In Re Heideker
455 B.R. 263
Bankr. M.D. Fla.2011Background
- Debtors filed consolidated Chapter 13 cases in the MD Florida Fort Myers division; plan confirmations occurred for the full applicable commitment period (5 years for above-median, 3 years for below-median debtors).
- Debtors proposed plans paying unsecured creditors only a portion of claims (2.8%–23.9%), not in full.
- After confirmation, each debtor moved to modify to an early lump-sum payoff, but unsecured claims would still not be paid in full.
- Trustee objected to modifications because they shorten the plan below the applicable commitment period.
- The court must decide whether Section 1325(b) applies to plan modifications under Section 1329 and, if so, whether a debtor may shorten the term without paying unsecured creditors in full.
- Decision: Eleventh Circuit precedent (Tennyson) treats the applicable commitment period as a minimum duration; this court held that 1325(b) applies to modifications and that plans may not shorten below the applicable commitment period unless unsecured claims are paid in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does 1325(b) apply to plan modifications under 1329? | Trustee; 1325(b) applies to modifications. | Debtors; 1325(b) does not apply to modifications. | Yes; 1325(b) applies to modifications. |
| Can a debtor shorten a modified plan below the applicable commitment period without paying unsecureds in full? | Modifications must still satisfy 1325(b) unless unsecureds are paid in full. | Modifications may shorten plan terms irrespective of full unsecured payment. | No; cannot shorten below the applicable commitment period unless unsecured claims are paid in full. |
Key Cases Cited
- In re Tennyson, 611 F.3d 873 (11th Cir. 2010) (applies temporal minimum duration; five-year period if above-median income absent full unsecured payment)
- In re Davis, 439 B.R. 863 (Bankr.N.D. Ill. 2010) (whether 1325(b) applies to modifications—diverges from other lines of authority)
- In re King, 439 B.R. 129 (Bankr.S.D. Ill. 2010) (illustrates 1325(b) incorporation in 1329 context; reliance on 1325(a) requirements)
- In re Slusher, 359 B.R. 290 (Bankr.D. Nev. 2007) (discusses interplay of commitment period and modification)
- In re Keller, 329 B.R. 697 (Bankr.E.D. Cal. 2005) (precedent on accelerated payments and effect on plan modification)