568 B.R. 74
Bankr. C.D. Ill.2017Background
- Debtor Arthur Gillen filed Chapter 13 on Nov. 4, 2016; retired, single, no dependents, with substantial monthly pension and Social Security.
- Debtor’s net monthly income: $7,054; Schedule J leaves $4,085.12 net; Form 122C-2 calculates projected disposable income of $2,020.40 (over-median debtor).
- Debtor’s plan: pay $1,262/month for 60 months (total $75,720), leaving $44,664.25 available to pay all timely unsecured claims in full but without interest.
- Trustee objected under 11 U.S.C. § 1325(b), arguing Debtor must either (A) pay unsecured claims the present value (i.e., with interest) or (B) commit all projected disposable income ($2,020.40/month) to the plan and thus shorten the term.
- No creditor objections; dispute centers on statutory interpretation of § 1325(b)(1)(A) — whether the prefatory phrase “as of the effective date of the plan” requires payment of present value (interest) when a plan pays unsecured claims in full but over an extended term.
Issues
| Issue | Plaintiff's Argument (Trustee) | Defendant's Argument (Gillen) | Held |
|---|---|---|---|
| Whether § 1325(b)(1)(A) requires payment of present value (interest) on unsecured claims when a plan pays 100% but does not commit all projected disposable income | The prefatory phrase “as of the effective date of the plan” should modify “the value,” requiring present-value payment (interest) if the plan’s monthly payments are less than disposable income | The phrase only fixes the time for the comparison; § 1325(b)(1)(A) permits 100% payment in nominal dollars without interest even if monthly payments are below projected disposable income | Court held § 1325(b)(1)(A) does not require interest; paying allowed unsecured claims in full (without interest) satisfies § 1325(b)(1)(A) and confirms the plan |
Key Cases Cited
- Petro v. Mishler, 276 F.3d 375 (7th Cir.) (if § 1325(a) satisfied and no objection, court must confirm plan)
- Hamilton v. Lanning, 560 U.S. 505 (2010) (§ 1325(b) is disjunctive; debtor may satisfy either (A) or (B))
- In re Foster, 319 F.3d 495 (9th Cir.) (general rule that unsecured creditors are not entitled to postpetition interest)
- Loughrin v. U.S., 134 S. Ct. 2384 (2014) (textual differences in similar statutory language can signal intentional distinction)