§ 108.3     Percentage of Payment
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 108.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The reported cases demonstrate that the intensity of good-faith scrutiny goes up as the percentage payment of unsecured debt goes down. Deep compositions—plans that pay a small percentage of allowed unsecured claims—provoke good-faith objections and court review. Every jurisdiction has a Chapter 13 culture that includes some general rules about what percentage of payment will escape an objection to confirmation from the Chapter 13 trustee or avoid elevated scrutiny by the court. The reported decisions often cite percentage of payment of unsecured debt as “relevant” evidence bearing on good faith at confirmation, but it can rarely be said with any certainty what percentage is decisive.

[2]

Many reported decisions confirm plans over good-faith objections when the debtor proposes to pay little, if anything, to unsecured claim holders.1 Many reported decisions deny confirmation for lack of good faith when the payment to unsecured creditors is small.2 There is no pattern to these deep composition cases. For every reported decision denying confirmation of a small-percentage plan, there is another on similar facts confirming a similar plan, sometimes from the same judicial district.


 

1  In re Smith, 286 F.3d 461 (7th Cir. 2002) (10% plan); Mason v. Young (In re Young), 237 F.3d 1168 (10th Cir. 2001) (4% plan); In re Day, No. 98-3182, 1999 WL 96117, at *4 (7th Cir. Feb. 17, 1999) (Table decision at 172 F.3d 52) (.4% plan); In re Chaffin, 816 F.2d 1070 (5th Cir. 1987) (2% plan); Wisconsin Higher Educ. Corp. v. Bear, 789 F.2d 577 (7th Cir. 1986) (6% plan); Ed Schory & Sons, Inc. v. Francis (In re Francis), 273 B.R. 87 (B.A.P. 6th Cir. 2002) (2 or 3% plan), aff’d, No. 02-3288, 2003 WL 21782600 (6th Cir. July 31, 2003) (unpublished); Keach v. Boyajian (In re Keach), 243 B.R. 851 (B.A.P. 1st Cir. 2000) (5% plan); Smyrnos v. Padilla (In re Padilla), 213 B.R. 349 (B.A.P. 9th Cir. 1997) (4% plan); In re Porter, 102 B.R. 773 (B.A.P. 9th Cir. 1989) (45 to 50% plan); United States v. Smith (In re Smith), 199 B.R. 56 (N.D. Okla. 1996) (2% plan); Colorado Student Obligation Bond Auth. v. Thompson (In re Thompson), 116 B.R. 794 (D. Colo. 1990) (2% plan); Holiday v. Tennessee Student Assistance Corp. (In re Holiday), 75 B.R. 265 (M.D. Tenn. 1986) (1% plan); In re Ault, 271 B.R. 617 (Bankr. E.D. Ark. 2002) ($50 per month toward $41,220 of debt); In re Davis, 269 B.R. 747 (Bankr. S.D. Ohio 2001) (10% plan); In re Goodrich, 257 B.R. 101 (Bankr. M.D. Fla. 2000) ($1,500 out of payments totaling $120,000); In re Wilcox, 251 B.R. 59 (Bankr. E.D. Ark. 2000) (18% plan); In re Nottingham, 228 B.R. 316 (Bankr. M.D. Fla. 1998) (14% plan); In re Nipper, 224 B.R. 756 (Bankr. E.D. Mo. 1998) (10% plan); In re Smith, 222 B.R. 846 (Bankr. N.D. Ind. 1998) (10% plan); In re Burris, 208 B.R. 171 (Bankr. W.D. Mo. 1997) (between 15% and 20% plan); In re Sharon, 200 B.R. 181 (Bankr. S.D. Ohio 1996) (24% plan); In re Alicea, 199 B.R. 862 (Bankr. D.N.J. 1996) (0% plan); In re Allard, 196 B.R. 402 (Bankr. N.D. Ill. 1996) (24% plan); In re Corino, 191 B.R. 283 (Bankr. N.D.N.Y. 1995) (10% plan); In re Weisser, 190 B.R. 453 (Bankr. M.D. Fla. 1995) (4% plan); In re Anadell, 190 B.R. 309 (Bankr. S.D. Ohio 1995) (9% plan); In re Fields, 190 B.R. 16 (Bankr. D.N.H. 1995) (0% plan); In re Martin, 189 B.R. 619 (Bankr. E.D. Va. 1995) (6% plan); In re Harlan, 179 B.R. 133 (Bankr. W.D. Ark. 1995) (14% plan); In re Short, 176 B.R. 886 (Bankr. S.D. Ind. 1995) (20% plan); In re Humphrey, 165 B.R. 508 (Bankr. M.D. Fla. 1994) (38% plan); In re Little, 116 B.R. 615 (Bankr. S.D. Ohio 1990) (25% plan); In re Selden, 116 B.R. 232 (Bankr. D. Or.), aff’d, 121 B.R. 59 (D. Or. 1990) (4% plan); In re Farley, 114 B.R. 711 (Bankr. S.D. Cal. 1990) (15% plan); In re Hughes, 98 B.R. 784 (Bankr. S.D. Ohio 1989) ($100 per month for three years toward $100,000 judgment); In re Castello, 98 B.R. 523 (Bankr. D. Or. 1989), vacated, 123 B.R. 466 (B.A.P. 9th Cir.), aff’d on remand, 127 B.R. 257 (Bankr. D. Or. 1991) (0% plan); In re Winthurst, 97 B.R. 457 (Bankr. C.D. Ill. 1989) (1% plan); In re Sutliff, 79 B.R. 151 (Bankr. N.D.N.Y. 1987) (20% plan); In re Riggleman, 76 B.R. 111 (Bankr. S.D. Ohio 1987) (10% plan); In re Harmon, 72 B.R. 458 (Bankr. E.D. Pa. 1987) (0% plan); In re Gathright, 67 B.R. 384 (Bankr. E.D. Pa. 1986), aff’d, 71 B.R. 343 (E.D. Pa. 1987) (40% plan); In re Williams, 66 B.R. 646 (Bankr. C.D. Ill. 1986) (15% plan); In re Kazzaz, 62 B.R. 308 (Bankr. E.D. Va. 1986) (16% plan); In re Whitehead, 61 B.R. 397 (Bankr. D. Or. 1986) (0% plan); In re Rushton, 58 B.R. 36 (Bankr. M.D. Ala. 1986) (10% plan); In re Schyma, 68 B.R. 52 (Bankr. D. Minn. 1985) (9% plan); In re Perkins, 55 B.R. 422 (Bankr. N.D. Okla. 1985) (22% plan); In re Krull, 54 B.R. 375 (Bankr. D. Colo. 1985) (20% plan); In re Peterson, 53 B.R. 339 (Bankr. D. Or. 1985) (25% plan); In re Dos Passos, 45 B.R. 240 (Bankr. D. Mass. 1984) (10% plan); In re McAloon, 44 B.R. 831 (Bankr. E.D. Va. 1984) (25% plan); In re Eppers, 38 B.R. 301 (Bankr. D.N.M. 1984) (16% plan); In re Ramus, 37 B.R. 723 (Bankr. N.D. Ga. 1984) (2% plan); In re Ali, 33 B.R. 890 (Bankr. D. Kan. 1983) (0% plan); Illinois Dep’t of Pub. Aid v. Jones, 31 B.R. 485 (Bankr. N.D. Ill. 1983) (10% plan).

 

2  Banks v. Vandiver (In re Banks), 267 F.3d 875 (8th Cir. 2001) (15% plan); Gier v. Farmers State Bank (In re Gier), 986 F.2d 1326 (10th Cir. 1993) (4% plan); Noreen v. Slattengren, 974 F.2d 75 (8th Cir. 1992) (“meager” plan); Handeen v. LeMaire (In re LeMaire), 898 F.2d 1346 (8th Cir. 1990) (en banc) (42% plan); Hardin v. Caldwell (In re Caldwell), 895 F.2d 1123 (6th Cir. 1990) (37% plan); Pioneer Bank of Longmont v. Rasmussen (In re Rasmussen), 888 F.2d 703 (10th Cir. 1989) (1.5% plan); First United Sav. Bank v. Edwards, 184 B.R. 46 (S.D. Ind. 1995) (40% plan); In re Rice, 72 B.R. 311 (C.D. Del. 1987) (13% plan); In re Sanabria, 52 B.R. 75 (N.D. Ill. 1985) (10% plan); In re Beauty, 42 B.R. 655 (E.D. La. 1984) (0% plan); In re Stanley, 296 B.R. 402 (Bankr. E.D. Va. 2002) (10% plan); In re Lancaster, 280 B.R. 468 (Bankr. W.D. Mo. 2002) (3% plan); In re Holder, 263 B.R. 622 (Bankr. N.D. Ala. 2001) (30% plan); In re Haskell, 252 B.R. 236 (Bankr. M.D. Fla. 2000) (8% plan); In re Hendricks, 250 B.R. 415 (Bankr. M.D. Fla. 2000) (0% plan); In re Baird, 234 B.R. 546 (Bankr. M.D. Fla. 1999) (.72% plan); In re Petersen, 228 B.R. 19 (Bankr. M.D. Fla. 1998) (2% plan); In re Walsh, 224 B.R. 231 (Bankr. M.D. Ga. 1998) (0% plan); In re Craig, 222 B.R. 266 (Bankr. E.D. Va. 1998) (0% plan); In re Mathenia, 220 B.R. 427 (Bankr. W.D. Okla. 1998) (7% plan); In re Tucker, 220 B.R. 359 (Bankr. W.D. Tenn. 1998) (30% plan); In re Georgeff, 218 B.R. 403 (Bankr. S.D. Ohio 1998) (30% plan); In re McLaughlin, 217 B.R. 772 (Bankr. W.D. Tex. 1998) ($2,455 toward $177,031.02 judgment); In re Kelly, 217 B.R. 273 (Bankr. D. Neb. 1997) (8.5% plan); In re Zaleski, 216 B.R. 425 (Bankr. D.N.D. 1997) (11.5% plan); In re Pope, 215 B.R. 92 (Bankr. S.D. Ga. 1997) (10% plan); In re Games, 213 B.R. 773 (Bankr. E.D. Wash. 1997) (0% plan); In re Jobe, 197 B.R. 823 (Bankr. W.D. Tex. 1996) (17% plan); In re Pickering, 195 B.R. 759 (Bankr. D. Mont. 1996) (2% plan); In re Thompson, 191 B.R. 967 (Bankr. S.D. Ga. 1996) (0% plan); In re Dingley, 189 B.R. 264 (Bankr. N.D.N.Y. 1995) (10% plan); In re Farmer, 186 B.R. 781 (Bankr. D.R.I. 1995) (0% plan); In re Oliver, 186 B.R. 403 (Bankr. E.D. Va. 1995) (17% plan); In re Kasun, 186 B.R. 62 (Bankr. E.D. Va. 1995) (34.9% plan); In re Clements, 185 B.R. 903 (Bankr. M.D. Fla. 1995) (2.9% plan); In re Tobiason, 185 B.R. 59 (Bankr. D. Neb. 1995) (.0035% plan); In re Strauss, 184 B.R. 349 (Bankr. D. Neb. 1995) (0% plan); In re Norwood, 178 B.R. 683 (Bankr. E.D. Pa. 1995) (no payment to victim of assault); In re Wilson, 168 B.R. 260 (Bankr. N.D. Fla. 1994) (minimal distribution); In re Webster, 165 B.R. 173 (Bankr. E.D. Va. 1994) (nothing to unsecured creditors); In re Norman, 162 B.R. 581 (Bankr. M.D. Fla. 1993) (21% plan); In re Sutherland, 161 B.R. 657 (Bankr. E.D. Ark. 1993) (9% plan); In re Carsrud, 161 B.R. 246 (Bankr. D.S.D. 1993) (2.4% plan); In re Murrell, 160 B.R. 128 (Bankr. W.D. Mo. 1993) (52% plan); In re Dunning, 157 B.R. 51 (Bankr. W.D.N.Y. 1993) (1% plan); In re Kuriakuz, 155 B.R. 454 (Bankr. E.D. Mich. 1993) (7.7% plan); In re Saglio, 153 B.R. 4 (Bankr. D.R.I. 1993) (nothing to unsecured creditors); In re Sitarz, 150 B.R. 710 (Bankr. D. Minn. 1993) (7% plan); In re Cordes, 147 B.R. 498 (Bankr. D. Minn. 1992) (46% plan); In re Jahnke, 146 B.R. 830 (Bankr. E.D. Cal. 1992) (0% plan); In re Stone, 145 B.R. 38 (Bankr. C.D. Ill. 1992) (“mere token” plan); In re Ristic, 142 B.R. 856 (Bankr. E.D. Wis. 1992) (less than 1% plan); In re Whipple, 138 B.R. 137 (Bankr. S.D. Ga. 1991) (0% plan); In re Edwards, 132 B.R. 400 (Bankr. E.D. Ark. 1991) (3.2% plan); In re Henricksen, 131 B.R. 467 (Bankr. N.D. Okla. 1991) (between 30% and 64% plan); In re Dillon-Bader, 131 B.R. 463 (Bankr. D. Kan. 1991) (10% plan); In re Smith, 130 B.R. 102 (Bankr. D. Utah 1991) (30% plan); In re Dotson, 124 B.R. 836 (Bankr. N.D. Okla. 1991) (9.58% plan); In re Sieg, 120 B.R. 533 (Bankr. D.N.D. 1990) (13% plan); In re Castonguay, 119 B.R. 256 (Bankr. D. Kan. 1990) (10% plan); In re Carpico, 117 B.R. 335 (Bankr. S.D. Ohio 1990) (8% plan); In re Carver, 110 B.R. 305 (Bankr. S.D. Ohio 1990) (10% plan); In re Jacobs, 102 B.R. 239 (Bankr. E.D. Okla. 1989) (7% plan); In re Carr, 95 B.R. 71 (Bankr. S.D. Ohio 1989) (30% plan); In re McKinney, 93 B.R. 135 (Bankr. S.D. Ohio 1988) (20% plan); In re Makarchuk, 76 B.R. 919 (Bankr. N.D.N.Y. 1987) (45% plan); In re Kourtakis, 75 B.R. 183 (Bankr. E.D. Mich. 1987) (24% plan); In re Carbajal, 73 B.R. 446 (Bankr. S.D. Fla. 1987) (20% plan); In re Terrill, 68 B.R. 441 (Bankr. C.D. Ill. 1987) (0% plan); In re Hazel, 68 B.R. 287 (Bankr. E.D. Mich. 1986), aff’d, 95 B.R. 481 (E.D. Mich. 1988) (1% plan); In re Hale, 65 B.R. 893 (Bankr. S.D. Ga. 1986) (2% plan); In re Todd, 65 B.R. 249 (Bankr. N.D. Ill. 1986) (26% plan); In re Geehan, 59 B.R. 600 (Bankr. S.D. Ohio 1986) (10% plan); In re Myers, 52 B.R. 248 (Bankr. M.D. Fla. 1985) (18% plan); In re Vance, 49 B.R. 973 (Bankr. D. Minn. 1985) (31% plan); In re Brock, 47 B.R. 167 (Bankr. S.D. Cal. 1985) (10% plan); In re Nkanang, 44 B.R. 955 (Bankr. N.D. Ga. 1984) (1% plan); In re Williams, 42 B.R. 474 (Bankr. E.D. Ark. 1984) (37% plan); In re Smith, 39 B.R. 57 (Bankr. S.D. Fla. 1984) (6% plan); In re Dalby, 38 B.R. 107 (Bankr. D. Utah 1984) (30% plan); In re Johnson, 36 B.R. 67 (Bankr. S.D. Ill. 1984) (10% plan); In re Boyd, 57 B.R. 410 (Bankr. N.D. Ill. 1983) (10% plan); In re Keiser, 35 B.R. 496 (Bankr. D. Del. 1983) (6.5% plan); In re Canda, 33 B.R. 75 (Bankr. D. Or. 1983) (14% plan); In re Sanders, 28 B.R. 917 (Bankr. D. Kan. 1983) (10% plan); Margraf v. Oliver, 28 B.R. 420 (Bankr. S.D. Ohio 1983) (7% plan).