Johnson v. Fink (In Re Johnson)
458 B.R. 745
8th Cir. BAP2011Background
- Debtors filed Chapter 13 in Dec 2009; plan confirmed Feb 2010, requiring $1,890 monthly for 60 months based on disposable income including Social Security.
- Around a year later, Mr. Johnson lost his second job, reducing income by $1,240 monthly; amended Schedules I/J showed $935.92 disposable income.
- Dec 2010: debtors filed post-confirmation amended plan lowering payments to $100 monthly; trustee objected, arguing failure to include all disposable income.
- Bankruptcy court denied confirmation, finding the modification was not in good faith and did not reflect a substantial change in circumstances.
- Debtors pursued interlocutory relief and then, following Zahn procedures, filed a second amended plan proposing $500 monthly; trustee and debtors continued to dispute the amount.
- Bankruptcy court overruled objections and confirmed the plan at $500 monthly; issue on appeal is the extent to which a confirmed plan may be modified under §1329.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Extent of modification after confirmation under §1329. | Johnson argues substantial change allows broad modification to reduce payments. | Trustee argues modification must correlate to the changed circumstances and not undermine the original plan. | Modification must correlate to the change; $100 not reflective; plan confirmed at $500 was affirmed. |
Key Cases Cited
- In re Murphy, 474 F.3d 143 (4th Cir. 2007) (modification requires substantial, unanticipated post-confirmation change)
- Educ. Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir. 1987) (substantial change in ability to pay may justify modification)
- In re Mattson, 456 B.R. 75 (Bankr. W.D. Wash. 2011) (modification must relate to changed circumstances; correlate to change)
- In re Savage, 426 B.R. 320 (Bankr. D. Minn. 2010) (good faith requirement; modification must reflect material adverse change)
- In re Hutchinson, 449 B.R. 403 (Bankr. W.D. Mo. 2011) (debtor must demonstrate substantial unanticipated change to modify plan)
- In re Thompson, 439 B.R. 140 (8th Cir. BAP 2010) (SSA excluded from current monthly income for plan calculations after confirmation)