516 B.R. 661
Bankr. M.D. Ga.2014Background
- Debtor is an above-median-income Chapter 13 debtor with no dependents; projected disposable income (PDI) calculated at $1,113.21 and applicable commitment period is five years.
- Debtor's amended plan proposes monthly payments to unsecured creditors of $378.53, which will pay unsecured claims in full over the five-year commitment period but does not devote all PDI to the plan.
- If Debtor paid all PDI, unsecured creditors would be paid in full in about one year.
- The Chapter 13 trustee objected, arguing that because Debtor is not paying all PDI under § 1325(b)(1)(B), confirmation must satisfy § 1325(b)(1)(A) — which the trustee contends requires unsecured claims be paid with interest (i.e., present value).
- The bankruptcy court considered a split of authority on whether § 1325(b)(1)(A) requires interest when a debtor declines to pay all PDI, and analyzed competing textual and policy interpretations.
- The court concluded that if a debtor does not commit all PDI under § 1325(b)(1)(B), then to satisfy § 1325(b)(1)(A) the debtor must pay unsecured claims with interest (present value as of confirmation).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1325(b)(1)(A) requires interest on unsecured claims when debtor does not pay all PDI under §1325(b)(1)(B) | Trustee: (plaintiff) §1325(b)(1)(A) must be read to require present-value payment (interest) as of plan effective date | Debtor: §1325(b)(1)(A) requires only payment of claim amount; no interest required; §1325(b)(4)(B) shows shorter full-payment periods without interest | Court: Agrees with trustee — when debtor elects not to pay all PDI, §1325(b)(1)(A) requires unsecured claims be paid with interest (present value measured at confirmation) |
Key Cases Cited
- Hamilton v. Lanning, 560 U.S. 505 (Sup. Ct.) (uses confirmation date to measure projected disposable income)
- In re Hight-Goodspeed, 486 B.R. 462 (Bankr. N.D. Ind.) (interprets §1325(b)(1)(A) to require present-value/interest when debtor does not pay all PDI)
- In re Stewart-Harrel, 443 B.R. 219 (Bankr. N.D. Ga.) (holds §1325(b)(1)(A) does not require interest; measures compliance as of confirmation without present-value requirement)
- In re Ross, 375 B.R. 437 (Bankr. N.D. Ill.) (supports debtor position that interest is not required)
- In re Richall, 470 B.R. 245 (Bankr. D.N.H.) (supports debtor position that no interest requirement exists)