In Re Heyward
- Reporters:
- , ,
- Before:
- Davis
MEMORANDUM AND ORDER
LAMAR W. DAVIS, JR., Bankruptcy Judge.FINDINGS OF FACT
Debtor filed Chapter 13 on January 31, 2006. Prior to confirmation, Debtor reported that he would have monthly income of $0 which is below the $45,775.00 applicable median family income in Georgia.
Chapter IS Statement of Current Monthly
On March 21, 2006, this Court confirmed Debtor’s plan of payments of $232 per month for 60 months. Trustee’s Report of Confirmation, Dckt. No. 32 (October 19, 2006). The payments were then raised to $288 per month starting in October 2007. Consent Order, Dckt.No. 40 (October 9, 2007). The plan proposed to pay a dividend to unsecured creditors of 1% or $300. Chapter IS Plan, Dckt. No. 2 (January 31, 2006).
On November 9, 2007, Debtor filed a Motion to Incur Debt for a Reverse Mortgage in order to “use the proceeds to pay off both mortgages and his Chapter 13 in full.” Motion to Incur Debt for Reverse Mortgage, Dckt.No. 43 (November 9, 2007). After notice and a hearing, this Court entered an order granting the motion to incur a reverse mortgage but reserved the ruling on using the proceeds to pay off the mortgages and reduce/pay off the Chapter 13 plan for a future order. Order Granting Motion to Incur Debt, Dckt. No. 56 (December 18, 2007). As of February 19, 2007, Debtor has been pending for 23 months, has paid $3,304.00, and still owes a balance of $12,572.00 on payments projected at the time of confirmation.
The issue raised by the parties is the interpretation of
CONCLUSIONS OF LAW
To alter the terms of his plan by early pay-off, Debtor would have to modify his current plan under
(a) At any time after confirmation of the plan but before the completion of payments under such plan, the plan may be modified, upon request of the debtor, the trustee, or the holder of an allowed unsecured claim, to . . .
(2) extend or reduce the time for such payments . . .
(b)(1) Section 1322(a), 1322(b), and 1323© of this title and the requirements ofsection 1325(a) of this title apply to any modification under subsection (a) of this title.
11. U.S.C.
(b)(1) If the trustee of the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan . . .
(B) the plan provides that all of the debtor’s projected disposable income to be received in the applicable commitment period beginning on the date that the first payment is due under the plan will be applied to make payments to unsecured creditors under the plan.
11 U.S.C. § 1325(b)(l)(B) (emphasis added)
Under the plain meaning of this clause, modified plans, which must be judged by
Bankruptcy courts have disagreed on the proper interpretation of
The minority view argues that the “applicable commitment period” phrase relates to the projection and calculation of a fixed sum, which is based on a debtor’s disposable income multiplied by the length of the “applicable commitment period” for that debtor. Thus, under this view, this sum may be paid in less than 36 months for below-median income debtors or in less than 60 months for above-median income debtors without violating
I agree with the majority view for the following four reasons. First, the express language of the statute clearly indicates that Debtor must perform his plan for a minimum of three years. 1 “The starting point in any case involving the meaning of a statute [ ] is the language of the statute itself.” Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 210, 99 S.Ct. 1067, 1073, 59 L.Ed.2d 261 (1979). “In construing a federal statute it is appropriate to assume that the ordinary meaning of the language that Congress employed ‘accurately expresses its legislative purpose.’ ” Mills Music. Inc. v. Snyder, 469 U.S. 153, 164, 105 S.Ct. 638, 645, 83 L.Ed.2d 556 (1985)(quoting Park ‘N Fly Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 83 L.Ed.2d 582 (1985)). “[F]or where, as here, the statute’s language is plain, ‘the sole function of the courts is to enforce it according to its terms.’ ” United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (}989)(quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)).
“[T]he strongest argument supporting the majority view is the unambiguous text . . . that provides a plan may be shorter than the applicable commitment period only if unsecured creditors are paid in full.”
In re Luton,
363 B.R. at 101. “Why would Congress include this provisions if all that was required of a chapter 13 debt- or was to pay a set amount of money under the plan? Under the monetary view,
The term “applicable commitment period” “uses a word with temporal meaning: ‘period’ means a ‘chronological division,’ ” “length of time, “portion of time,” or a “length of existence.” In re Schanuth, 342 B.R. at 607; In re Slusher, 359 B.R. at 301; In re Davis, 348 B.R. at 456; see also In re Grant, 364 B.R. at 663. “Similarly, the word ‘commitment’ is defined in Webster’s as ‘the act of doing or performing something’ and is also defined as ‘the obligation or pledge to carry out some action.’ The terms ‘commitment’ and ‘period’ are therefore terms that by their ordinary, everyday meanings contemplate or suggest action by the debtor over a period of time.” In re Davis, 348 B.R. at 456 (internal citations omitted).
Subsection (b)(4) “speaks only in terms of specific time increments i.e., three
Second, “[i]f Congress wanted the applicable commitment period to function as a multiplier, it could have stated so in the statute.”
In re Alexander,
344 B.R. at 751;
see also In re Nance,
371 B.R. at 370;
In re Davis,
348 B.R. at 456-57. In other provisions of the Bankruptcy Code, including other parts of
From these sections, this court can only conclude that, at least in this area, Congress says what it means and means what it says-if it wants to use a multiplicand, it will say so, usually with the words “multiplied by”; conversely, if Congress uses the word “period,” it means just that-a temporal division. Indeed, “the use of a particular phrase in one statute but not in another ‘merely highlights the fact that Congress knew how to include such a limitation when it wanted to.’ ”
In re Slusher, 359 B.R. at 302(citing In re Donald, 343 B.R. 524, 537 (Bankr.E.D.N.C.2006)(guoting In re Coleman, 426 F.3d 719, 725 (4th Cir. 2005)); In re Meyer, 355 B.R. 837, 2006 WL 3505379, at *8 (Bankr.D.N.M.2006)).
Third, “treating the term ‘applicable commitment period’ as a multiplicand would negate much of
Section 1329 provides a process for any interested party to seek modification of the chapter 13 plan after confirmation but “before the completion of payments” under the plan.11 U.S.C. § 1329(a) . This section is bolstered by other financial reporting requirements added in BAPCPA, such as Section 521(f)’s requirement that the debtor submit annual tax returns on request to any interested party, allowing those parties to determine if the debtor’s financial circumstances have changed sufficiently to justify seeking modification. But if the debtor manages to produce a lump-sum payoff to the trustee before the trustee or another interested party seeks modification, all interested parties could be barred at the time from modifying the plan. Once his plan is confirmed, a debtor could simply pay off the remaining monetary balance though a refinancing of a homestead interest or some other exempt source, obviating the need for further financial review and preventing interested parties from seeking modification based on the changed circumstances . . . “ ‘This result would be ofparticular benefit to wealthy debtors who might have exempt reserves, such as IRAs, from which to fund immediate completion of a chapter 13 plan upon confirmation with no regard to future increases in income.’ ”
In re Slusher, 359 B.R. at 304-05; see also In re Davis, 348 B.R. at 457-58.
Fourth, the minority view “represents a gross departure from pre-BAPCPA practice that is not justified by the language or structure of the statute.”
In re Schanuth,
342 B.R. at 607. Prior to BAPCPA,
“Before BACPA, although a few courts held that debtors who received a windfall could pay off the amounts owing under their plan before the three-year period ended without paying unsecured creditors the full amount of their claims,
2
most courts construed the
Under the prior version of§ 1325(b)(1) , a debtor generally could not exit bankruptcy prior to the expiration of 36 months.11 U.S.C. § 1325(b)(l)(B)(2004) . The revisions to this section appear to have merely substituted an “applicable commitment period” for the previously required three-year “best efforts” period. This is evidenced in the express language of§ 1325(b)(4)(B) , which clearly states that a debtor may propose a plan that is less than three or five years, whichever is applicable, only if unsecured creditors are paid in full. Like the “best efforts” requirement under prior law,§ 1325(b)(4)(B) imposes a minimum plan duration, unless full repayment is made to unsecured creditors in a shorter time. Obviously, BAPCPA has precipitated many changes in Chapter 13 practice. However, this Court does not believe that the elimination of a minimum plan length in cases where a debtor is not proposing to pay 100% to their unsecured creditors is one of those changes.
Therefore, I find that
ORDER
Pursuant to the foregoing Findings of Fact and Conclusions of Law, IT IS THE ORDER OF THIS COURT that the Debt- or is required to continue to make payments for thirty-six (36) months, unless he pays his creditors 100% of their allowed claims over a shorter period of time.
IT IS FURTHER ORDERED that the Debtor’s Motion to pay off the case early is denied. Debtor IS ORDERED to report on the status of his reverse mortgage transaction and an accounting of funds received and disbursed by March 21, 2008.
Notes
. The legislative history of
Chapter 13 Plans to Have a Five-Year Duration in Certain Cases. Paragraph (1) of § 318 of the Act amends Bankruptcy Code §§ 1322(d) and 1325(b) to specify that a chapter 13 plan may not provide for payments over a period that is not less than five years if the current monthly income of the debtor and the debtor’s spouse combined exceed certain monetary thresholds .... The applicable commitment period may be less if the plan provides for payment in full of all allowed unsecured claims over a shorter period.
In re Slusher, 359 B.R. at 303 (quoting H.R. REP. NO. 109-31, pt. 1, 1st Sess. 79 (2005), U.S.Code Cong. & Admin. News 2005, pp. 88, 146); see also In re Cushman, 350 B.R. at 213; In re Davis, 348 B.R. at 457.
“The title of this section of the House Report indicates that the amendments to
. See e.g., Matter of Casper, 154 B.R. 243, 246 (N.D.Ill.1993); In re Richardson, 283 B.R. 783, 801-02 (Bankr.D.Kan.2002)(“If after obtaining confirmation of a plan, a debtor receives a windfall and proposes to pay the total projected disposable income before the end of the plan term, the trustee should accept the money, distribute it according to the plan, and grant the debtor a discharge.”); In re Smith, 237 B.R. 621, 626 (Bankr.E.D.Tex.1999).