Cite as: Keith M. Lundin, Lundin On Chapter 13, § 114.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
Preconfirmation modification is most often used to fix errors, mistakes, and omissions in the original plan. The original plan is usually filed with the petition1 and is based on information that further investigation and development of the case may demonstrate to be not wholly accurate. It is not uncommon for debtors to forget to tell counsel about a claim or to misstate amounts of debt. Preconfirmation modification is the appropriate way to correct the omission or error.
It has been held that the debtor can modify the plan prior to confirmation to provide for payment of claims that were omitted in the original schedules.2 Sometimes correcting a single error or omission will require several modifications. If a claim has been omitted, it may be necessary to provide for that claim in the modified plan and to adjust the payments to other creditors, reclassify claims or increase the amount the debtor must pay into the plan. A common mistake of debtor’s counsel is to propose a modification that adds an omitted claim without adjusting other affected elements of the plan. Consultation with the Chapter 13 trustee is advisable if the modification significantly changes the original plan.
One common mistake in Chapter 13 plans that may not be fixable by preconfirmation modification is a miscalculation in the amount that the debtor must pay to the trustee. As mention above,3 in In re Walters,4 the original plan called for weekly payments of $135. Three months after filing the original plan, the debtor filed a modified plan to reduce the weekly payment to $52. The debtor had accumulated a $790 delinquency in payments under the original plan, and the modified plan did not propose to cure that delinquency. Acknowledging that the modified plan became “the plan” under § 1323(b), the court stated the issue as “whether the modified plan becomes ‘the plan’ retroactively for purposes of calculating preconfirmation payment delinquency.” The court held that the debtor could not use preconfirmation modification under § 1323 to retroactively alter the debtor’s obligation to commence making payments under § 1326 consistent with the original plan:
[A]n amended plan replaces the prior plan. . . . [T]his means that the amended plan terms simply become the new terms. The replacement does not alter obligations which have already accrued. . . . Allowing a debtor to cure pre-amendment plan payment defaults by simply filing an amended plan which reduces the plan payments would open a Pandora’s Box.5
1 See § 38.2 [ Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents ] § 37.4 Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents.
2 In re Hartdegen, 67 B.R. 230 (Bankr. N.D. Ala. 1986).
3 See § 209.1 [ Timing, Procedure and Form ] § 114.1 Timing, Procedure and Form.
4 223 B.R. 710 (Bankr. W.D. Mo. 1998).
5 223 B.R. at 713.