This mаtter is before the court on appellants/debtors’ appeal of an order of the bankruptcy court, 1 entered February 11, 1991, which denied confirmation of the debtors’ proposed Chapter 13 plan. Appel-lees Iowa Department of Revenue and Finance (IDRF) and United States of Americа, Internal Revenue Service (IRS) resist appellants’ appeal and urge the court to affirm the bankruptcy court’s decision. Both sides have filed briefs outlining their arguments.
The facts of this matter are undisputed. On September 19, 1990, debtors filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code, along with the rеquired statements, schedules, and a proposed Chapter 13 plan. On Schedule A-l (“Creditors Having Priority”), debtors listed debts of $5,956.84 to the IRS and $4,313.48 to the IDRF. These creditors have priority pursuant to 11 U.S.C. § 507(a)(7). The IRS subsequently filed a proof of claim in the amount of $6,490.50. The IDRF subsequently filed a proof of claim in the amount of $5,977.41. Debtors filed no оbjections to those proofs of claim. On September 28, 1990, the clerk of the bankruptcy court sent a scheduling order to all creditors. That order provided in part:
A hearing on confirmation of the plan will be held if written objections to confirmation of the plan are filed, in writing, with the clerk of this court and servеd upon the trustee and the debtor’s [sic]attorney on or before November 26, 1990.
Order for meeting of creditors, dated September 28, 1990. The trustee objected to the plan. The trustee’s objection was later withdrawn. No other creditor filed a written objection to the debtors’ proposed plan. A hearing was held on confirmation of the plan on February 8, 1991. Appearing were counsel for debtors and the Chapter 13 trustee. At that hearing, the bankruptcy court expressed its view that the plan was inadеquate in that it did not pay the priority claims in full, and the bankruptcy court discussed that issue with the trustee and counsel for the debtors.
The order appealed from denied confirmation of the plan on the basis that it did not pay the priority claims in full. The bankruptcy court allowed debtors an opportunity to file аn amended plan or to object to the proofs of claim filed by the IRS and the IDRF.
Title 11, United States Code § 1322(a)(2), provides that a Chapter 13 plan shall “provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507 of this title, unless the holder of a particular claim agrees to a different treatment of such claim.” 11 U.S.C. § 1322(a)(2). Debtors argue that a priority creditor must make a timely objection to a debtor’s proposed Chapter 13 plan, and if no objection is made, the creditor should be deemed to have agreed to different treatment. Title 11 U.S.C. § 1325 sets forth the six requirements for confirmation of the plan. “Except as provided in subsection (b), the court shall confirm a plan if ... the plan complies with the provisions of this chapter and with the other applicable provisions of this title.” 11 U.S.C. § 1325(a)(1).
As pointed out by the IRS, a bankruptcy court has an independent duty to review proposеd Chapter 13 plans for compliance with Title 11.
See Matter of Chaffin,
Resolution of this matter turns on the interpretation of the word “agrees” in 11 U.S.C. § 1322(a)(2). Does the failure to file a written objection constitute agreement or is an affirmative act of acceptance of the plan required?
Appellеe IDRF cites to several cases in support of its contention that an express agreement is required.
2
In
In re Ferguson,
The court must consider the structure of the bankruptcy code itself. Title 11, U.S.C. § 1324 provides that “[a]fter notice, the court shall hold a hеaring on confirmation of the plan. A party in interest may object to confirmation of the plan.” 11 U.S.C. § 1324 (emphasis added). As previously noted, the bankruptcy court has an independent duty to assure compliance with Title 11, even if no objection is lodged. There is no specific statutory provision providing that failure to object in and of itself constitutes a waiver of that objection. However, if the plan is confirmed, “[t]he provisions of a confirmed plan bind the debtоr and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.” 11 U.S.C. § 1327(a).
The cases cited by debtors involve the application of this latter provision.
See, e.g., United States on Behalf of Internal Revenue Serv. v. Norton,
After having considerеd this matter, the court agrees with the bankruptcy court that an express affirmation of consent is required to meet the requirements of 11 U.S.C. § 1322(a)(2). This court believes that the structure of the bankruptcy code and the general meaning of the word “agrees” suggest express consent. For the future reference of thе IRS and the IDRF, the court does note that the better procedure (in order to avoid disputes of this nature) is for a creditor with a priority claim to either specifically object to confirmation of a proposed plan which does not provide for full payment or file a written consent to less thаn full payment.
ORDER
Accordingly, It Is Ordered:
The decision of the bankruptcy court entered February 11, 1991, is hereby affirmed.
Done and Ordered.
Notes
. The Honorable Michael J. Melloy, Chief United States Bankruptcy Judge.
. One of those cases,
In re Davis,
. The court also notes that the plan in Norton provided for full payment of the IRS claim. The issue in Norton was whether the IRS could offset the debtors’ current tax overpayment against the debt.
. The court notes that a plan may, in some circumstances, be modified after confirmation. See 11 U.S.C. § 1329.