In Re Davis
439 B.R. 863
Bankr. N.D. Ill.2010Background
- Debtor Lisa Davis filed a Chapter 13 bankruptcy on June 21, 2008.
- Davis had above-median gross income of $7,709 and projected disposable income of $312; plan proposed 60-month commitment under §1325(b)(2).
- Her confirmed plan on September 18, 2008 paid unsecured creditors in full over 54 months at $740 monthly.
- After confirmation, Davis lost her job and separated from her husband, reducing income to $3,064 gross and $250 net.
- On January 25, 2010, Davis moved to modify the plan to $250 monthly for 36 months, which the trustee objected to under §1325(b) and for inequity.
- The court held §1325(b) does not apply to plan modifications under §1329 and granted the modification under §1325(a) good faith and related requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1325(b) applies to modifications of confirmed plans | Davis argues §1325(b) does not apply to modifications. | Trustee contends §1325(b) governs confirmation, thus applies to modifications. | §1325(b) does not apply to modification of a confirmed plan. |
| Whether modification complies with §1325(a) requirements | Modification meets good faith and other §1325(a) criteria. | Modification may fail good faith due to changed circumstances. | Modification complies with §1325(a) requirements, including good faith. |
| Whether §1329(b)(1) incorporates §1325(a) standards for plan modification | Not explicitly; §1329(b)(1) includes §1325(a) requirements. | Even if §1325(b) may be relevant, modification is governed by §1329(a) and §1325(a). | §1329(b)(1) incorporates only §1325(a) requirements, excluding §1325(b). |
Key Cases Cited
- Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (U.S. 2000) (statutory language must be followed unless absurdity shown)
- Lamie v. U.S. Trustee, 540 U.S. 526 (U.S. 2004) (plain language applied when disposition not absurd)
- Forbes v. Forbes (In re Forbes), 215 B.R. 183 (8th Cir. BAP 1997) (bankruptcy modification not a 'confirmation')
- In re Storey, 392 B.R. 266 (6th Cir. BAP 2008) (§1325(b) objection not part of modification)
- In re Fridley, 380 B.R. 538 (9th Cir. BAP 2007) (division on §1325(b) applicability to modification)