applies to CMI determinations after enactment, so it should govern this case | HAVEN Act should apply only to cases filed after enactment | Court: Apply the HAVEN Act to CMI decisions made after Aug. 23, 2019 regardless of filing date |
| Whether applying the HAVEN Act would be retroactive so as to upset confirmation | Applying HAVEN Act to confirmation is permissible; creditors had no vested right to VA benefits | Applying HAVEN Act to confirmation would impair creditors' rights and violate presumption against retroactivity | Court: Cannot apply HAVEN Act retroactively to invalidate or vitiate an already confirmed plan |
| Whether the HAVEN Act is procedural or a mere drafting correction (bearing on retroactivity) | Change is procedural / corrects drafting error and thus may be applied retroactively | Change is substantive and not a mere correction | Court: Change is substantive; not a drafting error; Landgraf presumption against retroactivity applies |
| Whether the HAVEN Act allows modification of a confirmed plan under § 1329 | HAVEN Act’s change in law is a legitimate, post‑confirmation reason to modify projected disposable income | Modification would unfairly reduce creditor recoveries after confirmation | Court: HAVEN Act provides a legitimate basis to modify the plan going forward under § 1329, subject to meeting § 1329(b)(1) / § 1325(a) requirements |
Key Cases Cited
- Bradley v. School Bd. of Richmond, 416 U.S. 696 (1974) (courts apply law in effect when decision is rendered absent manifest injustice or contrary congressional direction)
- Landgraf v. USI Film Prods., 511 U.S. 244 (1994) (presumption against retroactive application of statutes and framework for retroactivity analysis)
- Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827 (1990) (quoted in Landgraf regarding settled expectations and fairness)
- In re Murphy, 474 F.3d 143 (4th Cir. 2007) (Fourth Circuit requires "substantial and unanticipated" change for § 1329 post‑confirmation modification)
- Matter of Witkowski, 16 F.3d 739 (7th Cir. 1994) (§ 1329 requires no threshold change in circumstances to permit modification)
- Barbosa v. Solomon, 235 F.3d 31 (1st Cir. 2000) (rejects "substantial and unanticipated" requirement for § 1329)
- In re Meza, 467 F.3d 874 (5th Cir. 2006) (aligns with view that § 1329 contains no change‑in‑circumstances prerequisite)