528 B.R. 501
Bankr. S.D. Ga.2015Background
- Debtor Mark C. Barnes filed Chapter 13 on June 18, 2014.
- Debtor's plan proposes $1,125 per month for 60 months and a 100% dividend or pro rata of $7,500, whichever is greater.
- Debtor is an above-median debtor with a five-year commitment period and disposable income of $930.77 per month per means test.
- Schedule I shows monthly net income of $2,102.87 and a pro-rated tax refund of $935.33 per month.
- The Trustee objects that the plan (i) does not pay interest on unsecured claims and (ii) does not commit all projected disposable income to the plan.
- The court must decide (1) whether all projected disposable income is contributed and (2) whether interest is required on unsecured claims when a 100% dividend is proposed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether all projected disposable income is contributed | Trustee: not all disposable income is devoted to plan. | Barnes: tax refunds should be excluded from disposable income, showing all disposable income is devoted. | Sustained; tax refunds included, leading to not all disposable income contributed. |
| Whether interest must be paid on unsecured claims when plan pays 100% | Trustee: interest is required for the extended term when not all disposable income is contributed. | Barnes: interest on unsecured claims is not required in this scenario. | Sustained; interest must be paid to unsecured creditors. |
| Proper interpretation of 'as of the effective date of the plan' for § 1325(b)(1)(A) and (B) | Trustee: both subparts require present value as of the plan's effective date. | Barnes: interpretation should treat the phrase consistently across (A) and (B). | Sustained; the court adopts present-value interpretation for both provisions. |
| Whether interest is required under 1325(b)(1)(A) when 100% to unsecured is proposed and some disposable income is not contributed | Trustee: interest is necessary to reflect the time value of money when extending payment. | Barnes: no interest otherwise required by the statute in this configuration. | Sustained; interest is required. |
Key Cases Cited
- Hamilton v. Lanning, 560 U.S. 505 (2010) (defines projected disposable income as of the plan's effective date)
- Till v. SCS Credit Corp., 541 U.S. 465 (2004) (discusses discounting and value of deferred payments)
- In re Hight-Goodspeed, 486 B.R. 462 (Bankr.N.D.Ind. 2012) (addressed required interest under 1325(b)(1)(A))
- In re McKenzie, 516 B.R. 661 (Bankr.M.D.Ga. 2014) (interprets 'as of the effective date' language and present value)
- In re Stewart-Harrel, 443 B.R. 219 (Bankr.N.D.Ga. 2011) (analyzes interpretation of 'as of the effective date' across sections)
- Till v. SCS Credit Corp., 541 U.S. 465 (2004) (quoted earlier; included again for emphasis on present-value concept)
- In re Hale, 65 B.R. 893 (Bankr.S.D.Ga. 1986) (best interest test contextualization for § 1325(b)(1))
- In re Richall, 470 B.R. 245 (Bankr.D.N.H. 2012) (discusses interest treatment in plan confirmations)
- In re Rao, not applicable () ()