In Re Edmonds
444 B.R. 898
Bankr. E.D. Wis.2010Background
- Debtors proposed a Chapter 13 plan that separately classifies long-term student loan debts under §1322(b)(5).
- Trustee objected to confirmation on grounds of unfair discrimination against other unsecured creditors under §1322(b)(1) when paired with §1322(b)(5).
- Debtors’ plan would pay student loans (approx. $35,231.51) with fixed monthly amounts to a Student Loan creditor class, creating different dividends compared to other unsecured creditors.
- If approved, student loan creditors would receive about 53% and other unsecured creditors about 18%; if not, all unsecured creditors would receive about 28%.
- Debtors contend §1322(b)(5) supersedes §1322(b)(1) and should be read in isolation; the trustee argues §§1322(b)(1) and (5) must be read together.
- Court must determine whether post-petition interest on student loans may be paid under §1322(b)(10) when not all creditors are paid in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether separate classification of student loans under §1322(b)(5) is exempt from unfair discrimination under §1322(b)(1). | Edmonds contend §1322(b)(5) is specific and trumps §1322(b)(1). | Trustee argues §1322(b)(1) and (5) must be read together; discrimination applies. | §1322(b)(1) and (5) must be read together; plan discriminates unfairly. |
| If not exempt, does the plan unfairly discriminate in favor of student loan creditors? | Edmonds rely on §1322(b)(5) to justify separate treatment. | Trustee asserts discrimination against general unsecureds cannot be justified. | Plan discriminates against other unsecured creditors; not confirmable. |
| Does the plan violate §1322(b)(10) by paying post-petition interest on student loans but not on other unsecured claims? | Plan seeks post-petition interest on student loans as permitted. | §1322(b)(10) requires full payment of all allowed claims before paying post-petition interest. | Plan violates §1322(b)(10); post-petition interest cannot be paid. |
Key Cases Cited
- In re Coonce, 213 B.R. 344 (Bankr.S.D.Ill. 1997) (interplay of §§1322(b)(1) and (5); 1322(b)(5) not standalone)
- In re Harding, 423 B.R. 568 (Bankr.S.D.Fla. 2010) (read §1322(b)(5) with §1322(b)(1))
- In re Chandler, 210 B.R. 898 (Bankr.D.N.H. 1997) (§1322(b)(5) applied with §1322(b)(1))
- In re Thibodeau, 248 B.R. 699 (Bankr.D.Mass. 2000) (unfair discrimination assessment framework)
- In re Truss, 404 B.R. 329 (Bankr.E.D.Wis. 2009) (majority view on §1322(b)(5) vs §1322(b)(1))
- In re Hanson, 310 B.R. 131 (Bankr.W.D.Wis. 2004) (majority/minority considerations on §1322(b)(5))
- In re Cox, 186 B.R. 744 (Bankr.N.D.Fla. 1995) (§1322(b)(5) interpretation)
- In re Benner, 156 B.R. 631 (Bankr.D.Minn. 1993) (§1322(b)(5) interpretation)