In Re McNichols
MEMORANDUM OPINION
This matter comes before the Court for confirmation of the second amended plan filed by Mary Kay McNichols (the “Debt- or”) and on the objections to confirmation and motions to dismiss filed by Glenn Stearns, the Standing Chapter 13 Trustee assigned to this case (the “Trustee”), and Equity Insurance Managers, LLC (“Equity”). For the reasons set forth below, the Court sustains, in part, the Trustee’s objection to confirmation of the plan, but reserves ruling on his motion to dismiss. In addition, the Court sustains, in part, Equity’s objection to confirmation, but reserves ruling on its motion to dismiss. The Debtor is given fourteen days to file a third amended plan. If a plan is not filed, the case shall be dismissed. If a plan is filed, the continued confirmation hearing will be held on July 14, 2000 at 11:00 a.m. in Courtroom 2000, 505 North County Farm Road, Wheaton, Illinois.
I. JURISDICTION AND PROCEDURE
The Court has jurisdiction to entertain these .matters pursuant to
II. FACTS AND BACKGROUND
The Debtor was an employee of Equity pursuant to an employment agreement entered into by Equity and the Debtor on January 1, 1997. Equity claims that on February 4, 1998, the Debtor breached that employment agreement. The parties agreed to arbitrate their disputes, and pursuant to that arbitration, the Debtor was found to have breached the employment agreement. Equity was awarded $91,-000.00 in damages, plus costs in the amount of $986.66. On April 22, 1999, the Circuit Court of Cook County, Illinois, entered a judgment on the arbitration award in the amount of $91,000.00, plus costs, in favor of Equity and against the Debtor. On May 6, 1999, the Debtor filed a motion to reconsider, which was denied on May 18, 1999. Equity recorded a memorandum of its judgment thereby encumbering the marital home co-owned by the Debtor and her spouse. Equity’s post-judgment collection action precipitated the filing of the Debtor’s Chapter 13 petition. The Trustee and the Debtor have stipulated that the Debtor’s spouse has no personal liability for the $91,000.00 arbitration award and judgment. The Debtor’s spouse has not filed a bankruptcy petition.
The Debtor filed her Chapter 13 petition on June 7, 1999. On August 6, 1999, she filed a notice of appeal of the state court judgment. On January 7, 2000, the Debt- or filed a proof of claim on Equity’s behalf indicating that Equity was entitled
to
a secured claim in the amount of $44,500.00.
1
The Debtor then objected to the claim on the basis that it is not valid because the Debtor filed an appeal of the judgment underlying the claim. The Debtor subsequently withdrew its objection to Equity’s claim without prejudice. Equity filed an amended proof of claim asserting a se
The Debtor is a married woman, gainfully employed outside of the home, living with her working spouse and their two dependent teenaged children. The Debt- or’s second amended plan (the “Plan”) proposes to make monthly payments of $1,881.00 to the Trustee for thirty-six months or a total of $67,716.00. 2
The Debtor proposes to pay “outside” of the Plan (more accurately stated to pay “directly,” rather than through Plan payments made to the Trustee) National City Mortgage, a fully secured creditor via a first mortgage on the Debtor’s residence, Oak Brook Bank, an under secured creditor via a purchase money security interest in a 1998 Volkswagon automobile, and First Union Home Equity Bank N.A. n/k/a First Union Mortgage Corporation (“First Union”), a junior mortgage creditor, included as a secured claim in the Debtor’s petition and schedules. 3
Other pertinent parts of the Debtor’s Plan-call for disbursement of monies in the following order: (1) first, under Paragraph 2(a) to any priority claimants, including counsel for the Debtor, until paid in full (these amount to an estimated $4,469.26 in Chapter 13 Trustee’s fees at 6.6 % of Plan payments and an estimated $22,000.00 for the Debtor’s attorney’s fees); (2) second, under Paragraph 2(b) to the secured claim of Aetna Life Insurance Company, as Trustee on a 401 (k) plan loan until paid in full (Aetna’s filed proof of claim was for $22,769.06); (3) third, under Paragraph 2(c)(ii) to the general unsecured creditors pro rata to the extent of $9,000.00; (4) fourth, under Paragraph 2(c)(iii) to the unsecured creditors whose claims have a co-debtor until those claims have been paid in full (only one creditor fits this category, the Debtor’s spouse, whose filed claim was for $7,988.50); and (5) finally, under Paragraph 2(c)(iv) to Equity on its secured claim of $44,500.00.
From the above analysis, it is undisputed that the Debtor’s monthly Plan payments are insufficient to pay any money to Equity over the three year life of the Plan until the last month of the Plan term.
4
Thus, the Debtor proposes in the last month of the Plan term to make a lump sum payment to Equity pursuant to
The Debtor’s amended Schedule I shows that the Debtor earns approximately 40% of the household’s net take home pay or $5,117.13 per month, and the nondebtor spouse earns approximately 60% of the household’s net take home pay or $7,469.00
The Trustee filed an objection to confirmation of the Debtor’s Plan and a motion to dismiss the bankruptcy case pursuant to
On February 14, 2000, Equity filed an objection to confirmation and a motion to convert the Debtor’s Chapter 13 case. Equity adopts the Trustee’s objections. Equity contends that the Debtor’s Plan cannot be confirmed for some of the same reasons raised by the Trustee: (1) the Plan violates
III. DISCUSSION
A. Chapter 13 Confirmation Standards
B. The Disposable Income Requirement
The Court may not approve a Chapter 13 plan unless it satisfies the disposable income test of
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 debt- or ...; and
(B) if the debtor is engaged in business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business.
In order to satisfy this test as mandated by
Generally, debtors may not maintain their pre-petition lifestyles at the expense of their creditors.
See Jones,
This test prohibits a debtor from proposing to pay for luxury items, investments and other unnecessary items at the expense of payments to unsecured creditors. Consequently, the disposable income requirement turns on whether a debtor’s budgeted expenses are reasonably neces
Moreover, several courts have held that a plan is not confirmable as payments for recreational items are not reasonably necessary for support or maintenance.
See In re Rybicki,
To apply these standards to a married debtor who files individually, courts base their calculation of the debtor’s disposable income on the debtor’s family budget, including the income and expenses of the nondebtor spouse.
See In re Carter,
“Consideration of the nondebtor spouse’s income is seen as necessary because a portion of that spouse’s income is likely to be applied to the basic needs of the debtor, potentially increasing the share of the debtor’s own income that is not reasonably necessary for support.”
Carter,
Most courts include the debtor’s spouse’s income in the budget for purposes of calculating projected disposable income under§ 1325(b) notwithstanding that the spouse is not a debtor in the Chapter 13 case. The theory is that the nonfiling spouse’s income is available to defray the debtor’s reasonably necessary expenses, thus freeing a larger portion of the debtor’s separate income for satisfaction of unsecured claims. Creditors have argued successfully that it would be unfair to allow the debtor’s separate income to be used for the family necessities and not count a nonfiling spouse’s income that would remain “disposable” to the debtor and uncommitted to the plan.Section 1325(b)(2) is worded that disposable income means income “which is received by the debtor and which is not reasonably necessary ... for the maintenance or support of the debtor or a dependent of the debtor.” Income to a nonfiling spouse is not necessarily “received by the debtor.” However, to account for the portion of the debtor’s income which is “not reasonably necessary ... for the maintenance or support of the debtor or a dependent of the debtor,” it is appropriate to first use all of the nonfiling spouse’s income to pay expenses, thus arriving at approximately the same mathematical calculation without the fiction that the spouse’s separate income is “received by” the debtor. Either way the nonfiling spouse’s income is accounted for to the benefit of creditors in the debtor’s Chapter 13 case.
2 K. Lundin,
Chapter 13 Bankruptcy
§ 5.35 at 5-96-5-97 (2d ed.1997) (footnotes
The family is a functioning unit, of which the Debtor is an integral and important member, and the totality of the family’s income and expenses is appropriately considered in calculating both the disposable income of the Debtor for purposes of
C. The Trustee’s Objections to the Debtor’s Plan
1. The Debtor has not demonstrated that all disposable income is being committed to the Plan
The Debtor has not satisfied her burden of demonstrating that all proper disposable income for
While a nondebtor spouse can understandably be expected to pay for certain family expenses in amounts greater than the Debtor, there is no compelling logic, as the Debtor argues, to have some reasonably necessary expenses paid 50/50 while others are borne by the spouse at a much higher percentage, especially the nonessential luxury items, such as vacation home, timeshare, housekeeper, hairdresser and manicure expenses. True enough, some of those items are purportedly to be paid for by the spouse from his income, but the Debtor has the direct or indirect benefit and enjoyment of same. It is not appropriate for the Debtor to “cherry pick” the family expense budget and have luxury items paid for through allocation to the nondebtor spouse so that the net effect is to maintain a luxurious lifestyle, but only pay a small dividend to unsecured creditors, pro rata from the $9,000.00 of the total Plan payments allocated under Paragraph 2(c)(ii).
The Court notes that based on a review of the expenses, the Debtor and her family are living a rather luxurious lifestyle compared to most Chapter 13 debtors in this Court. After all, the Debtor chose to file bankruptcy and expenses that are “reasonably necessary” are not necessarily those related to the pre-petition lifestyle to which the Debtor has become accustomed.
See Cardillo,
The Court sustains the Trustee’s objection to the Debtor’s Plan on this ground. Some of the monthly expenses allocated to be paid by the spouse are excessive, to say the least, and truly unnecessary for the maintenance and support of the Debtor or her dependents. Moreover, the Debtor herself, directly or indirectly, benefits and receives some of the services for which the expenditures are made. A summary of some of those monthly expenses listed on amended Schedule J are as follows:
Recreation $641.50
Hairdresser $185.00
Manicures $ 60.00
Housekeeper $140.00
Gifts $200.00
The
The key term is “reasonable lifestyle.” Debtors need not be reduced to poverty and granted, some discretionary or recreational spending is not inappropriate, but courts are loathe to favor kindly expenditures which are for luxury goods or serve to perpetuate a luxury lifestyle. Greater scrutiny of a debtor’s proposed lifestyle and his budgetary components is required where, as here, a fairly high income Debtor is advancing a plan offering a niggling return to pre-petition creditors through a three-year plan.
Zaleski,
A review of the Debtor’s budget demonstrates that it is designed to perpetuate the family’s opulent lifestyle in the face of a parsimonious payment to the unsecured creditors. The Court will not condone such a flagrant manipulation of the disposable income requirement by shifting many of those luxury expenses to the Debtor’s spouse, especially where the Debtor directly enjoys the benefit of many of the luxury expenses.
The Court must take into account the impact that the nondebtor spouse’s income and expenditures have on the family budget in considering the Debtor’s disposable income. “The nondebtor spouse’s income is included in the
The Debtor relies on
In re Harmon,
In the
Harmon
case, the trustee objected to the debtor’s plan on the grounds that it failed to provide for all of the debtor’s net disposable income under
The Court declines to follow the rationale espoused in
Harmon.
Logically, if under
Harmon
all family expenses should be allocated 50/50 between the spouses, then many of the nonessential luxuries would likewise be half paid by the Debtor and this would clearly violate the intent and letter of
The Court opines that a more equitable and logical approach would be to have the Debtor and her spouse proportionally bear reasonable and necessary family expenses to maintain the family in the same relative ratio as their respective net incomes-in this case, 40% to the Debtor and 60% to her spouse. Further, the Court would disallow all unnecessary luxury items from the family budget in determining the Debt- or’s disposable income. It is simply inappropriate and unfair to the unsecured creditors to allow luxury items to be paid for through the expedient ploy of budgetary allocation to pay for same from the spouse’s net income when, in fact, the Debtor directly or indirectly benefits therefrom such as the hairdresser, manicures and housekeeper expenses. Therefore, the Court denies confirmation of the Debtor’s Plan because it fails to meet the spirit and letter of
2.
Paragraph 8 of the Plan does not modify the Trustee’s rights under
Next, the Trustee argues that Paragraph 8 of the Plan
8
attempts to im-
In
Casper,
the debtors’ Chapter 13 plan proposed to pay unsecured creditors over a sixty-month period at $550.00 per month with a pot of $33,000.00 for creditors.
Casper
is distinguishable in that it involved a plan proposing to pay a set per
In
Phelps,
the trustee sought to modify the debtor’s confirmed plan to increase the percentage that unsecured creditors would receive under the plan.
Next, the court addressed the question of whether “completion of payments” as used in
The Court overrules the Trustee’s objection based on this ground under the rationale of
Casper
and
Phelps.
The Trustee can seek to modify the Plan only after confirmation, but before the completion of the Debtor’s payments to the Trustee under the Plan. The Court does not read Paragraph 8 of the instant Plan as impermissibly restricting the Trustee’s rights under
3.
The Debtor will not likely complete all payments under the Plan pursuant to
Further, the Trustee objects to confirmation of the Plan on the basis that Paragraph 6
10
of the Plan attempts to al
The Plan proposes to pay to the Trustee $1,881.00 for thirty-six months. This amounts to a total sum over the life of the Plan of $67,716.00. The Trustee’s statutory fees at the time of trial were set at 6.6% of this sum or $4,469.26 pursuant to
Thus, the Plan must give Equity’s secured claim proper consideration and priority in time over First Union’s junior mortgage claim. Equity’s claim is bifurcated under
4. Unfair classification under the Plan
Next, the Trustee contends that Paragraph 2(c)(ii) and (iii)
11
of the
The statute does not provide standards for determining when a plan discriminates “unfairly.” Courts have developed a four-part test to determine if the discrimination is unfair: (1) whether the discrimination has a reasonable basis; (2) whether the debtor can carry out a plan without the discrimination; (3) whether the plan is proposed in good faith; and (4) whether the degree of discrimination is directly related to the basis or rationale for the discrimination.
In re Christophe,
The Court agrees with the Trustee’s position that a debtor’s ability to classify cosigned debts under
In addition, the Fifth Circuit Court of Appeals has held that where a debtor proposed to pay a cosigned debt in full, with twelve percent interest, prior to any distributions to the general unsecured class, such plan could not be confirmed. See In re Chacon, 202 F.3d 725, 726 (5th Cir.1999). The Chacon court noted that “[d]if-ferences in treatment are not discriminatory if they rationally further a legitimate interest of the debtor and do not disproportionately benefit the cosigner.... ” Id.
The Court finds the situation in
McKown
analogous to the matter at bar. Pursuant to the amended Schedule J, the cosigner spouse clearly has the ability to pay his share of any joint unsecured debt. That the Plan proposes to pay the co-debtor claim of the spouse in full, yet will produce a dividend of approximately 10% to the other general unsecured creditors, produces a widely disparate result. Moreover, as discussed infra, Equity’s secured claim is receiving unfair discriminatory treatment because Equity receives nothing
5. The language in Paragraphs 2(c)(iv) and 4(b) of the Plan is unclear and cryptic
Next, the Trustee argues that the language utilized in Paragraphs 2(c)(iv) and 4(b) of the Plan is unclear. 12 The Debtor retorts that the lack of clarity is the result of the Trustee’s inability to comprehend the paragraphs.
The Court sustains the Trustee’s objection regarding these paragraphs of the Debtor’s Plan. The Court .still has trouble understanding the intended meaning of these paragraphs, which are convoluted, somewhat prolix and confusing to apply. For example, it is not clear or certain which allowed secured claimants are to be paid directly by either the Debt- or or her spouse under Paragraphs 2(c)(iv) or 4(b) of the Plan. One alternative for the Debtor when drafting a coherent and easily understandable plan is to utilize the clear and concise Model Form Chapter 13 Plan. It is now available from the Court’s Web Site located on the Internet at www.ilnb.uscourts.gov. The Model Form Plan is also available in hard copy in Chambers and the Clerk’s Office.
D. Equity’s Objection to Confirmation of the Debtor’s Plan
Equity argues that the Debtor’s Plan cannot be confirmed for two reasons: (1) the Plan violates
[N]o taint automatically attaches to a Chapter 13 plan merely because it creates a differentiation in treatment among classes of unsecured elaims-just because it “diseriminate[s] against” one or more classes in the nonpejorative sense of the word “discriminate.” Instead the statutory prohibition is limited to plans that “discriminate unfairly”-and of course Congress has chosen to leave the critical word “unfairly” wholly undefined .... If a plan affording such preferential treatment is to survive scrutiny under the statutory “discriminate unfairly” test, the debtor must place something material onto the scales to show a correlative benefit to the other unsecured creditors....
McCullough v. Brown,
Equity argues that the Debtor’s Plan unfairly discriminates against it because the Plan makes an unenforceable promise to pay Equity’s secured claim out of exempt assets in the thirty-sixth month of the Plan with no provision to adequately protect Equity’s secured judgment lien against the family residence. Further, Equity contends that such discrimination is proposed with no correlative benefit to the other creditors in the case.
The Debtor’s Plan proposes to pay all other claims, secured, unsecured and priority, before paying anything on the secured claim of Equity. This includes paying First Union’s junior mortgage claim ahead of Equity’s secured claim as a result of its judgment lien, a memorandum which was apparently recorded prior to the junior mortgage. The Debtor proposes to pay Equity’s claim from her exempt 401(k) plan in month thirty-six of the Plan. The Court finds that this proposed treatment of Equity’s claim constitutes unfair discrimination for purposes of §■ 1322. The Debtor argues that her proposal to pay Equity’s secured claim in full with interest renders the discriminatory treatment of Equity’s claim fair. The Court disagrees and notes that it also ignores the disparate treatment afforded Equity’s unsecured claim along with the other general unsecured claimants vis a’ vis the separate treatment of the Debtor’s spouse’s claim to be paid under Paragraph 2(c)(iii) of the Plan. If the Debtor’s Plan were to fail, or if the Debtor decided not to proceed with her bankruptcy case by dismissing it at any time, as is her right under
In response to this argument, the Debt- or has proposed to amend the Plan to provide that if the case is dismissed on account of nonpayment of her Plan obligations, any order of dismissal would mandate the payment of post-confirmation interest on Equity’s allowed secured claim from such assets pursuant to the waiver. No rate of interest is specified and the Court is not inclined to prescribe one by judicial fiat. The Court notes that the Illinois post-judgment interest rate is 9% per annum.
See
The Court disagrees with Equity’s argument that the proposal to utilize exempt assets to pay Equity’s secured claim without providing Equity any adequate protection payments to preserve its secured position constitutes unfair discrimination against Equity. Pursuant to
The Debtor further argues that to force her to immediately pay any part of Equity’s secured claim using otherwise exempt retirement monies before the outcome of the appeal is known results in her incurring potentially unnecessary early withdrawal penalties under the Internal Revenue Code. The Debtor maintains that she is willing to incur those penalties only after the exercise of her appeal rights and claim objection proceeding prove unsuccessful. Finally, the Debtor states that this treatment of Equity’s claim is permitted under
The Court disagrees with the Debtor’s contention that
Next, Equity argues that the Debtor’s Plan is unfair when it proposes to pay one general unsecured creditor in full while paying less to her other general unsecured creditors who do not have a co-debtor. The claim of Aetna is listed on the Debt- or’s Schedule D as a claim secured by the Debtor’s assets in her 401(k) account. Equity argues that a claim is only considered to be a secured claim to the extent of the “creditor’s interest in the estate’s interest” in the property that secures the debt.
See
A general principle of bankruptcy law is that upon the filing of a case in bankruptcy all of the debtor’s property becomes property of the estate. See11 U.S.C. § 541(a)(1) , (a)(2). This includes property that a debtor intends to claim as exempt. Taylor v. Freeland & Kronz,503 U.S. 638 , 641,112 S.Ct. 1644 , 1647,118 L.Ed.2d 280 (1992). Thereafter, if the debtor properly claims property as exempt and no objections to the exemption are sustained, the property is deemed exempt and is no longer part of the estate....
Lastly, Equity maintains that the Debtor’s ability to make the required payments under the Plan is uncertain and speculative in violation of
The Debtor’s Plan requires her to withdraw from her exempt 401(k) account in the thirty-sixth month of the Plan. Equity contends that such withdrawal is governed by the terms of the trust in which the funds are held as well as the provisions of the Internal Revenue Code and ERISA. Equity argues that the Debtor will not be able to withdraw the funds from her 401(k) plan unless the trust instrument has a hardship clause allowing such early withdrawal.
The Court finds that the Debtor has not provided sufficient evidence to demonstrate that the trust instrument of her 401(k) plan allows for early withdrawal, and if it does, whether a withdrawal would be allowed under her circumstances. Further, she has not demonstrated with any certainty that those funds will be there and available at that point in time. The Debtor testified at trial that the assets are invested in blue chip and technology stocks subject to market vagaries and fluctuations (which in recent months have been wide and various depending of the stock issue). At this point, it is wholly speculative as to how much or whether these assets will exist in the Plan’s thirty-sixth month. The Debtor is unwilling to make an early withdrawal until she has exhausted her appeal rights.
In her first modification to the Plan, filed after the trial, the Debtor agreed to show after confirmation that at least $57,-000.00 of her exempt retirement funds are invested in federally insured investments which shall be so maintained until receipt of her discharge or dismissal of her case. No such proffer was made at the time of trial and there is no evidence before the Court at this stage to substantiate this belated attempted safeguard for Equity’s secured claim. This is not an acceptable functional equivalent of posting a superse-deas bond to secure Equity’s presumptively valid judgment lien.
The Court finds Equity’s treatment under the Plan unfair and unacceptable. The Plan proposes to pay First Union before paying Equity anything, which is in contravention of
E. The Motions of Equity and the Trustee to Dismiss
Both the Trustee and Equity argue that the ease should be dismissed under
(c) Except as provided in subsection (e) of this section, on request of a party in interest or the United States trustee and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 7 of this title, or may dismiss a case under this chapter, whichever is in the best interest of creditors and the estate, for cause, includ ing—
(5) denial of confirmation of a plan undersection 1325 of this title....
Lack of good faith in filing a bankruptcy case constitutes “cause” under
The Court declines to dismiss the Debtor’s case at this stage. This is a first filing for the Debtor. It is not at all uncommon for a Chapter 13 petition to be filed on the heels of adverse litigation. Rather than post a supersedeas bond with the state court while the Debtor appeals Equity’s judgment, she chose to file in this Court and seeks to reorganize her debts to all her creditors, rather than deal just with Equity alone-a much more complex and difficult process under the Bankruptcy Code. The Plan at bar is a flawed attempt to deal with all of her creditors. The Court concludes, however, that the Debtor has been forthcoming and is not attempting to abuse the system or her creditors. She should be afforded the opportunity to propose a facially confirmable plan. While this Plan does not meet the good faith requirements of
IV. CONCLUSION
For the foregoing reasons, the Court sustains, in part, the objections of the
This Opinion constitutes the Court’s findings of fact and conclusions of law in accordance with
Notes
. The amount of the proof of claim filed by the Debtor on behalf of Equity was calculated by subtracting the unpaid amount of the first mortgage on the marital home from the fair market value of the property, dividing the remaining equity in the residence by two, and then subtracting the Debtor’s Illinois homestead exemption ($285,000 — $181,000 -¡- 2— $7,500 = $44,500). See Debtor's Post-Trial Memorandum in Support of Confirmation of the Second Amended Plan, p. 4. The Court notes that Equity filed a secured claim in that amount on March 1, 2000, which is deemed allowed.
. The total amount to be paid into the Plan each month includes a $824.00 monthly payment to Aetna Life Insurance Company, as Trustee on its secured 401(k) loan claim.
. Although not completely clear, the Trustee argues, and the Debtor does not disagree, that Equity’s judgment lien was recorded on April 22, 1999, prior to First Union’s junior mortgage, which was recorded on May 10, 1999 as shown by its proof of claim, which may render First Union’s claim either under secured or possibly wholly unsecured.
. Plan Payments: $1,881.00 x 36 months = $67,716.00
Plan Disbursements:
Paragraph 2(a) $ 4,469.26
22,000.00 (estimated attorney’s fees)
Paragraph 2(b) 22,769.06
Paragraph 2(c)(ii) 9,000.00
Paragraph 2(c)(iii) + 7,988.50
$66,226.82
($67,716.00 - $66,226.82 = $1,489.18 which is less than one month's Plan payment)
. The following is the list of unsecured claims as filed and deemed allowed:
Creditor Amount
Mario J. Parisi $ 3,000.00
American Arbitration Association 2,377.50
American Express Travel Related 2,028.02
American Express Centurion Bank 7,551.82
Discover Financial Services, Inc. 9,436.99
Citibank, N.A. 7,665.99
Citibank, N.A. 6,923.12
Equity’s unsecured claim 47,486.66
Fleet Credit Card Services, L.P. + 3,799.95
TOTAL $90,270.05
($9,000.00 4- $90,270.05 = .0997 or approximately 10%)
. Paragraph 8 of the Plan provides:
8. Debtor shall have the option at any time after confirmation to prepay the monthly installments due under paragraph 1 using exempt assets or funds borrowed from friends or relatives. Upon receipt of such funds by the Office of the Chapter 13 Trustee and the making of any payment(s) required under paragraph 6, the "completion of payments” under this plan shall be deemed to have occurred for purposes of11 U.S.C. § 1329 irrespective of whether such Trustee shall have completed the making of disbursements of available funds.
.
(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 on an allowed unsecured claim, to-
il) increase or reduce the amount of payments on claims of a particular class provided for by the plan;
(2) extend or reduce the time for such payments; or
(3) alter the amount of the distribution to a creditor whose claim is provided for by the plan, to the extent necessary to take account of any payment of such claim other than under the plan.
(b)(1)Sections 1322(a) , 1322(b) and 1323(c) of this title and the requirements ofsection 1325(a) of this title apply to any modifications under subsection (a) of this section.
(2) The plan as modified becomes the plan unless, after notice and a hearing, such modification is disapproved.
(c) A plan modified under this section may not provide for payments over a period that expires after three years after the time that the first payment under the original confirmed plan was due, unless the court, for cause, approves a longer period, but the court may not approve a period that expires after five years after such time.
. Paragraph 6 of the Debtor’s Plan provides: In the event that the aggregate amount of the 36 monthly payments required to be made by the Debtor under ¶ 1 is insufficient to permit payment in full of claims specified in ¶ 2(a) and ¶ 2(c)((i), (ii)(iii) and (iv)) of this plan, Debtor agrees, as permitted by
. Paragraph 2(c)(ii) and (iii) provides:
2. From the payments so received, and except as provided in paragraph 4 below, the Trustee shall make disbursements as follows:
(c) Subsequent to completion of dividends disbursed under subparagraph 2(a) above but contemporaneous with the making of the disbursements under subparagraph 2(b) above, dividends to creditors whose timely filed claims are duly allowed shall be paid as follows:
ii. The next $9,000 in disbursements on claims shall be made prorata on allowed, timely filed general unsecured claims including such claims for which there is a co-debtor.
iii. Thereafter and as permitted by11 U.S.C., § 1322(b)(1) , remaining monies available for disbursement to creditors shall be disbursed prorata on the balance remaining to be paid on those allowed, timely filed general unsecured claims for a consumer debt of the debtor where and only if any other individual is liable on such consumer debt with the debtor, until the earlier to occur of (A) the exhaustion of paragraph 1 funds available to make disbursements to creditors; and (B) the payment in full of such claims including post-petition interest at the contract rate and any fees and charges permitted to be imposed both by the contract and enforceable under applicable non-bankruptcy law.
. Paragraph 2(c)(iv) of the Plan provides:
2. From the payments so received, and except as provided in paragraph 4 below, the Trustee shall make disbursements as follows:
(c) Subsequent to completion of dividends disbursed under subparagraph 2(a) above but contemporaneous with the making of the disbursements under subparagraph 2(b) above, dividends to creditors whose timely filed claims are duly allowed shall be paid as follows:
iv. Next, disbursements shall be made on allowed secured claims (except for the secured claim of Aetna Life Insurance Company, Trustee of the Irland and Rogers 401(k) Plan and except for such claims being paid directly by Debtor or her spouse pursuant to paragraph 4(b) below) whose holders shall retain the lien securing such claims so long as the claim remains an allowed secured claim and which such claims shall be paid in full with post-petition interest at the statutory interest rate from time to time prevailing. To the extent the funds available for disbursement from the Office of the Chapter 13 Trustee are insufficient to complete payment of this provision, the insufficiency shall be paid in accordance with paragraph 6 below.
In addition, Paragraph 4(b) of the Plan provides:
Any Holder of an allowed secured claim, the last scheduled payment of which is not due per the terms of the agreement until after the 36 month term of this Plan, shall not receive payments under this Plan from the Chapter 13 Trustee, but Debtor shall instead maintain and continue to make payments specified by the agreement directly on such claims as authorized by11 U.S.C. § 1322(b)(5) . The holder shall retain both the lien securing such claim and all rights under the terms of the agreement except that any provision which permits the holder to declare a default or to accelerate payments solely on account of the commencement of this bankruptcy case shall be of no force and effect. For the purpose of identifying those claims governed by this ¶ 4(b), claims falling within this category shall expressly exclude the claims of Equity Insurance Managers listed on Debtor’s bankruptcy Schedule D and of Aetna Life Insurance Company, Trustee of the Irland and Rogers 401(k) Plan, and shall expressly include all other claims listed on Debtor’s bankruptcy Schedule D.
.
(b) Subject to subsections (a) and (c) of this section, the plan may-
(10) include any other appropriate provision not inconsistent with this title.