In re McAllister
ORDER ON PROPOSED MODIFICATIONS OF PLANS
I. Introduction and Statement of Issues
Charles and Diane McAllister filed their joint chapter 13 case in February 2011. In April 2012, the Court confirmed their chapter 13 plan [27, 33] that does not provide for any payments to unsecured creditors. The McAllisters could have resolved their unsecured debts by filing under chapter 7, but they needed chapter 13 relief to deal with a mortgage on their residence and to pay secured and nondis-chargeable priority tax claims.
Mrs. McAllister died on March 2, 2013, about two years after the filing of their case. [49], Mr. McAllister received $250,000 in life insurance proceeds that he
In response to Mr. McAllister’s unanticipated receipt of life insurance proceeds due to the untimely death of his wife, both Mr. McAllister and the Chapter 13 Trustee have proposed postconfirmation modifications to the chapter 13 plan under
Mr. McAllister’s proposed modification, as amended, provides for an increase in monthly plan payments to accelerate the completion of payments under the plan and for a distribution of $15,000 to holders of unsecured claims from the life insurance proceeds. [59, 69]. The Trustee’s modification proposes that $ 104,023.31 of the life insurance proceeds be paid to the Chapter 13 trustee to pay all allowed unsecured claims in full and the Trustee’s statutory fee. Mr. McAllister’s attorney is holding these funds in escrow pending further order. [67].
Application of
Subsection (a) of
A modification must also comply with subsections (b) and (c) of
Neither modification raises any issues with regard to compliance with the three subsections of
The confirmation requirements applicable here are the so-called “best interest of creditors test” of § 1325(a)(4), the good faith requirement of § 1325(a)(3), and the requirement of § 1325(a)(1) that a plan comply with the provisions of chapter 13 and other applicable provisions of the Bankruptcy Code. The Trustee contends that the projected disposable income test of § 1325(b) also applies to a modification. Although the modification provision in
The parties raise several questions that underlie their positions concerning application of the confirmation requirements to the competing modifications: (1) whether the life insurance proceeds are property of the estate; (2) whether Mr. McAllister can exempt them if they are; (3) whether the proceeds are “disposable income”; and (4) whether a modification may require the
Mr. McAllister asserts that the life insurance proceeds are not property of the estate under
The Trustee contends that any property a debtor receives after confirmation is property of the estate under
Based on her position that the proceeds are non-exempt property of the estate, the Trustee opposes Mr. McAlister’s modification on the ground that it does not comply with the best interest of creditors test of § 1325(a)(4). Her alternative position is that the proceeds are in any event disposable income and that Mr. McAlister’s modification does not meet the projected disposable income test of § 1325(b).
The Trustee asserts that her modification meets these requirements and that
Mr. McAlister objects to the Trustee’s modification. His primary argument relies on the premise that the proceeds are not property of the estate or are exempt. Based on this premise, he concludes that the Trustee’s modification does not meet the requirements of
Although the case thus involves a number of issues, the Court must answer three general questions:
1. Whether Mr. McAllister’s modification meets the requirements of§ 1329 ;
2. Whether the Trustee’s modification meets the requirements of§ 1329 ; and
3. Whether, in the exercise of its discretion, the Court should approve either modification if it meets the requirements of§ 1329 . If both modifications comply with§ 1329 , the Court must determine which one to approve.
Part II summarizes the Court’s conclusions that it will approve Mr. McAllister’s modification and deny approval of the Trustee’s. Parts III and IV explain, respectively, why the Court approves Mr. McAllister’s modification and does not approve the Trustee’s.
II. Summary
For reasons set forth below, the Court approves Mr. McAllister’s modification and denies approval of the Trustee’s modification.
Mr. McAllister’s modification
Part III discusses whether Mr. McAllis-ter’s modification meets the best interest of creditors test of
With regard to the best interest of creditors test of
Even if the projected disposable income test of
The only reason for the Court to exercise its discretion to deny approval of Mr. McAllister’s modification is the Trustee’s modification, which results in payment of claims in full. Consequently, the Court concludes that it should approve Mr. McAllister’s modification, unless it can and should approve the Trustee’s modification. (Subpart 111(D)).
The Trustee’s modification
Part IV addresses Mr. McAllister’s objections to the Trustee’s modification.
The Court then considers whether a postconfirmation modification under
Alternatively, to the extent that either of the foregoing rulings is erroneous, the Court concludes that, in the exercise of its discretion, it should not approve the Trustee’s modification because Mr. McAllister needs the life insurance proceeds for the current and future support of himself and his family. (Subpart TV(C)).
Conclusion
The Court will approve Mr. McAllister’s proposed modification and deny approval of the Trustee’s modification. (Part V).
III. Mr. McAllister’s Proposed Modification
Mr. McAllister’s proposed modification commits only a portion of the life insurance proceeds to the payment of unsecured creditors. In view of the fact that the insurance proceeds are sufficient to permit the payment of all claims in full, the questions are whether the failure of Mr. McAllister modification to do so violates either the best interest of creditors test of
A. The best interest of creditors test—
In the modification context when a debt- or has received a postpetition inheritance or life insurance proceeds, courts and litigants usually ask three questions to determine whether a modification meets the best interest test.
The third question is whether the “effective date” for purposes of applying the test is the date of the modification or an earlier date, either the filing of the petition or original confirmation of the plan. If one of the earlier dates is the “effective date,” the postpetition property is likewise excluded because the debtor did not have it at the earlier time. If the modification date applies, the assumption is that the best interest test requires that the modification must provide for payment to unsecured creditors of what they would receive based on the inclusion in the estate of the value of the property the debtor acquired after confirmation.
Courts have divided on these questions,
Under the general rule of
So it does not matter whether the life insurance proceeds are nonexempt property of the estate or when the best interest of creditors calculation under
B. The projected disposable income test —
The next issue is whether the projected disposable income test of
At the time of confirmation, the projected disposable income test requires that a plan provide for a debtor to commit all of her disposable income during the “applicable commitment period” to the payment of unsecured creditors,
This statutory interpretation debate is interesting but not dispositive. It had more relevance prior to enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPC-PA”), which changed the operation of the projected disposable income test and, among other things, tied its definition to a new statutory definition of “current monthly income.”
Prior to BAPCPA, the statute defined “disposable income” simply as “income which is received by the debtor and which is not reasonably necessary to be expended” for specified purposes, including the maintenance and support of the debtor and her dependents.
After BAPCPA, however, a debtor’s receipt of a postconfirmation asset cannot possibly be “disposable income” under its statutory definition because the debtor did not receive it during the six months preceding the filing of the petition. Accordingly, Mr. McAllister’s modification does not run afoul of the projected disposable income test, and its failure to commit enough of the life insurance proceeds to pay claims in full does not violate the projected disposable income test even if it applies to his modification.
Moreover, the denial of approval of Mr. McAllister’s modification based on its failure to meet the projected disposable income test could be a Pyrrhic victory for unsecured creditors. If the Court denies approval of his modification, his original plan that pays nothing to unsecured creditors remains in place, unless the Court approves the Trustee’s modification. But how much a debtor can be required to pay under a trustee’s or unsecured creditor’s modification to increase payments is a dif
C. Good faith —
Mr. McAllister’s decision to voluntarily use some but not all of the life insurance proceeds to pay claims when nothing in the statute requires him to do so cannot show an absence of good faith. Even if it did, the absence of good faith would result in denial of the proposed modification, which would leave the original plan in place, unless the Court approves the Trustee’s modification.
The Court has no authority to rewrite Mr. McAllister’s modification to require that he commit more of the proceeds to pay unsecured claims. Surely the proposal to pay more to unsecured creditors than the confirmed plan currently requires does not demonstrate an absence of good faith. Indeed, his proposal to pay almost 15 percent of the unsecured claims instead of nothing affirmatively demonstrates the existence of good faith on his part.
The existence of the Trustee’s proposed modification that pays unsecured claims in full is immaterial to Mr. McAllister’s good faith with regard to his modification. Whether the Court can or should approve the Trustee’s modification raises different questions, which the Court discusses below. If the Court cannot or should not approve the Trustee’s’ modification, Mr. McAllister’s proposed modification is clearly more advantageous to creditors than refusing to approve his modification.
D. Exercise of Discretion
Mr. McAllister’s modification meets all other requirements that
IV. The Trustee’s Modification
The Trustee’s modification provides for the use of $ 104,023.31 of the life insurance proceeds to pay unsecured claims in full. Mr. McAllister objects to the modification on the ground that a modified plan cannot compel the use of a postconfirmation asset to pay claims if the asset is not property of the estate or is exempt. The statutory basis of his objection is
The premise of Mr. McAllister’s objection is that the life insurance proceeds are not property of the estate under
Mr. McAllister also contends that, even if it is permissible for the Trustee’s modification to require the use of the life insurance proceeds to pay unsecured debts, the Court should in the exercise of its discretion deny approval of the Trustee’s modification, primarily because he needs all of the proceeds for his current and future support. Subpart C discusses this issue.
A. The life insurance proceeds as property of the estate
The property of the estate issue involves a conflict between
Because
Two bankruptcy judges in Georgia have carefully analyzed this issue and concluded that property of the estate under
The Court agrees with the interpretative analyses and conclusions in Key and Walsh that the specific date restriction set forth in
Given the foregoing determination, the Court need not determine whether Mr. McAllister is a dependent for purposes of his ability to exempt the proceeds under
B. Whether a modification may require use of non-estate property
The Trustee asserts that, even if the life insurance proceeds are not property of the estate, a modification can require Mr. McAllister to use them to pay creditors. Section (1) of this subpart first examines the legal principles that authorize such a modification. Section (2) then considers whether those principles are consistent with the Eleventh Circuit’s ruling in Gamble v. Brown (In re Gamble),
1. Whether a modification under § 1S29 may require the use of non-estate or exempt property to pay creditors
The Trustee contends that proceeds that a debtor receives from the postconfirmation receipt of property may constitute “disposable income” that a modification under
But this does not end the inquiry, because whether the proceeds are disposable income is not the proper question. The issue, rather, is whether the modification statute,
The following Subsection (a) explains why those amendments establish a debt- or’s ability to pay as the basis on which a trustee or unsecured creditor may seek an increase in payments through a postconfir-mation modification and as the standard that sets the limit on what a modification may require the debtor to pay. Subsection (b) then examines the statutory basis for the conclusion that a modification may require a debtor to use proceeds from property acquired after confirmation even if it is not property of the estate or is exempt. In Section (2), however, the Court concludes that such analysis conflicts with applicable case law in the Eleventh Circuit.
a. Debtor’s ability to pay as the basis for an increase in payments through post-confirmation modification
As originally enacted by the Bankruptcy Reform Act of 1978, chapter 13 was fully voluntary. Only the debtor could seek relief under chapter 13,
Because only the debtor could propose a postconfirmation modification,
Further, the original chapter 13 did not contain a projected disposable income test. The only statutory requirement for confirmation that originally governed the amount that unsecured creditors must receive under a chapter 13 plan was the best interest test of
The Bankruptcy Amendments and Federal Judgeship Act of 1984 (“BAFJA”) made two important changes to chapter 13. First, BAFJA enacted the original projected disposable income test in
Although BAFJA changed the modification statute to permit trustees and unsecured creditors to propose a modification, it did not change the requirements in
The two confirmation tests in
In addition to permitting trustees and unsecured creditors to request a postcon-firmation modification of a chapter 13 plan, the BAFJA amendments made two other significant changes with regard to individual cases. One was the addition of the original projected disposable income test in
Courts have recognized that all of these changes evidence a Congressional purpose that the bankruptcy laws require a debtor to pay creditors in accordance with her ability to do so.
Thus, BAFJA established a debtor’s ability to pay as a standard for confirmation through enactment of the projected disposable income test and, by permitting trustees and unsecured creditors to modify the plan, carried that standard forward through the case.
The Bankruptcy Abuse Prevention and Consumer Practice Act of 2005 (“BAPC-
It is clear that the purpose behind these BAPCPA changes was to strengthen enforcement of the ability to pay policy through more objective standards for determining ability to pay. BAPCPA thus did not alter the ability to pay standard that
So
The next question is whether the right to modify based on the ability to pay is restricted when the source of funding is property that is not property of the estate or is exempt. The next subsection considers this issue.
b. Whether a trustee’s or unsecured creditor’s modification under
Mr. McAllister contends, however, that a modification may not require a debtor to use proceeds derived from the receipt of a postconfirmation asset if it is not property of the estate or exempt.
Prior to the enactment of BAPCPA in 2005, most courts ruled that a debtor’s receipt of money from exempt property could nevertheless be “disposable income” for purposes of the projected disposable
As the Court explained earlier,
In the modification context, the applicable statute is
The BAPCPA amendments to the projected disposable income test do not affect this analysis of
The same principle applies when the property is not property of the estate. Whether property that a debtor acquires postconfirmation
c. Summary
In summary, the projected disposable income test of
The Court thus turns to the question of whether this principle conflicts with applicable rulings of the Eleventh Circuit.
2. Whether Eleventh Circuit authority permits a modification to require the use of proceeds from non-estate or exempt property
The premise of the analysis in Subsection IV(B)(l)(b) is the principle of the pre-BAPCPA cases that a debtor may be required to use proceeds from excluded property to pay unsecured claims. The Court must determine whether that principle is viable in view of the Eleventh Circuit’s ruling in Gamble v. Brown (In re Gamble),
In Gamble, the chapter 13 debtors sold exempt property and sought to retain the proceeds. The lower courts ruled that
The Eleventh Circuit reversed. The court observed that
Gamble dealt with exempt property rather than property that, as in this ease, is not property of the estate. The Court sees no principled basis for distinguishing the case based on this difference. As Subsection IV(B)(l)(b) explains,
Lower courts in the Eleventh Circuit disagree as to whether Gamble precludes consideration of proceeds from excluded property in determining disposable income. Consistent with the pre-BAPCPA cases on the issue cited earlier,
The Eleventh Circuit addressed the effect of Gamble on the disposable income issue in an unpublished opinion
Some six months after the filing of her chapter 13 case and five months after confirmation of her plan, the debtor filed an amendment to her schedules to disclose her personal injury claim and to claim an exemption in it. No one objected to the exemption. When she later filed a motion to approve a settlement of the claim and disbursement of the proceeds to her, the trustee objected to disbursement of the proceeds to the debtor on the ground that the settlement proceeds were disposable income (under the pre-BAPCPA statute) that should be paid to creditors under the plan.
Applying Gamble, the lower courts concluded that, in the absence of an objection to the debtor’s claim of an exemption, exempt property could not be disposable income and ruled that the debtor was entitled to receive all of the proceeds. The Eleventh Circuit affirmed.
In Walden, the trustee squarely presented the legal principles that the Court discusses in Subsection IV(B)(l)(b) to support the position that exempt property may nevertheless be “disposable income,” relying on cases such as those this Court cited above.
The Walden court thus ruled that proceeds from exempt property could not be “disposable income” and reiterated the Gamble conclusion that a debtor may use such proceeds as her own.
In reaching this result, the Walden court noted — as did the Gamble court— that no one had objected to the debtor’s claim of an exemption in the personal injury claim in the first instance.
But the mere filing of such an objection does not properly control the outcome.
Walden holds, then, that proceeds from exempt property cannot be disposable income that a debtor must commit to a plan. This holding directly contradicts the rulings of the pre-BAPCPA cases discussed earlier that exempt property could nevertheless be “disposable income” — the argument that the trustee unsuccessfully advanced in Walden.
The Walden court thus rejected the principle advanced earlier that another provision of the Bankruptcy Code (the projected disposable income statute in the pre-BAPCPA cases and, here, the modification statute) may trump the exemption provisions and require commitment of exempt property to pay creditors. Under Walden, the exclusion of property from the estate does matter, and a modification may not require a debtor to use excluded property to pay unsecured creditors.
So under Gamble, and particularly as amplified by Walden, the trustee’s modification does not comply with the mandatory requirements of
C. Alternative Disposition of Trustee’s Modification
The previous Subpart B concludes that the Trustee’s modification does not comply with
Thus, the question is, assuming alternatively either that the proceeds are nonexempt property of the estate or that a postconfirmation modification under
As discussed above, courts have concluded that Congress intended to establish a debtor’s ability to pay as a standard for original confirmation and to carry that standard forward through the term of the plan. Although ability to pay is impor
Mr. McAllister is 57 years old with a tenth grade education. He worked as a welder and fabricator for approximately 22 years and as a truck driver for the next 19 years. His most recent take-home pay as a trucker was approximately $ 800 to $ 900 per month, but he is not now able to work because of arthritis in his knees, hands, and back, for which he must receive medical treatment. In this regard, the Court notes that Mr. McAllister experienced difficulty in taking the witness stand. Moreover, because of various difficulties that his children have experienced, Mr. McAllister has assumed significant responsibility for the day-to-day care of several grandchildren.
Mr. and Mrs. McAllister bought life insurance policies about 14 years ago so that, when the first of them died, the other would have something for retirement. They had no other retirement resources such as a § 401(k) program or Individual Retirement Account. Their only substantial asset was their home, the mortgage on which is being paid under the plan and which had no equity at the time of the filing of this case.
When Mrs. McAllister died, Mr. McAl-lister received $ 250,000 from her life insurance policy. The accounting for the use of the proceeds is not exact. Mr. McAllister’s attorney now holds $104,023.31 in escrow for the payment of creditors under the Trustee’s modification if the Court approves it, and at the time of the hearing Mr. McAllister held approximately $30,000 in remaining proceeds.
Specific expenditures include $ 30,000 for his wife’s funeral, $ 10,000 for family burial plots next to his wife’s, $ 10,000 in loans to his children, and $ 8,000 for a used pick-up truck, which he needs to transport his grandchildren. Mr. McAllister spent the remaining $ 57,000 of proceeds to make his chapter 13 plan payments of $ 960 per month, for living expenses, including expenditures for the support of his grandchildren, and for other items for his children and grandchildren. Although some of his uses of funds may be questioned (for example, the purchase of a four-wheeler and furniture for a grandchild), it does not appear that, in general, he spent the proceeds to obtain anything near a lavish lifestyle.
Mr. and Mrs. McAllister filed this case under chapter 13 primarily to keep their residence in which they had lived since 1990. Had Mrs. McAllister not died unexpectedly and had Mr. McAllister’s physical condition not deteriorated, they would have come out of their case with their residence, Mr. McAllister would continue to work, and the life insurance policies on their lives would provide a source of funds for the survivor’s support in later years. Creditors in this case could not have had a different expectation.
Things did not work out that way. Mr. McAllister became unable to work shortly before his wife’s death, and she died unexpectedly. Given Mr. McAllister’s age,
A primary factor for the Court to consider in exercising its discretion to approve or disapprove a modification is the debtor’s ability to pay. It is true, of course, that a substantial amount of money is available to pay creditors in full. But doing so would severely impair an aging, disabled debtor with little prospects for significant future income or any way to replace an asset that he and his wife counted on to sustain them in future years.
Application of the ability to pay standard requires a realistic assessment of the debtor’s financial situation and must include consideration of the debtor’s future needs. The need to consider a debtor’s future needs arises from the “fresh start” policy of chapter 13 that is one of the fundamental concepts that properly guides a court’s discretion.
Application of the ability to pay standard in this manner is not unfair to creditors. They could not have expected the untimely death of Mrs. McAllister. They did not extend credit on the basis of her life insurance policy, and they are receiving no less than what the original plan promised or what they would receive if this were a chapter 7 case.
In this regard, it is noteworthy that the McAllisters could easily have obtained chapter 7 relief, but at the cost of losing their residence of over 20 years. Their decision to proceed under chapter 13 instead of chapter 7 affected, in reality, only one other creditor: the lender holding a security deed on the home. That lender will receive at least the value of its claim, i. e., the value of its collateral,
Mr. McAllister’s retention of his home is an important benefit that he received from proceeding under chapter 13 rather than chapter 7. But that benefit does not justify depriving him and his family of the expected benefit of life insurance proceeds upon the death of his wife because it occurred far earlier than anyone expected.
This is not a “windfall” case. A windfall occurs when a debtor receives an unanticipated, fortuitous, and significant benefit without earning it or planning it. Examples of windfalls include a debtor’s winning the lottery or receiving a substantial inheritance or life insurance proceeds upon the death of someone other than a spouse.
The situation here differs dramatically in nature and degree from such “windfall” circumstances. A debtor in her 40’s with stable employment receiving significant proceeds upon the death of a parent is in a far different situation than Mr. McAllister because she has continuing income for her support and the opportunity in future years to save for her retirement years. Mr. McAllister, in contrast, has neither. And surely Mr. McAlister would prefer to have his wife instead of the insurance mon
To the contrary, full payment of the creditors in this case would be a windfall to them. Again, they could not have anticipated this situation and clearly did not rely on it in extending credit or in evaluating their treatment under the original plan. Of course, creditors expected to be paid and did not anticipate that the McAl-listers would end up in bankruptcy. Nevertheless, a debtor’s bankruptcy is always a possibility; once it happens, consideration of fairness to creditors takes place in the context of bankruptcy principles. No concept of fairness to creditors in a bankruptcy case requires that they receive the benefit of Mrs. McAllister’s death due to the fortuitous circumstance that it occurred before the debtors completed their payments under the plan rather than after.
Finally, the Court notes that Mr. McAl-lister has proposed to commit a significant amount of the proceeds to his unsecured creditors that will permit them to receive almost 15 percent of their claims. This is much more than the creditors would have received in a chapter 7 case and, as such, is a fair result for them.
In the totality of the circumstances of this case, the Court concludes in the exercise of its discretion that it is not appropriate to approve the Trustee’s modification.
V. Conclusion
For reasons set forth above, the Court concludes that Mr. McAllister’s modification meets the requirements of
It is, therefore, hereby ORDERED and ADJUDGED that Mr. McAllister’s modification [Doc. 59, 69] be, and it hereby is, APPROVED and that the Trustee’s modification [Doc. 69] be, and it hereby is, DISAPPROVED.
IT IS ORDERED.
Notes
. Mr. McAllister’s modification appears to contemplate the early pay-off of his plan. The projected disposable income test of
. Gamble v. Brown (In re Gamble),
Thomas v. Walden was an appeal from the Northern District of Georgia. A copy of the Eleventh Circuit’s opinion in Walden is in this Court's record at Docket No. 47 in the case of Betty C. Walden, Case No. 99-12191. The Court has directed that copies of selected documents from Ms. Walden’s case be filed in this case [Docket No. 72], including the Eleventh Circuit’s unpublished opinion at page 42.
. See W. Homer Drake, Jr., et al., Chapter 13 Practice and Procedure § 11B:9 (2013-2 ed.).
. See Mullican v. Moser (In re Mullican),
.
.
. As later text at pages 20-24 discusses, Chapter 13 as originally enacted did not contain a projected disposable income test, and the modification statute,
. See generally W. Homer Drake, Jr., et al., Chapter 13 Practice and Procedure § 11B:12 (2013-2 ed.).
. E.g., In re Mattson,
. E.g., In re Cormier,
. Former
(2) For purposes of this subsection, "disposable income" means income which is received by the debtor and which is not reasonably necessary to be expended—
(a) for the maintenance or support of the debtor or a dependent of the debtor, including charitable contributions (that meet the definition of "charitable contribution” under section 548(d)(3) to a qualified religious or charitable entity or organization (as that therm is defined in section 548(d)(4)) in an amount not to exceed 15 percent of the gross income of the debtor for the year in which the contributions are made; and
(b) if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business.
. Some courts have applied the projected disposable income test to a modification by interpreting the statute to permit determination of projected disposable income by reference to the debtor’s income at the time of the modification. E.g., In re Ducret,
.
. Accord, e.g., In re Schlottman,
. E.g., Carroll v. Logan (In re Carroll),
. The Court finds as a fact that Mr. McAllis-ter was not an actual dependent of his wife at the time of her death because she had no
.
.
.
. E.g., In re Tschiderer,
. W. Homer Drake, Jr., et al., Chapter 13 Practice and Procedure § 9B:30 (2013-2 ed.).
. Id.
. Id. at§ 9B:31.
.
. E.g., Barbosa v. Solomon,
. See Oversight Hearings on Personal Bankruptcy Before the Subcommittee on Monopolies and Commercial Law of the House Committee on the Judiciary, 97th Cong., 1st and 2d Sess. 215, 221 (1981-82); Lawrence P. King, 5 Collier on Bankruptcy ¶ 1329.01 [b] at 1329-5 (15th ed. 1996).
.See W. Homer Drake, Jr., et al., Chapter 13 Practice and Procedure § 11B:14 (2013-2 ed.). See also Lawrence P. King, 5 Collier on Bankruptcy ¶ 1329.01[b] at 1329-5 (15th ed. 1996).
. BAPCPA added an additional reason for modification and changed provisions relating to the term of the plan to “applicable commitment period.”
. E.g., In re Sunahara,
.E.g., Stuart v. Koch (In re Koch),
Under BAPCPA, courts have ruled that social security benefits are exempt under federal law and are not included in the projected disposable income analysis. E.g., Mort Ranta v. Gorman,
. E.g., Freeman v. Schulman (In re Freeman),
. Text supra at page 423-24.
. It is important to distinguish between an asset that is exempt or is not property of the estate that exists at the time of original confirmation from an excluded asset that a debtor acquires after confirmation. The existence of the preconfirmation asset is taken into account through application of the best interest of creditors test. If property as of the petition date is not property of the estate or is exempt, the receipt of proceeds from the asset, even if realized after confirmation, provides no proper basis for modification of the plan.
. The only difference is that, in some situations, property that is not property of the estate may be subject to some types of nondis-chargeable debts that cannot be enforced against exempt property.
If property is not property of the estate, it is not subject to administration in the bankruptcy case itself, just like exempt property. Some debts that are not enforceable against exempt property, however, are enforceable against non-estate property.
Exempt property is immune from all pre-petition debts except nondischargeable taxes, domestic support obligations, debts secured by liens that are not avoidable, certain debts owed by an "institution-affiliated party” of an insured depository institution to a federal depository institutions regulatory agency acting in its capacity as conservator, receiver, or liquidating agent for such institution, and debts in connection with fraud with regard to certain student loans. II U.S.C.
No such immunity exists with regard to non-estate property, but the discharge injunction of § 524(c) protects it from debts that are discharged. Section 524(a)(2) provides that a debtor’s discharge "operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any [discharged, prepetition] debt as a personal liability of the debtor.” Unlike exempt property, therefore, non-estate property remains subject to any debts that are not discharged.
Nevertheless, the general rule is that non-estate property is not subject to prepetition debts. Accordingly, whether property is excluded from the estate because it is not property of the estate or is exempt, the effect on the debtor and creditors in almost all situations is the same: it is the debtor's to keep, free from liability for prepetition debts.
. The court quoted Hall v. Finance One of Georgia, Inc. (In re Hall),
. Text supra at pages 424-27.
. Accord, In re Peebles,
. See supra notes 30-31.
. In re Myles,
The district court for the Middle District of Florida later ruled in another case that social security benefits are not part of a disposable income or good faith analysis. In re Vandenbosch, 459 B.R. 140 (M.D.Fla.2011).
. In re Peebles,
. In re Springer,
. As an unpublished opinion, the ruling is not binding precedent. Eleventh Circuit Rule 36-2 ("Unpublished opinions are not considered binding precedent, but they may be cited as persuasive authority.”). In the absence of any Eleventh Circuit authority on the issue, the Court concludes that it is appropriate to rely on the unpublished opinion. See In re Malone,
. The Eleventh Circuit’s opinion is unpublished and is not generally accessible. Walden was an appeal in a bankruptcy case in the Northern District of Georgia. Because the proceedings material to the opinion occurred prior to this Court's full use of the electronic case filing system, however the portions of this Court’s record material to the issues, likewise, are not generally available because they have been archived. The Court has retrieved the paper file from the archives and has directed the Clerk to docket in this case selected portions, including the chapter 13 plan, various pleadings, and the rulings of the bankruptcy court, the district court, and the Eleventh Circuit. [Docket No. 72], A copy of the Eleventh Circuit’s unpublished opinion also appears in this Court's electronic case filing system in the case itself. In re Betty C. Walden, No. 99-12191, Docket No. 47.
. Brief of Appellant in Thomas v. Walden (In re Walden), Eleventh Circuit Docket No. 02-10613-EE (Mar. 15, 2002) (hereinafter "Wal
. Walden Brief of Appellant,
. Walden Brief of Appellant,
[I]ncome for purposes ofsection 1325(b) includes income that would be otherwise exempt from attachment under state law.Section 1325(b) is not limited to "non-exempt disposable income” but applies to all income from whatever source which is made available to the debtor if that income is not needed for the maintenance and support of a debtor or dependent of the debtor.
Id. at *2.
. Thomas v. Walden (In re Walden), No. 02-6013, slip op. at 5 (11th Cir. June 13, 2002) ("[T]he Trustee concedes that she did not timely object to the exemption of the settlement proceeds.”). The District Court in Walden also noted that Gamble "may not apply in situations where an objection to a claimed exemption has been timely filed.” Thomas v. Walden (In re Walden), Civil Action No. 3:01-CV-52-JTC (Jan. 23, 2003). A copy of the District Court opinion is in the record of this case, Docket No. 72 at 34.
. See In re Springer,
. Under
. In re Forte,
. Id. at 869.
. See In re Forte,