443 B.R. 219
Bankr. N.D. Ga.2011Background
- Debtor filed Chapter 13 petition June 11, 2010; amended plan Aug 24, 2010 with $1,157 monthly payment and 100% unsecured dividend.
- Debtor is above-median income; applicable commitment period five years; plan lasts ~51 months.
- Plan funds include attorney's fees, priority taxes, secured car claim, general unsecureds totaling $27,648.22.
- Debtor's Schedule I/J show available net income exceeds plan payment; exact excess disputed.
- Trustee filed Objection to Confirmation Aug 2, 2010; hearing held Sept 1, 2010; briefing completed.
- Court to determine if 1325(b)(1) and 1325(a)(3) objections are satisfied by 100% unsecured dividend without interest; evidentiary issues on good faith remain.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 1325(b)(1) allows confirmation with 100% unsecured dividend without paying all disposable income | Stewart-Harrel argues 100% to unsecured creditors satisfies (A) | Trustee argues must satisfy (B) or require present value | 100% unsecured dividend satisfies 1325(b)(1)(A); no mandatory interest or full disposable income requirement under (B) observer for this plan |
| Whether interest on unsecured claims is required to satisfy 1325(b)(1) or only under best interests | Debtor contends no interest required for (A)/(B) | Trustee contends payment of interest may be needed under best interests, not 1325(b)(1) | Interest not required under 1325(b)(1); present-value interest may be required under 726(a)(5) for best interests |
| Whether the plan is filed in good faith under 1325(a)(3) given deviation from 100% payment | Debtor argues totality of circumstances supports good faith | Trustee asserts lack of good faith due to shorter/longer payment, Hummer payments, etc. | Good faith requires evidentiary hearing; no per se bad-faith ruling from plan structure |
Key Cases Cited
- Till v. SCS Credit Corp., 541 U.S. 465 (2004) (present-value analysis guidance for value of distributions)
- Burgess Wholesale Mfg. Opticians, Inc., 721 F.2d 1146 (7th Cir. 1983) (statutory interpretation guidance for 'as of the effective date' structure)
- CoreStates Bank, N.A. v. United Chemicals Technologies, Inc., 202 B.R. 33 (E.D. Pa. 1996) (present-value and confirmation considerations in Chapter 13)
- Hamilton v. Lanning, 130 S. Ct. 2464 (2010) (Supreme Court on projected disposable income and post-filing information)
- In re Cohen, 106 F.3d 52 (3d Cir. 1997) (twin-subsection lead-in interpretation; consistency in statutory construction)
- In re Ross, 375 B.R. 437 (Bankr.N.D.Ill. 2007) (present-value concepts in confirmation context)
- In re Jones, 374 B.R. 469 (Bankr.D.N.H. 2007) (discussion of disposable income calculations)
- In re Rhein, 73 B.R. 285 (Bankr.E.D. Mich. 1987) (early consideration of interests vs. schedule-based payments)
- In re Weiss, 251 B.R. 453 (Bankr.E.D. Pa. 2000) (whether interest is required under 1325(a)(4) rather than 1325(b)(1))
- In re Kitchens, 702 F.2d 885 (11th Cir. 1983) (no per se bad-faith rule for 1325(a)(3))
- In re Shelton, 370 B.R. 861 (Bankr.N.D. Ga. 2007) (totality of circumstances approach to good faith)