Wilbur Porter, II
OPINION OVERRULING TRUSTEE‘S OBJECTION TO DEBTOR‘S POST-CONFIRMATION PLAN MODIFICATION
I. INTRODUCTION
The matter is before the Court on Debtor Wilbur Porter, II‘s (“Debtor“) Chapter
There are three issues. The first issue is whether
II. JURISDICTION
The Court has jurisdiction to determine this matter pursuant to
III. FACTUAL AND PROCEDURAL BACKGROUND
The facts in this case are not in dispute. The Debtor, who is 56 years old, filed the bankruptcy petition on March 29, 2023. [ECF No. 1]. On the same day, the Debtor filed Official Bankruptcy Form 122C-1, the Chapter 13 Statement of Current Monthly Income and Calculation of Commitment Period. [ECF No. 7]. This form determines the applicable commitment period pursuant to
The Debtor also filed Official Form 122C-2, the Chapter 13 Calculation of your Disposable Income on March 29, 2023. [ECF No. 8]. This calculation uses the current monthly income amount from Form 122C-1 of $5,994.00 and reduces it by the expenses allowed under IRS expense allowances, additional expense deductions and deductions for debt payment. In this case, the total adjustments are $5,662.58. [ECF No. 8, pgs. 6-7]. This calculation shows that the Debtor‘s post-petition monthly disposable income is $371.42. [ECF No. 8].
With the petition, the Debtor filed Schedules I and J. [ECF No. 1]. Schedule I works to “(e)stimate monthly income as of the date you file this form.” [ECF No. 1, pg. 34]. Debtor‘s combined monthly income is $3,514.00, a reduction from his prepetition income on Form 122C-1. [ECF No. 1, pg. 35]. Schedule J estimates “your expenses as of your bankruptcy filing date.” [ECF No. 1, pg. 37]. Here, Debtor‘s expenses are $2,768.00 [ECF No 1, pg. 38]. Again, a number lower than the permissible deductions on Form 122C-1. Using these numbers, the Debtor‘s monthly net income is $746.00. [ECF No. 1, pg. 38].
The Chapter 13 Plan [ECF No. 2] was confirmed August 26, 2023, and provided for monthly plan payments of $746.00 for 60 months, in addition to requiring the Debtor to remit 100% of future income tax
On October 7, 2024, the Debtor filed Debtor‘s Chapter 13 Plan Modification requesting a reduction in the amount of the plan payment from $746.00 to $100.00 per month. [ECF No. 28]. The modification also requested a reduction in the plan length from 60 to 36 months. Attached to the Plan Modification is a liquidation analysis that again demonstrates the amount available to unsecured creditors is -0-. [ECF No. 28, pg. 6].
On the same day the Debtor filed amended schedules I and J. [ECF No. 29]. Schedule I demonstrates a combined monthly income of $2,964.39. Schedule J shows a new housing expense of $845.00 per month, total expenses of $2,863.00, and monthly net income of $101.39.
It is significant that according to the amended schedules Debtor‘s income is reduced by $549.61 each month. Additionally, despite the new housing expense of $845.00, overall expenses increased by only $95.00 per month. (Pre-confirmation schedule J expenses were $2,768.00 per month.) [ECF No. 2].
The request for the modification is based on a change in the Debtor‘s financial circumstances. In an Unsworn Declaration Under Penalty of Perjury Pursuant to
The Trustee objected to the Plan Modification on October 17, 2024. She argues that a reduction in the amount of the plan payment and time of the plan is not warranted under the circumstances. [ECF No. 30].
At the first hearing on February 3, 2025, the Court ordered a supplement to explain Debtor‘s change in employment, and to provide an affidavit. At the adjourned hearing on February 27, 2025, the Trustee withdrew the objection regarding the reduction to the plan payments and agreed to monthly plan payments of $100.00 per month from $746.00 per month. [ECF Nos. 43 and 48]. The Trustee maintained the objection regarding the reduction in the time of the plan. The Trustee argued that Debtor did not provide a reason for a reduction in the plan length as required by
Per the Trustee, the Debtor is current in his monthly payments on the Chapter 13 Plan. [ECF No. 48, ¶ 4]. A review of the Trustee records shows the Debtor is 96.86% paid into the plan. The last payment was made March 14, 2025. Further, the claims register shows 7 filed unsecured claims, totaling $38,386.12. The unsecured creditors have received $11,678.07 per the Trustee records, about 30% of the amount claimed.1
IV. DISCUSSION
a. Principles of Statutory Construction
The first step in statutory construction “is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.” Fullenkamp v. Veneman, 383 F.3d 478, 481 (6th Cir. 2004) (internal quotation and citation omitted).
b. Section 1325(b) Does Not Apply to Plan Modifications
After reviewing the statutory language and the cases cited by the parties, the Court concludes that
Therefore, the Court is joining the majority view that recognizes that
(i) Parties’ Arguments
First, the Debtor argues that the express language of
In response, the Trustee maintains that the applicable commitment period in
In reply, Debtor explains that
(ii) The Express Language of § 1329 Allows Debtors to Reduce the Time to Make Plan Payments
Post-confirmation plan modifications are governed by
(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) Sections 1322(a), 1322(b), and 1323(c) of this title and the requirements of section 1325(a) of this title apply to any modification under subsection (a) of this section.
Accordingly,
(iii) Section 1329 Lacks Reference to § 1325(b)
As already stated,
Notably, Congress could have limited
The Trustee presents two arguments in support of her position that
The Court disagrees. Both arguments are incorrect, as the Court will explain below, the express language of
(iv) The Express Language of § 1325(b) Does Not Apply to Plan Modifications—Therefore, it is Not Made Applicable to Plan Modifications by Reference in § 1325(a)
(b)(1) If the trustee or 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-- (A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim; or
(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.
(a) Except as provided in subsection (b), the court shall confirm a plan if--
(1) The plan complies with the provisions of this chapter and with the other applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of title 28, or by the plan, to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by law;
(4) the value, as of the effective date of the plan, of property to be distributed under the plan on account of each allowed unsecured claim is not less than the amount that would be paid on such claim if the estate of the debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan--
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that--
(I) the holder of such claim retain the lien securing such claim until the earlier of--
(aa) the payment of the underlying debt determined under nonbankruptcy law; or
(bb) discharge under section 1328; and
(II) if the case under this chapter is dismissed or converted without completion of the plan, such lien shall also be retained by such holder to the extent recognized by applicable nonbankruptcy law;
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim; and
(iii) if--
(I) property to be distributed pursuant to this subsection is in the form of periodic payments, such payments shall be in equal monthly amounts; and
(II) the holder of the claim is secured by personal property, the amount of such payments shall not be less than an amount sufficient to provide to the holder of such claim adequate protection during the period of the plan; or
(C) the debtor surrenders the property securing such claim to such holder;
(6) the debtor will be able to make all payments under the plan and to comply with the plan;
(7) the action of the debtor in filing the petition was in good faith;
(8) the debtor has paid all amounts that are required to be paid under a domestic support obligation and that first become payable after the date of the filing of the petition if the debtor is required by a judicial or administrative order, or by statute, to pay such domestic support obligation; and
(9) the debtor has filed all applicable Federal, State, and local tax returns as required by section 1308.
The reference to
There are two reasons. First,
By its terms,
§ 1325(b) comes into effect only when a party with standing objects to “confirmation of the plan,” and so the subsection only has direct application to plan confirmation. However, a plan is “confirmed” only once in a Chapter 13 case. Modifying a confirmed plan under§ 1329 does not involve another “confirmation“; rather,§ 1329(b)(2) simply provides that unless the court “disapproves” the modification, “the plan as modified becomes the plan.” See Forbes v. Forbes (In re Forbes), 215 B.R. 183, 188 (8th Cir. BAP 1997) (“The Bankruptcy Code does not provide for the ‘confirmation’ of a modified plan; rather, the plan as modified becomes the plan if it is not disapproved.“). Because the objection allowed by§ 1325(b) applies only to confirmation of a plan, the terms of§ 1325(b) itself do not apply to proposals to modify a previously confirmed plan.
Second,
Section 1325(a) is a straightforward directive: “the court shall confirm a plan” if each of the nine statements thereafter set out in§ 1325(a) applies to the case. These nine statements are indeed “requirements” for confirmation. A “requirement” is “a requisite or essential condition,” see Webster‘s Third New International Dictionary 1929 (1981), and the application of each of the nine statements is a prerequisite for plan confirmation under§ 1325(a) , see In re Jones, 530 F.3d 1284, 1290 (10th Cir. 2008) (“[T]he conditions specified in§ 1325(a) are clearly mandatory requirements.“).In contrast,
§ 1325(b) is not a “requirement.” Rather than a prerequisite for confirmation,§ 1325(b) is an exception to the confirmation that§ 1325(a) otherwise mandates.Section 1325(a) states that courts must confirm a plan that meets its nine requirements;§ 1325(b) has the potential for preventing that result. Nothing in§ 1325(b) is required for confirmation. No party is required to object to confirmation under that subsection, and even if grounds for objection are present, a plan may be confirmed if the objection is not made. See In re Storey, 392 B.R. 266, 273 (6th Cir. BAP 2008) (“If no objection to confirmation is interposed, the plan may bе confirmed regardless of ‘the applicable commitment period.’ “); In re Braune, 385 B.R. 167, 171 (Bankr. N.D. Tex. 2008) (“[I]f no objection to confirmation is interposed, the plan may be confirmed whether or not it provides for full payment of creditors....“); In re Tracey, 66 B.R. 63, 65 (Bankr. D. Md. 1986) (“Unlike the confirmation standards of§ 1325(a) , the ability-to-pay test may not be raised by the court sua sponte ....“) The provisions of§ 1325(b) , then, are not part of the “requirements” of§ 1325(a) made applicable to plan modification under§ 1329(b)(1) .
This interpretation of
The Court is not persuaded by the cases holding to the contrary. Trustee relies on In re Keller, In re King, and In re Groner. First, all three cases ignore the express language of
Second, all three cases cited and relied on by the Trustee, while acknowledging that
history for their analysis, these cases only focus on the history and purpose of
Third, the Trustee‘s cases criticize the majority‘s reliance on the good faith requirement of
Importantly, Congress chose to make plan modifications subject to the good faith requirement of
Finally, the Trustee‘s cases erroneously conclude that if
(v) No Absurdity Results from the Inapplicability of § 1325(b) to Plan Modifications
The Court further concludes that no absurdity results from the inapplicability of
Moreover, “[t]he incorporation of
c. Section 1327 - Debtor is Not Relitigating an Issue that Was or Could Have Been Litigated at Confirmation
(i) Parties’ Arguments
The Trustee argues that pursuant to In re Ellison, 620 B.R. 594 (Bankr. E.D. Mich 2020), the Debtor “cannot relitigate an issue that was or could have been litigated at confirmation as it violates
The Trustee also contends that the “applicable commitment period” is a temporal rеquirement for the length of the plan citing to Baud v Carroll, 634 F.3d 327 (6th Cir 2011) and Whaley v Tennyson (In re Tennyson), 611 F.3d 873, 879 (11th Cir 2010). The applicable commitment period is not a mathematical determination that begins and ends at the time of confirmation. Finally, the Trustee states that this approach “is also supported by the spirit of chapter 13 which is for Debtors to provide the greatest recovery for creditors while the debtor seeks a fresh start.” [ECF No. 50, pg. 6]. Otherwise, the CMI would be pointless, and creditors could not determine their recovery during the plan. The only way to shorten the length of the plan is to pay 100% to unsecured creditors.
In response, the Debtor asserts that he could not have requested a deviation from the applicable commitment period at confirmation as
Next, Debtor maintains that Carroll supports his position as the debtors in Carroll were “above median income six months preceding commencement of the case and, therefore, would have a 60-month applicable commitment period.” [ECF No. 60, Tr. Feb. 27, 2025, pg. 8-9]. The debtors however, had no disposable income, and argued that “they didn‘t have to be in a 60-month plan[.]” Id. The Sixth Circuit disagreed and held that “[t]he plan length is determined by current monthly income and the applicable commitment period and that‘s it. And there was no way to argue that at confirmation because that didn‘t change.” Id. Thus, the Debtor asserts that the parties “are not litigating for purposes of determining the applicable commitment period because that is a pre-petition calculation.” [ECF No. 60, Tr. Feb. 27, 2025, pg. 12]. At the February 27, 2025 hearing, Debtor further argued that per Hamilton v. Lanning, 560 U.S. 505 (2010) cited in Carroll,
we can consider post-petition changes in income that are known or virtually certain in determining disposable income, that is, in determining the plan payment, but not the applicable commitment period. And that‘s what we would litigate frequently was post-petition changes in income and expenses that were known or virtually certain.
[ECF No. 60, Tr. Feb. 27, 2025, pg. 12].
Furthermore, Debtor argues that because he is no longer above median income, a reduction in the length of the plan is warranted. However, at the time the
At the February 27, 2025 hearing, the Trustee confirmed that she would have objected if, at confirmation, the Debtor had proposed a 36-month plan based on post-petition and pre-confirmation changes in income. [ECF No. 60, Tr. Feb. 27, 2025, pgs. 20-21].
(ii) Carroll, In re Tennyson, and Lanning Held that the Applicable Commitment Period is a Temporal Requirement in the Context of Plan Confirmation
The applicable commitment period is defined in
Post BAPCPA decisions adopting the monetary approach in which the courts point to pre-BAPCPA practice in support of their position rely on cases decided in the context of plan modification or early-payoff, not confirmation. See Fuger, 347 B.R. at 97-101; Swan, 368 B.R. at 25. By contrast, as discussed above, pre-BAPCPA decisions addressing plan сonfirmation support the temporal approach.
The Court already concluded that
(iii) Section 1327 and In re Ellison, 620 B.R. 594 (Bankr. E.D. Mich. 2020)
As stated, plan modifications are subject to
In re Ellison held that “[a] plan modification that attempts to relitigate an issue that was litigated at confirmation or cоuld have been litigated at confirmation, does not comply with
The Plan Mod states that because the Debtor is a below median income debtor, with an ACP of 36 months, there was “no real cause” for the Court to have
approved at confirmation a plan with a length of 60 months under § 1322(d) . The Debtor requests that the Court now come to a different conclusion about “cause” under§ 1322(d) than it did at the time of confirmation. The problem with the Debtor‘s request is that the Plan states on its face — consistent with the Debtor‘s own statement of current monthly income — that the Debtor is a below median income debtor with an ACP of 36 months. This fact was plainly disclosed and known to all parties — including the Debtor‘s attorney — at the time of confirmation. If there was any issue regarding whether the Court had “cause” under§ 1322(d)(2) to approve a 60 month plan for the Debtor, as the Debtor is now suggesting, that issue could certainly have been raised and litigated at the time of confirmation. It was not.
Unlike In re Ellison, the Debtor in the case at bar was an above median income debtor and, therefore, could not have argued for a shorter applicable commitment period at the time of confirmation. Debtor was required to confirm a 60-month plan. In addition, there is a post confirmation change in facts as Debtor‘s income has decreased and his expenses are increased. The debtor in In re Ellison, on the other hand, could have confirmed a 36-month plan because she was a below median income debtor. But, for whatever reason, that debtor proposed a 60-month plan at confirmation. There was no post-confirmation change in that debtor‘s financial circumstances, she simply wanted to modify the plan length based on the same facts that existed at her confirmation.
The applicable commitment period is based on pre-petition income; as a result, any post-petition and pre-confirmation changes in income do not affect the applicable commitment period. The “applicable commitment period” is defined in
(4) For purposes of this subsection, the “applicable commitment period“--
(A) subject to subparagraph (B), shall be--
(i) 3 years; or
(ii) not less than 5 years, if the current monthly income of the debtor and the debtor‘s spouse combined, when multiplied by 12, is not less than--
(I) in the case of a debtor in a household of 1 person, the median family income of the applicable State for 1 earner;
(II) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable State for a family of the same number or fewer individuals; or
(III) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable State for a family of 4 or fewer individuals, plus $925 [originally “$525“, adjusted effective April 1, 2025] per month for each individual in excess of 4; and
(B) may be less than 3 or 5 years, whichever is applicable under subparagraph (A), but only if the plan provides for payment in full of all allowed unsecured claims over a shorter period.
(A) means the average monthly income from all sources that the debtor receives (or in a joint case the debtor and the debtor‘s spouse receive) without regard to whether such income is taxable income, derived during the 6-month period ending on--
(i) the last day of the calendar month immediately preceding the date of the commencement of the case if the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of
this title if the debtor does not file the schedule of current income required by section 521(a)(1)(B)(ii); and (B)(i) includes any amount paid by any entity other than the debtor (or in a joint case the debtor and the debtor‘s spouse), on a regular basis for the household expenses of the debtor or the debtor‘s dependents (and in a joint case the debtor‘s spouse if not otherwise a dependent); and
Accordingly, Debtor‘s post-petition and pre-confirmation changes in income could not hаve been litigated at confirmation for purposes of determining the applicable commitment period. Therefore, the Debtor‘s plan modification does not violate
Additionally, the Debtor‘s plan modification does not violate
d. Application of § 1325(a) to Debtor‘s Proposed Plan Modification
(i) Parties’ Arguments
Next, Debtor argues that the proposed plan modification is feasible and filed in good faith. [ECF No. 43, pgs. 8-13]. Regarding feasibility, Debtor has filed amended Schedules I and J that the Trustee has not challenged. Despite Debtor‘s job loss and new rental expense of $845.00, the monthly budget has only increased by $95.00. The Debtor maintains that the plan modification is feasible. In fact, if the Debtor were to file the plan today on the terms requested in the plan modification, the plan would be confirmable. Finally, the Debtor argues that after a review of the totality of the circumstances in In re Alt, 305 F.3d 413, 419 (6th Cir. 2002), he has demonstrated good faith. [ECF No. 43, pg. 9].
Trustee asserts that the Debtor has not provided a reason for the plan modification from 60 months to 36 months as required by
In reply, the Debtor maintains that the Trustee‘s position would prevent any reduction in the plan term. “If the only time a debtor could reduce the time plan term would be if Debtor cannot make any payments, then
[He] doesn‘t own anything. He didn‘t at the time this case was filed. He still doesn‘t. He could just as easily dismiss this case and file a Chapter 7 tomorrow and pay nobody anything. But he doesn‘t want to do that. He, for reasons of his own, he feels an obligation to do his best and he‘s willing to do that, but he, beyond -- to try and push that beyond another 18 months just isn‘t warranted under the -- under 1329. It isn‘t probably long-term feasible.
[ECF No. 60, Tr. Feb. 27, 2025, pg. 16]. Furthermore, “[t]he liquidation value of the estate and the plan at ECF 2, Page 8 has a zero percent liquidation analysis. That is the amount that 1325(a) requires be paid to creditors. We‘ve already paid almost 29 percent to unsecured creditors[.]” [ECF No. 60, Tr. Feb. 27, 2025, pg. 13-14]. Finally, Debtor claims that if he “were to file a plan today on the terms of the modification, the plan would be confirmable.” [ECF No. 60, Tr. Feb. 27, 2025, pg. 14]. Thus, the Debtor contends that the plan modification is feasible and filed in good faith.
(ii) Debtor‘s Proposed Plan Modification is Feasible and Filed in Good Faith
The Court concludes that Debtor‘s proposed plan modification is feasible and filed in good faith. Preliminarily, the Court notes that contrary to the Trustee‘s assertion, Debtor provided a reason for requesting a reduction in the time to make plan payments—a decrease in income and a new housing expense due to the loss of Debtor‘s second employment. In addition, Debtor is now a below median income debtor who satisfies the requirements of
Pursuant to
As a starting point, the bankruptcy code requires that, in order to be confirmed, a debtor‘s plan must, among other things, be “proposed in good faith.”
11 U.S.C. § 1325(a)(3) . In that context, “[o]ur circuit‘s good faith test requires consideration of the totality of circumstances.” Society Nat‘l Bank v. Barrett (In re Barrett), 964 F.2d 588, 591 (6th Cir. 1992) (citations omitted). Among the circumstances to be considered in determining whether a plan has been proposed in good faith are the following:(1) the debtor‘s income;
(2) the debtor‘s living expenses;
(3) the debtor‘s attorney‘s fees;
(4) the expected duration of the Chapter 13 plan;
(5) the sincerity with which the debtor has petitioned for relief under Chapter 13;
(6) the debtor‘s potential for future earning;
(7) any special circumstances, such as unusually high medical expenses;
(8) the frequency with which the debtor has sought relief before in bankruptcy;
(9) the circumstances under which the debt was incurred;
(10) the amount of payment offered by debtor as indicative of the debtor‘s sincerity to repay the debt;
(11) the burden which administration would place on the trustee;
(12) the statutorily-mandated policy that bankruptcy provisions be construed liberally in favor of the debtor.
See id. at 592. We have also emphasized that good faith is a fact-specific and flexible determination. See Metro Employees Credit Union v. Okoreeh-Baah (In re Okoreeh-Baah), 836 F.2d 1030, 1032–33 (6th Cir. 1988).5
In re Alt, 305 F.3d at 419. Moreover,
In considering whether a proposed modification comports with
§ 1325(a)(3) good faith requirement, it is appropriate for the Court to consider the standards of§ 1325(b) , In re Stein, 91 B.R. at 800, despite the fact that§ 1329(b) does not specifically incorporate the “ability to pay“/“projected disposable income test” of§ 1325(b) . See In re Hill, 386 B.R. at 676. Judge Colton has described the relevancy of the ability to pay standard in the context of a modification, thus:Congress intended chapter 13 plans to be modifiable based on a debtor‘s increased or decreased “ability to pay” during the life of the plan. This “ability to pay” standard authorizes chapter 13 plan modifications regardless or whether the new found ability to pay constitutes “disposable income” within the meaning of sеction 1325. An inheritance, a personal injury claim, even lottery winnings-all can be the basis of an upward modification of a confirmed chapter 13 plan.
In re Roscoe, No. 8:13-BK-06517-RCT, 2017 WL 2839496, at *2 (Bankr. M.D. Fla. June 28, 2017) (emphasis added). Accordingly, “§ 1329‘s focus [is] on a debtor‘s actual, post-confirmation income and expenses.” In re Prieto, No. 308BK3308PMG, 2010 WL 3959610, at *3 (Bankr. M.D. Fla. Sept. 22, 2010), see also In re Wetzel, 381 B.R. 247, 252 (Bankr. E. D. Wis. 2008) (“Although the disposable income test does not explicitly apply, courts have recognized that the ‘debtor‘s changed income and expenses are factored into the bankruptcy court‘s good judgment and discretion.’ “) (quoting In re Sounakhene, 249 B.R. 801 (Bankr. S.D. Cal. 2000)). By incorporating the “ability to pay” analysis under
§ 1325(b) to a modified plan, “the Court‘s good faith inquiry should include a review of a debtor‘s proposed monthly budget.” In re Stein, 91 B.R. at 801.
In re Scholl, 605 B.R. 163, 182–83 (Bankr. S.D. Ohio 2019). Finally, the proponents of a modification have the burden of proof under
Turning to the In re Alt factors, the Court first concludes that the first factor—the debtor‘s income—weighs in Debtor‘s favor. There is no dispute that Debtor‘s monthly income reduced from $3,514.00 to $2,964.39 due to an involuntary loss of his second employment. Here, Trustee arguеs that while Debtor‘s income is reduced, it is possible that this reduction is temporary, as the Debtor could obtain a second job. The Trustee‘s assertion is speculative and not based on any facts before the Court.
The third factor concerning debtor‘s attorney fees weighs in Debtor‘s favor. Here, Trustee contends that if the Debtor is allowed to reduce the time of the plan, all remaining payments made by the Debtor will likely be used to pay attorney fees with no payments for the creditors. Debtor provides that his counsel has received $3,500.00 and unsecured creditors have received $11,021.16, and anything else they receive in the time remaining if the plan time is reduced. Even if unsecured creditors do not receive more payments, they received more than the -0- provided for in the liquidation analysis. Furthermore, plan payments will continue to be disbursed according to the dictates of the Bankruptcy Code.
The fourth factor regarding the expected duration of the Chapter 13 plan weighs in Debtor‘s favor. The plan has run 18 months and would run a total of 36 months with the modification. Debtor argues that shortening the plan to 36 months cannot lack good faith when it is permitted by
Thе fifth factor addressing the sincerity with which the debtor has petitioned for relief under Chapter 13 favors the Debtor. The Debtor is sincere and doing his best to pay his creditors. As stated, the unsecured creditors have been paid more than they would receive in a Chapter 7, and Debtor is willing to continue making payments. Trustee contends that if the Debtor is permitted to reduce the plan length, it “would make a mockery of honest, hardworking, well intended debtors who pay a higher percentage of their claims consistent with the purpose and spirit of Ch 13.” [ECF No. 50 pg. 10]. The Court disagrees. The record before the Court shows that the Debtor is honest, hardworking and trying to pay his creditors to the best of his ability.
Factors seven through nine were not addressed by the parties. Given the record in this case, the Court finds these factors not relevаnt.
The tenth factor addressing the amount of payment offered by debtor as indicative of the debtor‘s sincerity to repay the debt favors the Debtor. Debtor‘s loss of his second employment resulted in an additional housing expense. Despite this $845.00 per month expense, his overall expenses increased by only $95.00 per month. The Debtor has a very tight budget and commits all of his disposable income. As noted, Debtor could have easily dismissed this case and sought a chapter 7 discharge. The Debtor is sincere in repaying his debt.
The eleventh factor, the burden which administration would place on the trustee, was not addressed by the parties.
Lastly, the twelfth factor regarding the statutorily mandated policy that bankruptcy provisions be construed liberally in favor of the debtor favors the Debtor. Here, Debtor maintains that completing the Chapter 13 and receiving a discharge fulfills the Congressionally mandated policy of granting an honest but unfortunate debtor a chаnce to obtain a discharge. The Court agrees.
After analyzing the relevant factors, the Court concludes that the Debtor has proposed his plan modification in good faith.
V. CONCLUSION
For the foregoing reasons, the Court concludes that
Signed on May 22, 2025
/s/ Maria L. Oxholm
Maria L. Oxholm
United States Bankruptcy Judge
Notes
So, the debtors in this case have a choice. Their motion to borrow will be approved but if they also wish to complete their confirmed plan with an accelerated lump sum payment, it must be sufficient to pay unsecured claims in full. Alternatively, assuming the debtors are able to convince the court that, given their particular economic circumstances, payments for less than 3 years without paying unsecured claims in full satisfies section 1325(a)(3), they must modify their plan.Id. at 703. (Emphasis added). Thus, the Keller court contemplates that the debtors could shorten their plan payments without paying unsecured claims in full provided they modify their plan and convince the court their circumstances warrant such modification.
Good faith is an amorphous notion, largely defined by factual inquiry. In a good faith analysis, the infinite variety of factors facing any particular debtor must be weighed carefully. We cannot here promulgate any precise formulae or measurements to be deployed in a mechanical good faith equation. The bankruptcy court must ultimately determine whether the debtor‘s plan, given his or her individual circumstances, satisfies the purposes undergirding Chapter 13: a sincerely-intended repayment of pre-petition debt consistent with the debtor‘s available resources. The decision should be left simply to the bankruptcy court‘s common sense and judgment.In re Okoreeh-Baah, 836 F.2d at 1033.