§ 108.2     Duration of Plan
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 108.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The duration of a Chapter 13 plan is specifically addressed in §§ 1322(d)1 and 1325(b)(1).2 Somewhat oversimplified, the plan must commit all of the debtor’s disposable income for at least three years; for cause, the debtor may extend the plan to a maximum of five years.

[2]

Notwithstanding these specific rules governing duration, many reported decisions consider duration of the plan as a component of good faith.3 Some decisions make extension of the plan toward the maximum five years the price the debtor must pay to demonstrate good faith.4 One court grafted onto good faith a requirement that the plan extend beyond 36 months if the debtor committed physically violent misconduct before the petition.5 Several courts have cited the debtor’s voluntary extension of the plan beyond 36 months as evidence in support of good faith.6 At the other extreme, courts have rejected good-faith objections to plans of extremely short duration that otherwise satisfy the requirements for confirmation.7

[3]

Contrast these decisions with others holding that cause for extension of a plan beyond three years under § 1322(d) requires evidence of something more than just the debtor’s desire to pay a greater percentage of unsecured claims.8 Sections 1325(b) and 1322(d) demonstrate that Congress intended the typical Chapter 13 plan to be approximately three years in length.9 Engrafting duration considerations onto the good-faith test in § 1325(a)(3) generates conflicting messages for debtors.

[4]

The good-faith cases that apply duration considerations convert § 1325(a)(3) into a weapon. Creditors force Chapter 13 debtors to extend the plan beyond three years by objecting to confirmation of any plan in which an extension would produce a greater dividend. This turns § 1322(d) on its head.10 If the plan satisfies the three-year test in § 1325(b),11 it is the debtor who controls the duration of the plan, and only the debtor can propose a plan that extends beyond three years. As stated by one court, once the Chapter 13 debtor satisfies § 1325(b) by proposing a 36-month plan, “good faith does not require a plan of greater duration.”12 This rule must hold even when the debtor has the ability to fund a longer plan else good faith becomes a nonstatutory exception to the duration rules in §§ 1325(b) and 1322(d).13

[5]

Too many reported decisions ambiguously recite that Chapter 13 debtors cannot be “required” to extend the plan beyond 36 months, but the failure to (voluntarily?) do so demonstrates a lack of good faith.14 When extension beyond 36 months is the only salve for the bankruptcy court’s good-faith itch, the 60-month plan becomes a creditor entitlement by the simple expedient of objecting to confirmation.

[6]

An extreme example of morphing the good-faith test into a duration requirement is In re Walsh.15 The debtors’ 36-month plan paid for two cars while paying nothing to unsecured claim holders. The bankruptcy court found that if the disposable income test in § 1325(b)(2)(A) were applied, only one of the cars would be reasonably necessary for the maintenance of the debtor.16 However, neither the trustee nor an allowed unsecured claim holder objected to confirmation.17 To reach the disposable-income-test objection hidden in this picture, the bankruptcy court explained that the unreasonableness of the car expense was properly considered as part of the good-faith determination. The court then wove together the three-year duration requirement in § 1325(b)(1)(B) and the good-faith test in § 1325(a)(3):

[A] debtor is limited to disbursements on secured claims which are “reasonably necessary to be expended for the maintenance and support of a debtor or a dependent of a debtor.” 11 U.S.C. § 1325(b)(2)(A). . . . In analyzing a case to determine whether confirmation is appropriate, the trustee should consider the reasonable budget amount to be paid for an item such as a car and require that any excess proposed to be paid by the debtor to a secured creditor be funded by an extension of the plan beyond 36 months. It is critical to note here that the Court is not requiring the debtors to extend the duration of plans in order to fund a dividend to unsecured creditors. Instead, any such extension would be made, if at all, for the purpose of funding a payment which exceeds the reasonable amount which would be appropriate for that item in the budget of that debtor. . . . Debtors’ three-year plan proposes no payments to unsecured creditors while funding the purchase of a second vehicle which is not necessary for an effective reorganization. The convenience of this second vehicle comes at the expense of the unsecured creditors. If Debtors propose to utilize Chapter 13 to pay for that nonessential vehicle, they should exert an effort in terms of a plan duration that is more than the minimum currently proposed.18
[7]

Walsh is an alarming use of good faith as a back door for the disposable income test when no party with standing has objected to confirmation under § 1325(b). The debtor in Walsh faced a double whammy: a hybrid good-faith/disposable-income-test duration requirement that floats somewhere in between § 1325(a)(3) and § 1325(b)(1)(B); and a cloaked disposable-income-test objection to confirmation from a source without standing to raise the issue.

[8]

Duration of the plan has become a wild card in good-faith litigation. Despite substantial evidence of contrary congressional intent, debtors take a risk proposing a plan that only meets the minimum three-year requirement in § 1325(b)(1)(B). If feasibility is not impaired, a longer plan will be interpreted as a stronger demonstration of good faith by many courts. Creditors can always argue that a longer plan will pay a greater percentage of claims and should be required to show the debtor’s good faith. This position is not supported by the Code but is effective to impede confirmation of composition plans that are shorter than five years. The threat of a good-faith objection has become an effective negotiating position to bully the debtor into a longer plan.


 

1  See discussion of length of plan beginning at § 112.1  General Rule: Three Years, More or Less.

 

2  See § 91.5  Counting the Three-Year Period.

 

3  See, e.g., Gier v. Farmers State Bank (In re Gier), 986 F.2d 1326 (10th Cir. 1993) (Court denies confirmation on good-faith grounds of 4% plan based in part on findings that the proposed monthly payment was “small” and the proposed three-year plan was “short.”); Ed Schory & Sons, Inc. v. Francis (In re Francis), 273 B.R. 87 (B.A.P. 6th Cir. 2002) (That the debtor extended the plan to 60 months is a factor in support of good faith when plan will pay a small percentage of a judgment declared nondischargeable in prior Chapter 7 case.), aff’d, No. 02-3288, 2003 WL 21782600 (6th Cir. July 31, 2003) (unpublished); Banks v. Vandiver (In re Banks), 248 B.R. 799, 804 (B.A.P. 8th Cir. 2000) (“In this case, the Debtor admitted that his sole motivation for filing bankruptcy was to avoid paying Vandiver on the debt at issue. This admission, combined with the fact that the Debtor proposed only a three-year plan that paid less than 15 percent of Vandiver’s claim, supports the bankruptcy court’s finding that the Debtor’s modified plan was proposed in bad faith as yet one more attempt to deny Vandiver her marital community property interest in the Debtor’s pension.”), aff’d, 267 F.3d 875 (8th Cir. 2001); Mason v. Young (In re Young), 237 B.R. 791 (B.A.P. 10th Cir. 1999) (Amendment of plan to increase length from 36 to 60 months and to increase dividend to 4% overcomes circumstantial evidence of bad faith in original three-year plan.), aff’d on other grounds, 237 F.3d 1168, 1176–77 (10th Cir. 2001) (After sustaining good-faith objection to 36-month plan that would compromise a large claim that would probably be nondischargeable in a Chapter 7 case, Tenth Circuit affirms confirmation of amended plan that extends for 60 months. “[I]t was not . . . clear error for the court to accept the subsequent plan for the maximum sixth-month period under 11 U.S.C. § 1322(d). Rather, it was Young’s right under the Bankruptcy Code to ‘modify the plan at any time before confirmation’ within the parameters of 11 U.S.C. § 1322.”); In re Leone, 292 B.R. 243 (Bankr. W.D. Pa. 2003) (Extending plan to 60 months is an alternative offered by the court to cure good-faith problem with confirmation of a 36-month plan that pays only 11% to unsecured creditors.); In re Lancaster, 280 B.R. 468 (Bankr. W.D. Mo. 2002) (Although Chapter 13 debtor cannot be required to extend plan beyond 36 months, a 36-month plan that pays only 3% to the victim of the debtor’s prepetition criminal misconduct is not proposed in good faith.); In re McGovern, 278 B.R. 888 (Bankr. S.D. Fla. 2002) (When the debtor is able to fund a longer plan, good faith does not allow a 36-month plan that proposes to pay only 11% of debts that would be nondischargeable under Chapter 7.), rev’d, 297 B.R. 650 (S.D. Fla. 2003); In re Roberts, No. 00-01989-M, 2001 WL 1903453 (Bankr. N.D. Okla. Jan. 16, 2001) (unpublished) (That the debtor proposed a three-year plan is “circumstantial evidence of bad faith” that, together with 8% dividend, supports a lack of good faith in plan that compromises a large claim that would be nondischargeable in a Chapter 7 case.); In re Johnson, 262 B.R. 831, 840–41 (Bankr. D. Idaho 2001) (“Congress has determined that 36 months is an allowed term for a plan, and requiring the plan to be extended beyond the minimum in this case appears to the Court an unfairly harsh requirement, given the deterioration of Mr. Johnson’s physical condition over the past several years. While functionally and medically ‘disabled,’ Mr. Johnson has, in order to successfully propose and complete a Chapter 13 plan, expressed a willingness to work limited hours each week. Proposing a plan for the minimum time allowed under the Code does not evidence bad faith under the facts of this situation.”); In re Haskell, 252 B.R. 236, 243 (Bankr. M.D. Fla. 2000) (“Plan length and the portion of debt to be repaid under a proposed plan are relevant to the determination of good faith.” Five-year plan would at best distribute less than 8% to unsecured claim holders and lacked good faith.); In re Wilcox, 251 B.R. 59 (Bankr. E.D. Ark. 2000) (That debtors extended plan to 60 months is a factor favoring confirmation of an 18% plan that compromised a large claim that would probably be nondischargeable in a Chapter 7 case.); In re Hendricks, 250 B.R. 415, 420 (Bankr. M.D. Fla. 2000) (Lack of good faith in debtor’s three-year plan that pays 0% to unsecured claim holders. “[T]he Debtor has made no effort to pay her legitimate debts.”); In re Baird, 234 B.R. 546, 552 (Bankr. M.D. Fla. 1999) (“While good faith does not require a plan of greater duration than the 3-year statutory minimum, it remains a factor the Court must consider in its good faith analysis.” That debtor’s plan proposed the statutory minimum and would pay only .72% to unsecured claims was evidence of a lack of good faith.); In re Martin, 233 B.R. 436, 446 (Bankr. D. Ariz. 1999) (“The 55-month plan is 5 months short of the maximum time allowed by statute, § 1322(d), and 19 months longer than minimum required. This demonstrates long-term commitment while allowing for a small cushion in the event a temporary moratorium is needed during a dry spell.” Plan would pay approximately 24% of large claim for conversion.); In re Nottingham, 228 B.R. 316, 320 (Bankr. M.D. Fla. 1998) (“The duration of Debtor’s plan is sixty-months, the statutory maximum, suggesting a good faith effort to commit all disposable income to fund her plan.” Debtor needed 60 months to pay a large IRS debt in full.); In re Petersen, 228 B.R. 19 (Bankr. M.D. Fla. 1998) (That debtor proposed minimum three-year plan paying less than 2% of $550,000 nondischargeable judgment was factor substantially indicative of bad faith.); In re Walsh, 224 B.R. 231 (Bankr. M.D. Ga. 1998) (36-month plan that will pay for two cars, only one of which is necessary, while paying nothing to unsecured claim holders lacks good faith; extension of plan beyond 36 months would cure good-faith problem.); In re Games, 213 B.R. 773 (Bankr. E.D. Wash. 1997) (Lack of good faith in plan extended to 49 months to pay 100% of nondischargeable traffic fines but 0% to other unsecured claim holders; debtor could extend the plan to five years and solve good-faith problem.); In re Allard, 196 B.R. 402 (Bankr. N.D. Ill.) (Applying totality-of-circumstances test, extension of payment term from 48 to 60 months is factor indicative of good faith.), aff’d, 202 B.R. 938 (N.D. Ill. 1996); In re Pickering, 195 B.R. 759, 767–69 (Bankr. D. Mont. 1996) (That the plan “only endures for 36 months rather than the maximum of 60 months . . . indicates that Pickering lacks requisite sincerity in seeking Chapter 13 relief.”); In re Corino, 191 B.R. 283, 291 (Bankr. N.D.N.Y. 1995) (Applying totality-of-circumstances test, that the debtor proposes to pay all disposable income for the maximum five years permitted by the Code “demonstrates a willingness to pay her debt” in support of a finding of good faith.); In re Anadell, 190 B.R. 309, 311 (Bankr. S.D. Ohio 1995) (That the debtor “has proposed a plan of maximum duration” is one factor favoring rejection of good-faith challenge to 60-month plan that pays 9% of a large judgment that would be nondischargeable in a Chapter 7 case.); In re Oliver, 186 B.R. 403, 406 (Bankr. E.D. Va. 1995) (Totality of the circumstances indicating bad faith included that the original plan proposed by the debtor was a 10%, 36-month plan, and “[o]nly at the hearing on Washington Federal’s objection did debtor propose to lengthen the term of his plan to sixty months.”); In re Wilson, 168 B.R. 260 (Bankr. N.D. Fla. 1994) (Debtor shows bad faith under totality-of-circumstances test that included consideration that the plan proposed a “minimal” distribution in only 36 months.); In re Norman, 162 B.R. 581, 583 (Bankr. M.D. Fla. 1993) (“The Debtor’s manipulation of the Bankruptcy Code is further compounded by the short duration of the plan, which proposes to pay over 36 months, rather than 60 months, which is permitted by § 1322(c) [redesignated as § 1322(d) by Pub. L. No. 103-394, § 301, 108 Stat. 4106 (1994)] and which would provide the Government a significantly greater dividend on its claim.”); In re Murrell, 160 B.R. 128, 130 (Bankr. W.D. Mo. 1993) (Court denies confirmation where debtor proposed a 36-month, 52% plan, and “if debtor really wished to compose her debts, she could pay 42, 48 or 60 months.”); In re Neill, 158 B.R. 93, 98 (Bankr. N.D. Ohio 1993) (Bad faith is indicated where debtor’s second Chapter 13 filing was a “thinly veiled attempt to avoid a foreclosure sale” and the debtor proposed only a 24-month plan.); In re Baker, 129 B.R. 127 (Bankr. W.D. Tex. 1991) (Court rejected standing trustee’s argument for a per se rule that it is bad faith to propose a small-percentage plan that will last only 36 months. A blanket rule that all composition plans that stop at 36 months are proposed in bad faith would be inconsistent with congressional intent in §§ 1322(c) [redesignated as § 1322(d) by Pub. L. No. 103-394, § 301, 108 Stat. 4106 (1994)] and 1325(b). The length of the plan is relevant to good faith. That the debtor could increase the percentage of repayment by extending the plan beyond three years is not alone sufficient to prove lack of good faith.); In re Bush, 120 B.R. 403 (Bankr. E.D. Tex. 1990) (“Minimal length” of 36-month plan is indicative of lack of good faith.).

 

4  See, e.g.,In re Leone, 292 B.R. 243, 245 (Bankr. W.D. Pa. 2003) (Denies confirmation of 36-month plan that would cure default with respect to a $205,000 mortgage on real property valued at $138,000 and pay 11% to unsecured creditors. As an alternative to finding cheaper housing, “the Debtors could elect to extend the payments under the Plan for a term of up to 60 months.”); In re McGovern, 278 B.R. 888, 895 (Bankr. S.D. Fla. 2002) (“[A] debtor cannot propose a plan in good faith for the statutory minimum period of thirty-six months that proposes to pay only eleven percent of debts that would be non-dischargeable under chapter 7, when the debtor has the wherewithal to fund a plan of longer duration to increase the payout on such debts.”); In re Walsh, 224 B.R. 231 (Bankr. M.D. Ga. 1998) (36-month plan that will pay for two cars, only one of which is necessary, while paying nothing to unsecured claim holders is lacking of good faith, but good-faith problem could be cured by extending the plan beyond 36 months.); In re Games, 213 B.R. 773, 780 (Bankr. E.D. Wash. 1997) (Lack of good faith that debtor extended plan to only 49 months to permit 100% payment of nondischargeable traffic fines but 0% to other unsecured claim holders. “A refusal by the Debtors to go beyond the bare minimum effort is evidence of their intent to take advantage of the substantial benefits of Chapter 13 super discharge but avoid any detriment. . . . It does not appear from the record that it would cause any undue burden on the Debtors if they extended the term of their plan to the full five years.”); In re McCall, 199 B.R. 173, 175 (Bankr. E.D. Ark. 1996) (“[B]ad faith is demonstrated by the debtors’ plan under which they retain land and other assets by ‘redeeming’ the property without making any payments. . . . The Court deems it appropriate to permit the debtors to either amend their plan to propose to pay all of their unsecured debt by extending the term of the plan and increasing payments or re-convert the case to a case under Chapter 7.”); In re Smith, 130 B.R. 102, 105 (Bankr. D. Utah 1991) (36-month plan is not in good faith when substantial portion of unsecured debt is student loans and debtor could pay substantially more than 30% if debtor extended the plan to 60 months. “The good faith requirement for confirmation of a Chapter 13 plan cannot be met if the debtors are not putting forth their best efforts to repay creditors. The court must find that the length of the plan is a relevant consideration. . . . A 60-month plan is imperative in order for these debtors to meet the good faith requirement for confirmation.”); In re Kourtakis, 75 B.R. 183 (Bankr. E.D. Mich. 1987) (Court denies confirmation of 36-month plan proposing 24% repayment when five-year plan would increase dividend to 40%.); In re Hale, 65 B.R. 893 (Bankr. S.D. Ga. 1986) (Court denies confirmation of 2%, 36-month plan when debtor could pay 80% of unsecured claim in 60 months.); In re Williams, 42 B.R. 474 (Bankr. E.D. Ark. 1984) (Court denies confirmation of 36-month plan proposing to pay 37% of nondischargeable student loans, noting that debtor could extend plan to 60 months and make a more meaningful repayment.); In re Keiser, 35 B.R. 496 (Bankr. D. Del. 1983) (Debtor’s failure to seek extension to five years was cited as evidence of lack of good faith.).

 

5  In re Tobiason, 185 B.R. 59, 63–64 (Bankr. D. Neb. 1995) (“[I]n the usual Chapter 13 case, failure to provide for payments beyond 36 months does not evidence bad faith. However, I recognize that the duration of payments under a proposed plan is relevant to the good faith analysis in those egregious cases where a Chapter 13 debtor seeks to discharge a debt which arose from a willful and malicious injury. . . . Unlike my previous decision of [In re Swan, 98 B.R. 502 (Bankr. D. Neb. 1989)], where I concluded that a three year plan indicated a lack of good faith, the present case does not involve payment of a previously determined judgment for a physically violent act. . . . [W]hile the alleged breach of federal and state securities laws is egregious, I conclude that it is not of the same nature as the physically violent acts that were the subject matter of [In re Swan]. . . . [A] finding of lack of good faith is not warranted by the failure of the plan to provide for payments beyond 36 months.”).

 

6  See, e.g., Ed Schory & Sons, Inc. v. Francis (In re Francis), 273 B.R. 87 (B.A.P. 6th Cir. 2002) (That the length of debtor’s plan is the maximum permitted by the Bankruptcy Code is one factor in support of good faith notwithstanding that plan will pay only 2% or 3% of a $229,000 judgment declared nondischargeable in prior Chapter 7 case.), aff’d, No. 02-3288, 2003 WL 21782600 (6th Cir. July 31, 2003) (unpublished); Mason v. Young (In re Young), 237 B.R. 791, 798 (B.A.P. 10th Cir. 1999) (That the debtor amended plan to increase the length from 36 to 60 months to provide a small dividend to unsecured claim holders is one factor in good-faith analysis. “The Code does not require that a debtor file a five-year plan if he cannot pay off all of his debt with a three-year plan. . . . [A] three-year term may be some circumstantial evidence that Young proceeded in bad faith, it is only one factor that must be considered together with all the other evidence.”), aff’d on other grounds, 237 F.3d 1168 (10th Cir. 2001); In re Wilcox, 251 B.R. 59, 68 (Bankr. E.D. Ark. 2000) (That debtors extended plan to 60 months is a factor favoring confirmation of an 18% plan that compromised a large claim that would probably be nondischargeable in a Chapter 7 case. “This relatively small distribution to unsecured creditors is partially offset by the fact that the Debtors are dedicating all disposable income to a sixty month plan to repay debts. . . . The Debtors have further maximized the dividend to the general unsecured creditors by extending their plan by twenty-four months, something they are not required to do under the Bankruptcy Code. Thus, while the payments to general unsecured creditors are relatively small, those payments clearly demonstrate a sincere effort to honor their obligations.”); In re Martin, 233 B.R. 436, 446 (Bankr. D. Ariz. 1999) (“The 55-month plan is 5 months short of the maximum time allowed by statute, § 1322(d), and 19 months longer than minimum required. This demonstrates long-term commitment while allowing for a small cushion in the event a temporary moratorium is needed during a dry spell.”); In re Nottingham, 228 B.R. 316, 320 (Bankr. M.D. Fla. 1998) (“The duration of Debtor’s plan is sixty-months, the statutory maximum, suggesting a good faith effort to commit all disposable income to fund her plan.”); In re Sharon, 200 B.R. 181 (Bankr. S.D. Ohio 1996) (that the debtor proposes a 60-month plan and has established cause to extend the plan to 60 months is one factor in support of good faith, notwithstanding that the debtor’s 60-month, 24% plan permits the debtor to keep a $24,737.50 car.); In re Allard, 196 B.R. 402, 413 (Bankr. N.D. Ill.) (“The Debtor has agreed to increase the payment term from 48 to 60 months, which is indicative of an intent by the Debtor to pay as much of his disposable income to his creditors during the maximum allowable term under § 1322(d).” Applying totality-of-circumstances test and factors from Ravenot v. Rimgale (In re Rimgale), 669 F.2d 426 (7th Cir. 1982) and In re Smith, 848 F.2d 813 (7th Cir. 1988), confirms 60-month plan that pays 24% of a $140,000 claim that is potentially nondischargeable in a Chapter 7 case.), aff’d, 202 B.R. 938 (N.D. Ill. 1996); In re Corino, 191 B.R. 283, 291 (Bankr. N.D.N.Y. 1995) (Applying totality-of-circumstances test, debtor’s proposal to pay all disposable income to a five-year plan “demonstrates a willingness to pay her debt.” Court rejects good-faith challenge to fourth Chapter 13 case filed to deal with criminal and civil judgments for embezzlement.); In re Anadell, 190 B.R. 309, 311 (Bankr. S.D. Ohio 1995) (That the debtor “has proposed a plan of maximum duration” is a factor supporting good faith for a 60-month plan that pays 9% of a $72,302.57 judgment for misappropriation of client funds by a former attorney.); In re Harlan, 179 B.R. 133, 140 (Bankr. W.D. Ark. 1995) (That the debtor’s “modified plan is a sixty (60) month plan, the maximum permitted by statute,” is evidence in support of good faith of 14% plan managing claim for embezzlement that was declared nondischargeable in a Chapter 7 case.); In re Short, 176 B.R. 886, 889 (Bankr. S.D. Ind. 1995) (“[T]he Debtors . . . proposed a Plan which voluntarily extended plan payments an additional year beyond the three-year requirement, thereby resulting in a larger dividend to unsecured creditors. Chapter 13 Debtors are not required to pay more than three years’ disposable income into a plan in order to obtain a discharge under this chapter. . . . The fact that Debtors chose to do so in this case is indicative of good faith.”); Brown v. Davis (In re Davis), 172 B.R. 696 (Bankr. S.D. Ga. 1993) (That the debtor proposes to fund the plan for a period of five years is evidence of good faith in dealing with debts that the debtor was ordered to assume by a state domestic relations court.). But see In re Fretwell, 281 B.R. 745, 751 (Bankr. M.D. Fla. 2002) (“Debtors’ Amended Chapter 13 plan was for 36 months . . . . Debtors orally amended their plan at the confirmation hearing to extend the plan to sixty months . . . . Debtors’ last minute extension of plan payments, some four months after their Amended Chapter 13 plan was filed, demonstrates a belated attempt to settle with the trustee rather than a sincere effort to pay their unsecured creditors.”).

 

7  See, e.g., In re Klevorn, 181 B.R. 8, 11–12 (Bankr. N.D.N.Y. 1995) (Court rejects good-faith challenge to plan that surrenders rental property in full satisfaction of the only secured claim and pays the one unsecured claim holder in full with a single monthly payment of $1,085. Although the debtor has “no genuine need to seek the protection of the Code . . . [t]he weight of the factors favors a finding of good faith on the part of the Debtor in filing his Petition. There is no evidence of any hidden agenda.” The court noted “some difficulty rationalizing how a Chapter 13 plan of one month’s duration constitutes a ‘reorganization.’” There was no indication that the debtor was “in any way financially distressed,” but “Congress clearly provided a debtor, who seeks to reorganize, with the option of proposing a plan by which he/she may surrender property securing the claim of a creditor. That is exactly what the Debtor did in this case. It is possible that the Petition was filed simply because the Debtor found the Delaware Property burdensome.”). Accord United States v. Smith (In re Smith), 199 B.R. 56, 58–60 (N.D. Okla. 1996) (Affirms confirmation of 2% plan that discharges a $130,516.22 debt that survived discharge in a prior Chapter 7 case. Proposed plan would make a single payment of $19,620—a gift from the debtor’s sisters to pay attorney’s fees, secured claims in full and approximately 2% of unsecured claims. Applying Flygare v. Boulden, 709 F.2d 1344 (10th Cir. 1983) factors, “Appellees are submitting all of their disposable income for three years to the Plan.” It is not obvious how this calculation was made. “The fact of successive filings does not, by itself, constitute bad faith. . . . [T]he Bankruptcy Court presided over the prior Chapter 7 filing, and consequently was aware of the details related to the discharge/non-discharge of Appellees’ debts in that prior proceeding. . . . Nothing indicates that the debts which Appellees now seek to discharge under Chapter 13 were procured through fraud. . . . Plan provides for the payment of all of their secured debt. . . . Under the facts of this case the Court cannot conclude that the Bankruptcy Court’s determination that Appellee was acting in good faith is clearly erroneous.”).

 

8  See § 201.1 [ Cause for Extension beyond Three Years ] § 112.4  Cause for Extension beyond Three Years.

 

9  See § 199.1 [ General Rule: Three Years, More or Less ] § 112.1  General Rule: Three Years, More or Less. See also § 166.1 [ Counting the Three-Year Period ] § 91.5  Counting the Three-Year Period.

 

10  See, e.g., In re Rosencranz, 193 B.R. 629 (Bankr. D. Mass. 1996) (Debtor’s failure to prove cause for extension of proposed plan to 60 months is one factor indicative of bad faith.).

 

11  See §§ 163.1 [ In General ] § 91.1  In General and 166.1 [ Counting the Three-Year Period ] § 91.5  Counting the Three-Year Period.

 

12  In re Humphrey, 165 B.R. 508 (Bankr. M.D. Fla. 1994). Accord In re Burris, 208 B.R. 171, 178 (Bankr. W.D. Mo. 1997) (“[T]he debtor must voluntarily choose to extend the payment terms beyond 36 months. Such a request should be denied unless it is in the best interest of the debtor, therefore, Mr. Petry cannot impose an extension upon Ms. Burris. . . . Ms. Burris proposed her plan in good faith, and that she is committing all of her disposable income to make her plan payments. Mr. Petry, therefore, has no standing to require that she extend her plan payments beyond the 36 months required by sections 1322(c) [(d)] and 1325(b).”); In re Martin, 189 B.R. 619, 625 (Bankr. E.D. Va. 1995) (With respect to the 36-month duration of the proposed plan, “[t]he time limit provisions of § 1322(d) . . . are provisions enacted for the debtor’s benefit. To require the Chapter 13 debtor to extend his plan beyond the three year minimum period in order to create a cache of payments much larger than the debtor’s current liquidated asset value—ostensibly for the creditors’ sole benefit—would thwart the statutory requirements and intent of Chapter 13.” Court denied confirmation on classification and disposable income test grounds, but defects appear to be repairable.); In re Coburn, 175 B.R. 400, 402 (Bankr. D. Or. 1994) (“The debtor’s confirmed plan in this case was estimated by the chapter 13 trustee to require 46 months to complete. . . . ‘[C]ause’ to exceed 3 years must be something for the debtor’s benefit. . . . If ‘cause’ under § 1322(c) were construed to mean something that would benefit creditors, then all plans would be required to either pay 100% or to continue for at least 5 years. . . . [A] debtor may propose a plan that exceeds 3 years if he finds some benefit in doing so but . . . creditors may not force a debtor to do so. It is illogical to attempt to find some indication of bad faith when a debtor fails to exercise an option granted to him because he perceives no benefit in its exercise.”).

 

13  See Villanueva v. Dowell (In re Villanueva), 274 B.R. 836, 842–43 (B.A.P. 9th Cir. 2002) (Amended 36-month plan paying 19% to unsecured claim holders satisfies good-faith test notwithstanding that original 60-month plan paid 50% of unsecured claims. Original 60-month plan paid a claim secured by jewelry. Trustee objected to confirmation. Debtor responded by surrendering the jewelry and amending the plan to 36 months. “[T]he proposal of a 36-month plan, standing alone, even where the debtor initially proposed a longer term, does not constitute bad faith. . . . Villanueva initially proposed a 60-month plan, asserting as cause that he needed 60 months to pay his secured (and perhaps nondischargeable) debt. . . . [O]nce he had surrendered the jewelry, Villanueva had no motivation to extend the plan term beyond 36 months. His mere ability to do so by paying more does not equal cause . . . . Reducing the plan term may seem opportunistic, perhaps even unfair, but we cannot conclude the debtor’s proposal of his second amended plan was not in good faith. Villanueva’s motivation to stay in his plan 60 months understandably evaporated once he no longer had the jewelry he wanted to keep. This was an entirely foreseeable result of the trustee’s objection, as was the attendant reduction in payout to unsecured creditors.”); In re Mandarino, 277 B.R. 464, 467–68 (Bankr. E.D.N.Y. 2002) (That four-year plan could be increased to five years to pay an additional $550 toward a $450,000 unsecured claim is not a “pragmatic conception of good faith.” “[O]bjections to good faith should not be used to bully debtors into a five-year term or to create a backdoor or end-around the three-year limit of section 1322(d) . . . . [T]he objecting creditor is simply haggling over a $550 increment. An objection based upon a $550 increment is not sufficiently weighty.”), corrected and superseded by No. 801-87252-288, 2002 WL 1050388 (Bankr. E.D.N.Y. May 20, 2002).

 

14  Many such cases are collected in Appendix F. See, e.g., In re Lancaster, 280 B.R. 468, 481 (Bankr. W.D. Mo. 2002) (“While the Debtor cannot be required to file a plan extending beyond 36 months, the Court considers that the proposed 36-month plan, when combined with the rather small monthly payments he has proposed, to not be proposed in good faith.”).

 

15  224 B.R. 231 (Bankr. M.D. Ga. 1998).

 

16  See § 165.1 [ Reasonably Necessary for Maintenance or Support ] § 91.3  Reasonably Necessary for Maintenance or Support.

 

17  The disposable income test in § 1325(b) is applicable only upon objection by the trustee or the holder of an allowed secured claim. See 11 U.S.C. § 1325(b)(1), discussed in § 163.1 [ In General ] § 91.1  In General.

 

18  224 B.R. at 235–38.