§ 120.3     11 U.S.C. § 1327(b): Vesting Effect on Property of Estate
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 120.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Section 1327(b), borrowed from Chapter 11,1 states that “except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.”2 There is no analogue to § 1327(b) under the former Bankruptcy Act.3 Section 1327(b) was not amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).4

[2]

Given its ordinary dictionary meaning, “vesting” means that property of the estate is “put in possession or control of” the debtor.5 A legal dictionary defines “vest” as “to confer ownership” or “to give . . . an immediate, fixed right of present or future enjoyment.”6 “Possession” of property of the estate is always in the debtor in a Chapter 13 case—absent a contrary provision of the plan or confirmation order.7

[3]

The Bankruptcy Code recognizes important distinctions between property of the estate and property of the debtor. Property of the estate is comprehensively defined in § 541.8 The automatic stay in § 362 has separate subsections precluding collection action “against property of the estate”9 and “against property of the debtor.”10 In cases filed on or after October 17, 2005, there is controversy whether the stay that expires 30 days after the petition for a repeat filer under § 362(c)(3) is only the stay of acts against the debtor and against property of the debtor or the entire stay—including acts with respect to property of the estate.11 It is reasonable to conclude that the vesting of “all of the property of the estate in the debtor” under § 1327(b) means exactly what it says—except as otherwise provided in the plan or the order of confirmation, property of the Chapter 13 estate remains in the possession, ownership and control of the debtor upon confirmation of a plan.12

[4]

The vesting of property in the debtor at confirmation under § 1327(b) has profound implications for debtors and creditors. Whether the Chapter 13 estate continues to exist after confirmation and the contents of that estate directly determine whether and to what extent the automatic stay continues to protect the property that was property of the estate.13 Of special importance to lienholders, § 1327(c) is slaved to the vesting effect in § 1327(b) in this critical way: property that vests in the debtor under § 1327(b) is “free and clear” of the claims or interests of creditors that are provided for by the confirmed plan.14

[5]

The vesting of property in the debtor at confirmation affects the existence and extent of administrative expenses after confirmation because many administrative expenses are limited by § 503(b)(1) to the actual, necessary costs and expenses of “preserving the estate.”15 The vesting effect at confirmation can change the property that remains in the estate to be administered by a Chapter 7 trustee in the event of conversion after confirmation.16 Several courts have focused on the vesting effect in § 1327(b) as a limitation on bankruptcy court jurisdiction after confirmation in Chapter 13 cases.17 Because exemptions are related by the Code to property of the estate, the vesting of property in the debtor at confirmation has spawned interesting exemption litigation.18 The vesting of the estate in the debtor has an uncertain effect on the debtor’s rights and responsibilities with respect to that property after confirmation, including the sale of property by the debtor after confirmation.19 Whether a cause of action has vested in the debtor may impact the debtor’s right to pursue that cause of action in bankruptcy court or elsewhere.20

[6]

These important issues are all linked to the vesting effect of confirmation in § 1327(b). Years of litigation in these other contexts has produced a fruit salad of interpretations of the vesting effect in § 1327(b).

[7]

The basic problem is that § 1327(b) is an amalgam of concepts drawn from parts of the Code that work well enough in their separate contexts but work less well cobbled together. Property of the estate is a phrase of art important to almost everything in bankruptcy practice. In a Chapter 13 case, property of the estate has a different meaning than under Chapter 7 of the Code.21 In addition to the forms of property described in § 541, in a Chapter 13 case § 1306(a) draws into the estate “(1) all property of the kind specified in [§ 541] that the debtor acquires after the commencement of the case . . . and (2) earnings from services performed by the debtor after the commencement of the case.”22 Congress borrowed the vesting-effect language in § 1327(b) from Chapter 1123—a chapter in which property of the estate has a very different meaning for all entities except individuals after BAPCPA.24 In particular, property of the estate in a Chapter 11 case filed by an entity other than an individual does not include most forms of property acquired after the petition.25 The estate is substantially fixed at the petition in a typical Chapter 11 case, and it is easy enough to determine what vests in the debtor at confirmation under § 1114(b). The estate is constantly acquiring new property (and income) in a Chapter 13 case, and the vesting of that property in the debtor at confirmation is territory that was unique to Chapter 13 practice under the Code prior to the 2005 Act.26

[8]

When property of the estate vests in the debtor at confirmation, the collision of §§ 1306 and 1327(b) produces two tough questions:

 

  
Does the Chapter 13 estate continue to exist after confirmation?
 

 

 

 

  
If the estate continues to exist, what is in the Chapter 13 estate after confirmation?
 

 

 

[9]

These questions have arisen in reported Chapter 13 cases in every context mentioned above. Not all of the reported cases fit neatly in the following construct, but for the most part there are four principal views of the vesting effect of confirmation on property of the Chapter 13 estate. A fifth view has emerged in a few recent decisions.

 

  
Estate-termination approach—At confirmation the estate ceases to exist and all property of the estate, whether acquired before or after confirmation, becomes property of the debtor.27
 

 

 

 

  
Estate-transformation approach—At confirmation, all property of the estate becomes property of the debtor except property essential to the debtor’s performance of the plan; the Chapter 13 estate continues to exist, but it contains only property necessary to performance of the plan, whether acquired before or after confirmation.28
 

 

 

 

  
Estate-replenishment approach—At confirmation, all property of the estate becomes property of the debtor; the Chapter 13 estate continues to exist and “refills” with property defined in § 1306 that is acquired by the debtor after confirmation, without regard to whether that property is necessary to performance of the plan.29
 

 

 

 

  
Estate-preservation approach—The vesting of property in the debtor under § 1327(b) does not remove any property from the Chapter 13 estate, whether acquired before or after confirmation; property remains in the estate until the case is closed, dismissed or converted. The debtor’s rights and responsibilities with respect to property of the estate may change somewhat at confirmation, but the existence and composition of the estate are not disturbed by § 1327(b).30
 

 

 

 

  
Conditional-vesting approach—At confirmation vesting gives the debtor an immediate and fixed right to use estate property, but that right is not final until the debtor completes the plan and obtains a discharge.31
 

 

 

[10]

It is not always clear which approach a court has adopted, with the distinctions between estate preservation and estate replenishment particularly cloudy. During the first decade or so of practice under the Code, there seemed to be a trend in favor of the third interpretation of § 1327(b)—the Chapter 13 estate emptied at confirmation but then refilled as § 1306 brought new property into the estate. More recently, a majority of the § 1327(b) cases have leaned toward the second approach—“estate transformation” in which confirmation returns property to the debtor that is not necessary to fulfillment of the plan without regard to when the property is acquired. The Seventh, Eighth and Eleventh Circuits are more or less in the estate-transformation camp,32 but recent Eleventh Circuit opinions seem to find exceptions to strict application of the transformation formula.33

[11]

The most recently expressed fifth view—“conditional vesting”—claims to give full meaning to the interplay of §§ 1306 and 1327 by defining vesting at confirmation as a conditional right to possess and use estate assets. Under this approach, full benefits of vesting are realized only upon completion of the confirmed plan and receipt of discharge. As explained by the district court in Woodard v. Taco Bueno Restaurants, Inc.:34

        Up until now, all of the [other four] approaches have read the term “vest” to mean that a debtor receives the right to enjoy his assets, which were transferred to the bankruptcy estate at the commencement of the chapter 13 proceeding, free and clear of any claims of any allowed unsecured creditor at the time of confirmation. In light of chapter 13 and what it seeks to achieve, however, the Court concludes that that is an incorrect interpretation of what is meant by “vest” in section 1327.
        Of pivotal importance to a correct and internally consistent construction of the bankruptcy code is this: unlike other chapters of the code, chapter 13 does not require a debtor to liquidate most of his assets. . . . But section 541 does provide for the creation of a bankruptcy estate at the commencement of a chapter 13 bankruptcy, and section 1306 furthers its scheme and logic by requiring any newly acquired assets to be included. Also, unlike other chapters in the code, chapter 13 allows for a debtor to remain in possession of those assets even though their ownership has been transferred to the bankruptcy estate. . . . Thus, the Court must conclude that at the commencement of a chapter 13 bankruptcy, the bankruptcy estate is created via the taking of title to all assets; the estate continues to exist until the first to occur of closure, dismissal, and conversion; and any § 541 assets the debtor acquires after commencement but before dismissal, closure, or conversion are also added to the estate. . . . The debtor, however, keeps possession of those assets even though they are owned by the bankruptcy estate.
        But at the point of confirmation, section 1327 vests in the debtor all property of the bankruptcy estate free and clear of any claims of any creditor provided for by the plan. The bankruptcy code does not provide a definition of the term “vest.” . . .
        In the absence of a definition of the term “vest,” the Court must construe it in accordance with its ordinary meaning. . . . Black’s Law Dictionary defines the term “vest” this way: “To give an immediate, fixed right to present or future enjoyment.” . . . Webster defines “vest” as: “To give a person a legally fixed immediate right of present or future enjoyment (as an estate).” . . . Applying these ordinary definitions of the term, the Court believes that at the time of confirmation, the debtor is given an immediate and fixed right to the future enjoyment of the bankruptcy estate, whatever assets it consists of, free and clear of any claims of any creditor provided for by the confirmed plan. Although this is an immediate and fixed right, it is one the debtor does not enjoy until he has faithfully completed his obligations under the plan and is entitled to a discharge.35

 

[12]

This fifth view is in many respects an embellishment of the estate-preservation approach—giving some meaning to “vesting” without upsetting the continuation of an estate that contains pre- and postconfirmation property. The Woodard court was construing vesting in the context of application of judicial estoppel to bar the Chapter 13 debtor from pursuing a cause of action that was not disclosed in the bankruptcy schedules.36 Although concluding that the employment discrimination cause of action, which developed postpetition, was property of the bankruptcy estate and should have been disclosed, the court declined to apply judicial estoppel, finding that “Woodard’s failure to disclose his cause of action under this factual situation based on what was an honest mistaken belief that he had no duty to disclose it amounts to inadvertence.”37

[13]

The view now lagging—“estate replenishment”; that the estate empties at confirmation and then refills—is perhaps best illustrated by a bankruptcy case with memorable facts from the U.S. District Court for the Northern District of Illinois. In Chicago v. Fisher (In re Fisher),38 the city of Chicago booted, towed and finally crushed a Chapter 13 debtor’s car after confirmation. The city claimed the right to do these things based on 10 parking tickets accumulated by the debtor after the petition. The debtor countered that the city violated the stay by immobilizing and destroying her car during the Chapter 13 case. The district court concluded that the city did not violate the stay because at confirmation the car vested in the debtor under § 1327(b) and the city’s claim for postpetition parking tickets was not subject to the automatic stay.39 To reach this conclusion, the district court explained the vesting effect in § 1327(b) this way:

[T]he term “vests” in § 1327(b) does effect a change in the estate and its property. . . . [U]pon confirmation, the property of the estate “vests” or transfers to the debtor, § 1327(b), but the estate survives and there does exist property of the estate after confirmation, § 1306(a). . . . [Section] 1306(a) defines “property of the estate” to include property and earnings acquired by the debtor after the case’s commencement. While the case is pending, the post-petition property and earnings are added to the estate until confirmation, the event that triggers § 1327(b) and “vests” the property of the estate in the debtor. That is, the property interests comprising the pre-confirmation estate property are transferred to the debtor at confirmation, and this “vesting” is free and clear of the claims or interests of creditors provided for by the plan, § 1327(b), (c). Finally, the property of the estate once again accumulates property by operation of § 1306(a) until the case is “closed, dismissed, or converted.”40
[14]

After the Illinois district court reported Fisher, the U.S. Court of Appeals for the Seventh Circuit in Black v. United States Postal Service (In re Heath)41 embraced a different view of § 1327(b). The debtor in Heath was a postal worker. The confirmed plan called for a “take out order,” directing the Postal Service to deduct money from the debtor’s paycheck and send it directly to the Chapter 13 trustee.42 The confirmation order also provided that “the debtor’s income and other assets including accounts receivables [sic] remain estate property to the extent necessary to fulfill the plan.”43

[15]

On receipt of the take out order, the Postal Service charged a $50 fee for making the deduction, citing 5 U.S.C. § 5520a(j)(2). The Chapter 13 trustee filed an adversary proceeding to recover the $50. The Postal Service defended that the trustee lacked standing.44 The Seventh Circuit, through Judge Posner, held that the bankruptcy court lacked jurisdiction over the trustee’s adversary proceeding based on the vesting effect of confirmation under § 1327(b):

The plan as confirmed by the bankruptcy court does not place all of Heath’s income until the completion of the plan in the debtor’s estate and so in the trustee’s control, but only so much of the income (or her other property) as necessary to the fulfillment of the plan. We must therefore consider whether the $50 that the Postal Service deducted from her postal salary as a garnishment fee is necessary to the fulfillment of the plan—necessary, that is, to the payment in full of the creditors’ allowed claims. Conceivably it is—but no effort to establish that Heath’s financial situation is so fragile that the loss of $50 will jeopardize fulfillment of the plan has been made. . . . We read the two sections, 1306(a)(2) and 1327(b), to mean simply that while the filing of the petition for bankruptcy places all the property of the debtor in the control of the bankruptcy court, the plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan. It would presumably be an abuse of discretion for the bankruptcy judge to confirm a plan that retained more of the property in the hands of the trustee than was reasonably necessary to fulfill the plan, though we need not decide that in this case. If the $50 taken from Heath’s wages to pay the Postal Service’s garnishment fee were property of the estate, this adversary action would be within the core jurisdiction of the bankruptcy court. 28 U.S.C. § 157(b)(2)(E). But as it is not property of the estate, and no other basis of core jurisdiction is present, the action can be maintained in the bankruptcy court only if it is “related” to the bankruptcy proceeding, 28 U.S.C. § 1334(b), which means (so far as bears on the present case) only if it is likely to affect the debtor’s estate, . . . of which there is no evidence.45
[16]

In Heath, the Seventh Circuit says that a plan or confirmation order is permitted by § 1327(b) to overcome the vesting effect of confirmation, but it would be “an abuse of discretion” to confirm a plan that overcame the vesting effect more broadly than property “reasonably necessary to fulfill the plan.” The district court opinion in Fisher casts a broader net for § 1327(b)—after confirmation the estate “once again accumulates property by operation of § 1306(a)”46 until the case is closed, dismissed or converted, without regard to whether that property is necessary to performance under the plan. Applying the logic of Heath to the facts in Fisher, if the car was “necessary” to the debtor’s performance of the Chapter 13 plan, the car would have remained in the Chapter 13 estate and the city of Chicago would have booted itself right into trouble with the automatic stay.

[17]

Perhaps the more important holding in Heath is the limit on bankruptcy court jurisdiction that results from the vesting of property under § 1327(b). Heath holds that even “related to” jurisdiction fails with respect to property that vested in the debtor at confirmation that is not “reasonably necessary” to the debtor’s performance under the plan. This jurisdictional holding could interfere with the authority of the bankruptcy court to police the automatic stay with respect to property that vests in the debtor at confirmation.47 Heath calls into question the authority of the debtor and the Chapter 13 trustee to commence and maintain causes of action during the Chapter 13 case.48 If it is an “abuse of discretion” for a bankruptcy court to confirm a plan that broadly overcomes the vesting effect in § 1327(b), then bankruptcy practitioners will be hard pressed even with carefully crafted plans to extend bankruptcy court jurisdiction into the postconfirmation period.49 For example, a bankruptcy court in Alabama applied Telfair and Heath in its sua sponte denial of confirmation of a plan that postponed revesting of estate property, concluding that §§ 1322(b)(9) and 1327(b) don’t permit “an arbitrary delay in the vesting of the estate’s property in the debtor in excess of the portion reasonably anticipated as needed to fund the plan. . . .”50

[18]

Some of the fears raised by the Seventh Circuit’s reasoning in Heath were realized in Telfair v. First Union Mortgage Corp.51 The confirmed plan in Telfair provided for curing default and maintaining payments on a mortgage under § 1322(b)(5).52 The arrearages were cured through the Chapter 13 trustee, and the regular monthly payments were made by the debtor directly to the mortgage holder.53

[19]

After the petition, the debtor defaulted on direct payments, and the mortgage holder incurred attorney fees filing motions for relief from the stay and incurred expenses for force-written hazard insurance. As it (erratically) received payments directly from the debtor, the mortgage holder reimbursed itself for attorney fees and insurance premiums, enlarging the default. The debtor sought sanctions on the theory that the mortgage holder violated the automatic stay when it intercepted the debtor’s payments and applied them other than as anticipated by the confirmed plan.

[20]

Citing Heath, the Eleventh Circuit adopted the “estate transformation approach,” holding that “‘while the filing of the petition for bankruptcy places all the property of the debtor in the control of the bankruptcy court, the plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.’”54 Because the regular mortgage payments were made directly by the debtor, those payments “were . . . no longer property of the estate and First Union’s application of a portion of those payments to attorney’s fees . . . did not violate section 362(a).”55

[21]

The Eleventh Circuit’s reading of § 1327(b) in Telfair is one more compelling reason why Chapter 13 debtors should never make mortgage payments directly to the lienholder after confirmation.56 But the broader issue is that Heath and Telfair signal that § 1327(b) works a very significant change in the relationship between the bankruptcy court and the Chapter 13 debtor at confirmation. The bankruptcy estate deflates, and the debtor loses many of the protections of the automatic stay. And in important ways, the Chapter 13 case disconnects from bankruptcy court jurisdiction with respect to property and the debtor’s dealings with creditors after confirmation. These are scary outcomes for debtors who thought that their financial futures were safely protected by the stay and within the supervision of the bankruptcy court for the life of the Chapter 13 case.

[22]

The jurisdictional effect of § 1327(b) discussed by the Seventh Circuit in Heath was also recognized by the U.S. Court of Appeals for the Tenth Circuit in a case dealing with a Chapter 13 debtor’s sale of real property after confirmation. In United States v. Richman (In re Talbot),57 the confirmed plan trifurcated the IRS’s claim into a priority claim of $15,875, a secured claim of $18,674 and a general unsecured claim of $3,111. Twenty months after confirmation, the debtors sold their home, and the IRS extracted $38,646 for release of its lien. The Chapter 13 trustee sought disgorgement from the IRS of the proceeds in excess of its allowed secured claim. Citing Heath, the IRS responded that the house vested in the debtor at confirmation, thus disposition of the sale proceeds was outside the bankruptcy court’s authority. The Tenth Circuit agreed with the IRS’s reading of the vesting effect of confirmation under § 1327(b):

The Trustee does not dispute that § 1327(b) generally effects a revesting of the property of the bankruptcy estate in debtors upon confirmation of a Chapter 13 plan of reorganization. She notes, however, that the automatic revesting provided in § 1327(b) is subject to a contrary result when “otherwise provided in the plan or the order confirming the plan.” . . . According to the Trustee, the [debtors’] Plan and the order confirming the Plan altered § 1327(b)’s automatic revesting scheme with the [debtors’] house remaining property of the bankruptcy estate and, therefore, subject to district court jurisdiction post-confirmation. . . . Neither the Plan nor the order confirming the Plan contain [sic] any language purporting to alter or delay the automatic vesting provisions of § 1327(b). . . . [T]he Trustee has not identified, and we could not find, a single case holding that a plan provision in a Chapter 13 plan which provides for the retention of liens by secured creditors pursuant to § 1325(a)(5) of the Code prevented the property subject to the lien from revesting in the debtor upon confirmation of the debtor’s plan. . . . Because neither the Plan nor the order confirming the Plan provides otherwise, the [debtors’] residence revested in them upon confirmation of the Plan. 11 U.S.C. § 1327(b). Accordingly, the bankruptcy court’s order of disgorgement cannot be affirmed on the ground that the residence was part of the bankruptcy estate.58
[23]

The Tenth Circuit went on to find authority for the disgorgement order in the binding effect of confirmation under § 1327(a). However, the alternative holding does not distract from the Tenth Circuit’s agreement with the Seventh Circuit that the vesting of property in the debtor at confirmation under § 1327(b) reduces the bankruptcy court’s jurisdiction. This interpretation of § 1327(b) is likely to affect other aspects of Chapter 13 practice, such as the use of avoidance or recovery powers after confirmation.

[24]

Probably the most important consequence of the vesting of property in the debtor at confirmation under § 1327(b) is found in § 1327(c). As discussed below,59 except as provided in the plan or in the confirmation order, “the property vesting in the debtor under [§ 1327(b)] . . . is free and clear of any claim or interest of any creditor provided for by the plan.”60 There is controversy about the extent to which “vesting . . . free and clear” in § 1327(c) affects the rights of lienholders in Chapter 13 cases.61 Some courts have managed this controversy by aggressively interpreting the concept of vesting in § 1327(b) to mean more or less than ordinary language usage suggests.

[25]

For example, in In re Scheierl,62 the court denied confirmation of a plan that would release an undersecured creditor’s lien upon payment of the secured portion of its claim. In response to the argument that confirmation limits and defines the lien rights of secured claim holders in Chapter 13 cases, the court offered this compressed notion of the vesting effect in § 1327(b): “‘[R]evesting’ . . . does nothing to affect the extent of a creditor’s pre-existing secured rights in the subject asset. In itself, ‘revesting’ can only transfer legal title from the fictive possession of the bankruptcy estate back to the debtor; it cannot affect the status of liens.”63 In contrast in In re Shorter,64 the court confirmed a plan that released an undersecured car lender’s lien upon payment of its allowed secured claim, giving this account of the powerful vesting effect in § 1327(b): “Without the statutory cram down requirement [in § 1325(a)(5)], all property of the estate would revest in the debtor upon confirmation of the debtor’s plan, potentially eliminating existing liens upon confirmation. § 1327(b).”65

[26]

The “free and clear” language in § 1327(c) is conditioned that the creditor is “provided for by the plan.”66 There is no similar condition in § 1327(b). In other words, property of the estate vests in the debtor at confirmation under § 1327(b) without regard to whether a lienholder is provided for by the plan; however, the property that vests in the debtor under § 1327(b) is “free and clear of any claim or interest of any creditor” only if that creditor is provided for by the plan.67 Most Chapter 13 debtors want to free their property from the claims (including liens) of creditors with payments through the plan. To do so, the plan must provide for creditors, else the vesting in the debtor at confirmation will be subject to all claims of creditors.

[27]

The vesting of property in the debtor at confirmation under § 1327(b) may have the undesirable effect for debtors of dissolving some protection of the automatic stay.68 Section 362(c)(1) provides that “the stay of an act against property of the estate under subsection (a) of this section continues until such property is no longer property of the estate.”69 At confirmation, § 1327(b) could be interpreted to have the effect contemplated in § 362(c)(1). Property that leaves the estate at confirmation and becomes property of the debtor is still protected by the stay from the enforcement of liens that secure claims that arose before commencement of the case;70 but it is well recognized that if property vesting in the debtor at confirmation leaves the estate, it becomes fair game for collection and lien enforcement by creditors holding debts that arose after the petition.71

[28]

The extent of the protection of the automatic stay after confirmation in a Chapter 13 case may depend on which view of the vesting effect in § 1327(b) the court adopts.72 For example, the court in In re Jackson,73 held that only property existing at the time of confirmation revested in the debtor; consequently, a judgment creditor violated § 362(a)(4) when it obtained a lien against property inherited postconfirmation, but did not violate the stay with respect to preconfirmation property that had vested in the debtor.74 In In re Markowicz,75 the IRS levied on a Chapter 13 debtor’s wages after confirmation to collect postpetition taxes. In a jurisdiction adopting the Fisher view—that the estate refills in a Chapter 13 case to contain all property acquired by the debtor after confirmation—the debtor’s postconfirmation earnings in Markowicz would have been property of the estate protected from the collection action of even a postpetition creditor by § 362(a).76 However, the bankruptcy court in Markowicz adopted the more restrictive view that “by virtue of 11 U.S.C. § 1327(b), property acquired by a chapter 13 debtor post-petition that is not committed to the funding of a plan is not property of the estate.”77 Accordingly, the debtor’s postconfirmation earnings not committed to funding the plan vested in the debtor, and the IRS levy did not violate the stay.

[29]

Differing notions of the vesting effect in § 1327(b) produce significantly different outcomes in this fundamental area of Chapter 13 practice. A national creditor like the IRS can only know whether its levy on a Chapter 13 debtor after confirmation will violate the automatic stay by also knowing which definition of vesting a court is likely to use for § 1327(b) purposes.78 There will be no national uniformity with respect to the reach of the automatic stay after confirmation in Chapter 13 cases unless and until there is consensus about the meaning of the vesting effect in § 1327(b).

[30]

Jackson and Markowicz illustrate that the effect of § 1327(b) is especially problematic when a postpetition creditor seeks to collect from the debtor’s wages after confirmation.79 A postconfirmation collection action against the debtor’s wages can be fatal to the entire Chapter 13 case. Chapter 13 debtors may be able to protect against this disruption by making provision in the plan for full payment of postpetition claims80 and by language that postpones the vesting effect of § 1327(b) until the completion of payments under the plan.81

[31]

Remember also that the confirmed plan itself may provide protection from postconfirmation collection efforts notwithstanding that the vesting effect of confirmation has limited the automatic stay. In other words, collection effort can violate the terms for payment in the confirmed plan notwithstanding that the same collection effort did not violate the automatic stay. For example, in Florida Department of Revenue v. Rodriguez (In re Rodriguez),82 the Eleventh Circuit applied Telfair to conclude that the Florida Department of Revenue did not violate the automatic stay by sending child support collection letters to a Chapter 13 debtor because property of the estate vested in the debtor at confirmation under § 1327(b) and the exception to the stay in § 362(b)(2)(B) applied. But the Eleventh Circuit found that the State of Florida did violate the confirmation order by seeking to collect amounts in excess of that provided for in the confirmed plan, and damages were appropriately assessed for contempt of the confirmation order.83

[32]

Providers of goods and services to Chapter 13 debtors get trapped in the uncertainty about the vesting effect in § 1327(b). Under 11 U.S.C. § 503(b), a provider of goods or services necessary to preserve a bankruptcy estate is entitled to be paid as an administrative expense.84 Administrative expenses typically are treated as priority claims under § 507(a)(2) and are paid in full through the Chapter 13 plan.85 Implicit in the definition of administrative expense under § 503 is the existence of a bankruptcy estate to preserve. If the Chapter 13 estate ceases to exist or is emptied of content at confirmation by § 1327(b), then postconfirmation suppliers of goods and services cannot hold administrative expenses.86

[33]

The vesting effect in § 1327(b) can affect exemptions in Chapter 13 cases, at least with respect to exemptions in property acquired after confirmation of a plan. Discussed in detail elsewhere,87 Chapter 13 debtors claim exemptions under § 522(b) “from property of the estate.”88 It is at least theoretically interesting that in the absence of a provision overcoming the vesting effect in § 1327(b), a Chapter 13 debtor’s exemption in property acquired after confirmation might depend on which view of § 1327(b) prevails in the jurisdiction.

[34]

A few reported cases have discussed the interaction of § 1327(b) and exemptions. Although reversed on other grounds by the U.S. Court of Appeals for the Eleventh Circuit, the bankruptcy court in In re Gamble89 held that the vesting effect of § 1327(b) did not defeat the responsibility of the Chapter 13 trustee to retain possession of cash claimed exempt by the debtor pending completion of payments under the plan. The bankruptcy court reasoned that exempt property was removed from the estate; thus, when confirmation vested the estate in the debtor, exempt property did not vest in the debtor but was “placed, in effect, in suspense, pending completion of the plan.”90 In American General Finance, Inc. v. Tippins (In re Tippins),91 it was argued that the debtor lacked standing to maintain a cause of action against a lender for fraud, misrepresentation and conspiracy in connection with credit life insurance because the lawsuit was property of the Chapter 13 estate and remained in the estate after confirmation based on a confirmation order that overcame the vesting effect in § 1327(b). The bankruptcy court found that because the debtor claimed an exemption in the cause of action, the debtor had a property interest in the lawsuit sufficient to confer standing.

[35]

In In re Guentert,92 the debtor died after confirmation, and the issue became whether life insurance proceeds were property of the Chapter 13 estate that must be valued to determine whether a proposal to pay off the confirmed plan satisfied the best-interests-of-creditors test.93 The bankruptcy court cited Fisher for the proposition that the insurance proceeds became property of the Chapter 13 estate notwithstanding § 1327(b): “[P]roperty that was identified and not distributed under the plan at confirmation becomes property of the debtor. Property that comes into the estate postconfirmation remains property of the estate.” The court postponed the best-interests-of-creditors-test calculation to allow the debtor to prove exemption rights in the insurance proceeds.

[36]

In In re Brown,94 the vesting of property in the debtor at confirmation removed property from the estate for exemption purposes, and upon conversion, the Chapter 7 trustee’s objection to the debtor’s homestead exemption was moot because the home was no longer property of the estate.

[37]

Vesting effect under § 1327(b) can be outcome determinative of a Chapter 13 debtor’s standing to bring a cause of action that arises after the petition.95 Discussed in detail elsewhere,96 some courts have held that a Chapter 13 debtor is judicially estopped to prosecute a cause of action that arose after the petition if the debtor did not amend the schedules to include the postpetition lawsuit.97 The logic of these decisions is that the postpetition cause of action becomes property of the Chapter 13 estate and must be revealed so that the trustee and creditors can determine its value. The vesting effect of confirmation under § 1327(b) directly impacts this logic: if property of the Chapter 13 estate after confirmation does not include a postpetition cause of action, then it cannot be said that the failure to amend schedules affected the rights of creditors for judicial estoppel purposes.98 On the other hand, some courts more rigorously conclude that the debtor’s obligation to disclose assets continues postconfirmation—without regard to the vesting effect in § 1327(b)—with the consequence that judicial estoppel can bar pursuit of any undisclosed asset.99

[38]

To prevent draining or disintegration of the estate, it is the practice in some jurisdictions that all Chapter 13 plans contain a provision preserving the estate until consummation of the plan.100 This approach preserves the argument that all of the debtor’s property, including postpetition and postconfirmation acquisitions, remains in the estate and remains protected by the full extent of the automatic stay.101 Overcoming the vesting effect with a provision in the plan eliminates the uncertainty of different interpretations of § 1327(b), for example, with respect to the collection rights of postpetition creditors.102 Delayed vesting may also give the trustee authority to pursue an avoidance action.103

[39]

There are consequences to preserving the Chapter 13 estate after confirmation of the plan. If the plan or order of confirmation preserves the estate, the debtor may be obligated to comply with the notice and hearing provisions of § 363 and Bankruptcy Rules 4001 and 6004 when, for example, the debtor sells property after confirmation.104 If the estate remains after confirmation, postpetition claims for the actual, necessary costs and expenses of preserving that estate105 may be administrative expenses entitled to priority treatment through the plan.106 Preserving the estate in the confirmation order also captures postconfirmation acquisitions and income that may increase the entitlements of creditors on a motion to modify the plan after confirmation.107 Under some circumstances, allowing property to vest in the debtor at confirmation can advantage the debtor in a postconfirmation dispute about rights in that property.108

[40]

A plan provision overcoming § 1327(b) must be carefully worded to prevent interference with the free and clear effect of confirmation under § 1327(c). As detailed below,109 the vesting effect of confirmation in § 1327(b) dovetails with the free and clear effect in § 1327(c): the property vesting in the debtor is free and clear of the claims and interests of creditors provided for by the plan.

[41]

Postponing the vesting effect under § 1327(b) could be interpreted to postpone the free and clear effect of § 1327(c). Creditors with liens would like this idea, but a broad abrogation of § 1327(b) will adversely affect the debtor.

[42]

A carefully worded provision that delays the vesting effect until the allowed secured claim is paid through the plan does not obviously upset the reasonable expectations of debtors nor entitle lienholders to more than the Code contemplates in a Chapter 13 case. But delaying the vesting effect until completion of all payments under the plan produces complications. For example, when the debtor completes payment of the secured portion of an undersecured claim and needs to replace the collateral, the debtor cannot clear title without § 1327(c).110 When property subject to a lien is lost or destroyed during the Chapter 13 case and before completion of payment of the allowed secured claim, the vesting and free and clear effects of confirmation determine the proper disposition of insurance proceeds.111 Sale of property subject to liens during a Chapter 13 case produces similar issues when vesting has been delayed and allowed secured claims have been partially satisfied at the time of sale.112 Similar problems arose before the 1994 enactment of § 348(f) at conversion to Chapter 7 after confirmation but before the completion of payment of allowed secured claims when the plan postponed the vesting effect in § 1327(b).113

[43]

The wording of the plan also becomes important when the debtor owes domestic support obligations, including alimony, maintenance or support.114 There is an exception to the automatic stay in § 362(b)(2) that allows the collection of a domestic support obligation “from property that is not property of the estate.”115 Absent a contrary provision in the plan or order of confirmation, the debtor’s postpetition wages vest in the debtor at confirmation under § 1327(b). If the wages vested in the debtor are no longer property of the estate, a former spouse can collect a domestic support obligation from those wages, without violating the automatic stay.116 A plan provision overcoming the vesting effect in § 1327(b) disables the exception to the automatic stay in § 362(b)(2)(B), leaving the stay in effect with respect to postconfirmation wages and other property.117 Of course, the debtor must provide in the plan for payment in full of priority claims for alimony, maintenance or support and must pay postpetition support during the case.118 One reported decision acknowledged that a plan provision overcoming § 1327(b) prohibited postconfirmation collection of nondischargeable interest by a child support creditor; however, to avoid granting relief from the stay, the court required the debtor to modify the plan “such that the portion of the Debtor’s income that is necessary to pay the ongoing interest cost revests in the Debtor and is subject to collection by the Movant in the state courts.”119 As mentioned above, the debtor’s best management of a domestic support obligation that is not stayed by § 362 may be a robust provision for payment through the confirmed plan.120

[44]

It may be in the best interests of creditors that all property remains in the estate until consummation of the plan. Property of the estate is subject to various provisions of the Code and Rules that restrict a debtor’s freedom of use or sale during the Chapter 13 case.121 It is not obvious that property of the debtor is similarly restricted. It has been said that Chapter 13 debtors have an “unrestricted right” to dispose of their house once the house vests in the debtors at confirmation under § 1327.122 In a jurisdiction adopting the Fisher approach, it was held that a homestead vested in the debtor at confirmation and the debtor did not need court approval to hire a real estate broker to sell the house.123

[45]

Creditors are at risk if a Chapter 13 debtor can use or sell property after confirmation without the notice that would be required by § 363 with respect to estate property. For example, if the debtor has nonexempt equity in a home and if the debtor can sell the house and use the equity after confirmation, a subsequent conversion produces a Chapter 7 estate that does not include the equity dissipated by the debtor.124 If the home remains property of the estate after confirmation, the debtor must give notices of sale consistent with § 363 and Bankruptcy Rules 4001 and 6004, and creditors and the trustee have an opportunity to seek to condition the sale that the equity not be dissipated until after completion of payments under the plan. The debtor contemplating a sale of property after confirmation should include a provision for sale in the plan.125 It has been held that creditors can use modification after confirmation under § 1329 to recapture property that vested in the debtor at confirmation under § 1327(b).126 Even if postconfirmation assets can be captured for creditors through plan modification, a motion to modify must be filed before completion of payments.127

[46]

Finally, it is sometimes said that Chapter 13 debtors owe a fiduciary duty to creditors with respect to preserving, protecting and accounting for property of the Chapter 13 estate. Upon conversion to Chapter 7 (or in the event of a hardship discharge),128 any breach of duty with respect to property of the estate during the Chapter 13 case could produce an exception to discharge under 11 U.S.C. § 523(a)(4) or § 523(a)(6)129 or could bar the debtor’s discharge under § 727.130 Absent a provision of the plan or the order of confirmation overcoming the vesting of property in the debtor, the predicate for the debtor’s duty with respect to estate property disappears at confirmation.

[47]

One unreported bankruptcy court opinion finds an unexpected connection between the vesting effect in § 1327(b) and a Chapter 13 debtor’s duty to obey state law after confirmation. In In re Robertson,131 the debtor failed to pay state income taxes after confirmation. The state taxing authority moved to dismiss the case, asserting that the debtor’s failure to file returns and pay taxes was a violation of 28 U.S.C. § 959. Section 959 provides, “[A] trustee, receiver or manager . . . including a debtor-in-possession, shall manage and operate the property in his possession . . . according to the requirements of the valid laws of the State in which such property is situated.”132 The state argued that a violation of § 959 was cause for dismissal under § 1307.133 The bankruptcy court concluded otherwise based on the vesting effect of confirmation in § 1327: “[Section 959] is not applicable to a postconfirmation debtor in a Chapter 13 case. Code § 1327 provides that, upon confirmation, property of the estate is revested in the debtors. It follows that the Debtor here is neither a trustee nor a debtor-in-possession, and is not subject to 28 U.S.C. § 959.”134


 

1  See 11 U.S.C. § 1141(b).

 

2  11 U.S.C. § 1327(b).

 

3  Section 657 of the former Bankruptcy Act, 11 U.S.C. § 1057 (repealed), read as follows:

    Binding Effect of Confirmation

Upon confirmation of a plan, the plan and its provisions shall be binding upon the debtor and upon all creditors of the debtor, whether or not they are affected by the plan or have accepted it or have filed their claims, and whether or not their claims have been scheduled or allowed or are allowable.

 

4  Pub. L. No. 109-8, 119 Stat. 23 (2005). See § 505.1 [ Effects of Confirmation after BAPCPA ] § 120.5  Effects of Confirmation after BAPCPA.

 

5  Webster’s New 20th Century Dictionary of the English language 2033 (unabridged 2d ed. 1983).

 

6  Black’s Law Dictionary 1557 (7th ed. 1999).

 

7  See 11 U.S.C. § 1306(b), discussed in § 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property.

 

8  This definition is expanded in Chapter 13 cases by 11 U.S.C. § 1306. See discussion beginning at § 46.1  What Is Property of the Chapter 13 Estate?.

 

9  See, e.g., 11 U.S.C. § 362(a)(2), (a)(3) and (a)(4).

 

10  See, e.g., 11 U.S.C. § 362(a)(5).

 

11  See 11 U.S.C. § 362(c)(3), discussed beginning at § 60.1  When Does § 362(c)(3) Apply?.

 

12  See In re O’Brien, 181 B.R. 71, 74 (Bankr. D. Ariz. 1995) (“[A]t the time of confirmation 11 U.S.C. § 1327(b) ‘vests’ all of the property of the estate in the debtor. Black’s Law Dictionary states that the term ‘vests’ means ‘to give an immediate, fixed right of present or future enjoyment.’ Since Section 1306(b) already provides the debtor with possession of bankruptcy estate property, the term ‘vests’ in this context must mean that the bankruptcy estate generally ceases to exist, and the debtor has the sole ownership, control, and enjoyment of the property.”).

 

13  See below in this section, and see § 124.3  Does Confirmation Dissolve the Stay?. See also § 60.2  Which Stays Terminate?, for discussion of limitations on the automatic stay with respect to property of the debtor in a repeat filing after BAPCPA.

 

14  11 U.S.C. § 1327(c). See § 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

15  11 U.S.C. § 503(b)(1)(A). See below in this section, and see discussion beginning at § 136.2  Taxes before BAPCPA and discussion beginning at § 137.1  Postpetition Claims before BAPCPA.

 

16  See 11 U.S.C. § 348(f), discussed below in this section and in §§ 315.1 [ In Cases Filed before October 22, 1994 ] § 143.1  In Cases Filed before October 22, 1994, 316.1 [ In Cases Filed after October 22, 1994 ] § 143.2  In Cases Filed after October 22, 1994, 528.1 [ In General: More Grounds; Changed Consequences ] § 139.2  BAPCPA: More Grounds; Changed Consequences and 533.1 [ Lienholders’ Rights at Conversion under § 348(f) ] § 145.3  Lienholders’ Rights at Conversion under § 348(f) after BAPCPA.

 

17  See below in this section.

 

18  See below in this section, and see § 317.1 [ Exemptions at Conversion ] § 144.1  Exemptions at Conversion.

 

19  See below in this section, and see § 263.1 [ To Sell or Refinance Property of the Estate ] § 127.6  To Sell or Refinance Property of the Estate.

 

20  See below in this section, and see § 47.7 [ Causes of Action ] § 46.11  Causes of Action—Including Judicial Estoppel Issues.

 

21  See 11 U.S.C. § 1306(a)(1), (2). Compare 11 U.S.C. § 1207 for similar provisions in Chapter 12, and 11 U.S.C. § 1115, for similar provisions for individuals in Chapter 11 cases after BAPCPA.

 

22  11 U.S.C. § 1306(a)(1), (2). See §§ 45.1 [ What Is Property of the Chapter 13 Estate? ] § 46.1  What Is Property of the Chapter 13 Estate? and 403.1 [ Property of the Chapter 13 Estate—New Ins and Outs ] § 46.2  Property of the Chapter 13 Estate—Changes by BAPCPA.

 

23  See 11 U.S.C. § 1141(b).

 

24  See 11 U.S.C. § 1115, discussed in § 8.5  Other Chapters Too Expensive, Too Complicated or Unfriendly.

 

25  See, e.g., 11 U.S.C. § 541(a)(6) (“[E]arnings from services performed by an individual debtor after the commencement of the case” are excluded from property of the estate in a Chapter 11 case unless the debtor is an individual.). See 11 U.S.C. § 1115, discussed in § 8.5  Other Chapters Too Expensive, Too Complicated or Unfriendly.

 

26  Similar issues arise in Chapter 12 under 11 U.S.C. § 1207, and in cases filed on or after October 17, 2005, similar issues will arise in individual Chapter 11 cases because of BAPCPA amendments to 11 U.S.C. § 1115.

 

27  See, e.g., California Franchise Tax Bd. v. Jones (In re Jones), 420 B.R. 506, 512–16 (B.A.P. 9th Cir. Nov. 24, 2009) (Baum, Dunn, Jury) (Adopting “estate termination approach,” because property of the estate vested in debtor at confirmation, California Franchise Tax Board was free of stay to collect postpetition taxes, and it is not appropriate to equitably toll counting periods for priority under § 507(a)(8) in a subsequent Chapter 7 case. Debtors filed Chapter 13 on July 22, 2002, and their 2002 state income tax return was due with extension on October 15, 2003. Confirmed plan that submitted future income of the debtors “to the supervision and control of the Trustee, as is necessary for the execution of the Plan[,]” did not trigger the “except as otherwise provided” election in § 1327(b). Because the 2002 state income taxes were not priority debts under § 507(a)(8)(A)(i), statutory tolling added to § 507(a)(8) by BAPCPA was not available. Equitable tolling was not appropriate because after vesting in the debtor, no stay prevented the FTB from collecting the postpetition taxes from the debtor. “When interpreting Sections 1306 and 1327, the courts have split into four groups . . . . The Ninth Circuit has not decided this issue. The four approaches are: . . . ‘The estate preservation approach’—Property of the estate exists until the case is closed, dismissed or converted. . . . ‘The modified estate preservation approach’—Existing estate property vests in the debtor at confirmation, and estate property continues to exist from postpetition income. . . . ‘The estate transformation approach’—Only property needed to fund the plan is estate property, all other property is under the debtor’s control. . . . ‘The estate termination approach’—All property revests in the debtor and estate property is terminated upon confirmation. . . . We . . . adopt the estate termination approach . . . . Under the estate termination approach, the vesting of all estate property in the debtor at confirmation (unless the plan or confirmation order provides otherwise) and the concomitant termination of estate property gives [sic] effect to both Sections 1306 and 1327. . . . [C]onfirmation changes estate property to property of the debtor unless the plan or confirmation order specifically provides otherwise. . . . Section 1327(b) expressly provides the debtor with the ability to vest in itself all, none, or some combination of estate property. . . . [C]ollection of a post-petition debt can occur against a Chapter 13 debtor who does not otherwise provide in the plan or confirmation order that all property remains property of the estate. . . .  ‘[V]ests’ as used in Section 1327(b) means more than obtaining possession of estate property because Section 1306(b) already provides that debtors remain in possession of all estate property. . . . ‘[V]ests’ means absolute ownership, not mere possession. . . . Under the estate termination approach, . . . there was no automatic stay in effect at the time the return was filed. . . . [T]here was no estate property for the automatic stay to protect, leaving the FTB free to collect on its tax claim.”); Laughlin v. IRS (In re Laughlin), 98 B.R. 494 (D. Neb. Mar. 29, 1989) (Urbom) (Undistributed funds held by trustee at dismissal after confirmation are not property of Chapter 13 estate and can be levied upon by IRS without violating stay.); Mason v. Williams, 51 B.R. 548 (D. Or. Apr. 2, 1985) (Frye) (Bankruptcy estate ceases to exist upon confirmation under § 1327; postconfirmation creditor can collect postconfirmation judgment from the debtor’s postconfirmation wages.); Yoon v. Krick (In re Krick), 373 B.R. 593, 605 (Bankr. N.D. Ind. Sept. 12, 2007) (Klingeberger) (Acknowledging four views of § 1327(b), at confirmation bankruptcy estate ceased to exist and all property acquired before or after confirmation became property of debtor; upon conversion to Chapter 7, debtor’s postconfirmation transfer of interest in property left nothing in possession or control under § 348(f)(1)(A) that would become property of Chapter 7 estate.); Oliver v. Toth (In re Toth), 193 B.R. 992 (Bankr. N.D. Ga. Mar. 19, 1996) (Murphy) (Section 1327(b) acts to end the Chapter 13 estate, else “vest” has no meaning and § 1327 is redundant of other Code provisions.), probably overruled by Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001); In re McCray, 172 B.R. 154, 156 (Bankr. S.D. Ga. Sept. 15, 1994) (Walker) (Tax refund received by debtor after confirmation is not property of the estate. “Since this case has been confirmed and the funds in question were received by Debtor following confirmation, it is correct to declare that the right to these funds has vested in Debtor. Such a vesting in Debtor precludes any determination that the funds would be properly considered as ‘property of the estate.’”), probably overruled by Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001); Lambright v. United States, 125 B.R. 733 (Bankr. N.D. Tex. 1991) (Absent provision of plan or order of confirmation to the contrary, § 1327(b) vests all § 1306 property of the estate in the debtor free of the protection of the automatic stay. IRS is not prohibited by any stay to levy upon the debtor’s civil service annuity benefits after confirmation to collect a postpetition tax liability.); In re Petruccelli, 113 B.R. 5 (Bankr. S.D. Cal. Mar. 14, 1990) (Bowie) (After exhaustive review of § 1327(b) cases, concludes that Mason v. Williams, 51 B.R. 548 (D. Or. Apr. 2, 1985) (Frye), is persuasive. Upon confirmation, property of the estate vests in the debtor and is no longer property of the estate unless the plan or order of confirmation provides otherwise. IRS did not violate stay when it levied upon postpetition earnings to collect a postpetition tax claim where the plan did not undo the revesting effect of § 1327(b). Revesting of property in the debtor under § 1327(b) is complete unless expressly postponed by the plan or order of confirmation. IRS entitled to entire $8,500 in the debtor’s bank account at the time of levy notwithstanding that the debtor’s plan called for payments of $1,800 per month. If the debtor intended to interrupt revesting to the extent of the $1,800-per-month payment, the plan or order of confirmation should clearly have so stated.); In re Osei, 90 B.R. 910 (Bankr. N.D. Ill. June 6, 1988) (Barliant) (Citing Mason v. Williams, 51 B.R. 548 (D. Or. Apr. 2, 1985) (Frye), with approval but adopting “the pragmatic approach used by the court in [In re Clarke, 71 B.R. 747 (Bankr. E.D. Pa. Apr. 10, 1987) (Scholl)],” although the Chapter 13 estate terminated upon confirmation under § 1327(b), a postpetition creditor has some burden to demonstrate cause for relief from the stay to pursue the debtor’s postconfirmation wages.); In re Criss, 85 B.R. 459 (Bankr. N.D. Ohio May 12, 1988) (Baxter) (In dicta, § 1327(b) vests all assets of the estate in the debtor at confirmation; consequently, there remains no estate to preserve, and utility bills that accrue after confirmation cannot be administrative expenses under § 503.); In re Walker, 84 B.R. 888 (Bankr. D.D.C. Apr. 22, 1988) (Teel) (When Chapter 13 plan does not provide otherwise, residence revested in debtor upon confirmation of the plan and is no longer property of the estate. The automatic stay does not apply to effort of condominium association to collect postpetition condominium fees owed by the debtor.); In re Gyulafia, 65 B.R. 913 (Bankr. D. Kan. Oct. 10, 1986) (Franklin) (Because § 1327 vests property of the estate in the debtor and releases the estate of all claims and interests of creditors, taxes that accrue postconfirmation are incurred by the debtor, not by the estate, and cannot be administrative expenses under § 503.). See also Querner v. Querner (In re Querner), 7 F.3d 1199 (5th Cir. Nov. 26, 1993) (Sneed, Garza, Jolly) (On unusual facts, because probate estate of deceased Chapter 13 debtor vested in the debtor at confirmation, creditors not entitled to any proceeds of that probate estate.).

 

28  Telfair v. First Union Mortgage Corp., 216 F.3d 1333, 1340 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001) (Mortgage holder’s application of plan payments to attorney’s fees and insurance premiums did not violate automatic stay or discharge injunction because under “estate transformation approach” payments by the debtor directly to the mortgage holder were not property of the estate after confirmation. Confirmed plan provided for mortgage under § 1322(b)(5). The regular postpetition mortgage payments were made by the debtor directly to the mortgage holder. Arrearages were cured through the Chapter 13 trustee. After the petition, the debtor defaulted on direct payments. The mortgage holder incurred attorney’s fees filing three motions for relief from the stay and incurred expenses for force written hazard insurance. First Union reimbursed itself for attorney’s fees and insurance premiums from the debtor’s escrow account, from the regular monthly payments received directly from the debtor and/or from the arrearage payments from the trustee. Debtor sought sanctions. “[C]ourts have adopted one of three models: the estate termination approach, the estate preservation approach, and the estate transformation approach. . . . [T]he estate transformation approach . . . should be the law of this circuit. We therefore echo the conclusion of the Seventh Circuit and ‘read the two sections, 1306(a)(2) and 1327(b) to mean simply that while the filing of the petition for bankruptcy places all the property of the debtor in the control of the bankruptcy court, the plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.’ [Black v. United States Postal Service (In re Heath), 115 F.3d 521, 524 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner)]. In this case, after confirmation, only the amount required for the plan payments remained property of the estate. Telfair’s regular loan payments, made outside of the plan, were therefore no longer property of the estate and First Union’s application of a portion of those payments to attorney’s fees pursuant to the Deed did not violate section 362(a).”); Black v. United States Postal Serv. (In re Heath), 115 F.3d 521, 522–24 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner) (In dicta, “[w]e read the two sections 1306(a)(2) and 1327(b), to mean simply that while the filing of the petition for bankruptcy places all the property of the debtor in the control of the bankruptcy court, the plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan. It would presumably be an abuse of discretion for the bankruptcy judge to confirm a plan that retained more of the property in the hands of the trustee than was reasonably necessary to fulfill the plan, though we need not decide that in this case.” Court holds that it is without even “related to” jurisdiction to entertain a trustee’s action to recover a one-time fee assessed by the United States Postal Service upon receipt of a “take out” order. Although the confirmed plan provided that “the debtor’s income and other assets . . . remain estate property to the extent necessary to fulfill the plan,” court finds no evidence that the debtor’s financial situation “is so fragile that the loss of $50 will jeopardize fulfillment of the plan.”); Security Bank of Marshalltown v. Neiman, 1 F.3d 687, 690–91 (8th Cir. Aug. 2, 1993) (McMillian, Beam, Sachs) (Postconfirmation debts for feed and veterinary services are administrative expenses necessary for the preservation of the Chapter 13 “estate” of a debtor engaged in hog farming, notwithstanding confirmation of a plan that did not specifically preserve the estate. “We join the line of cases holding the estate continues to exist after confirmation of the Chapter 13 plan. Upon reviewing § 1327 regarding the effect of confirmation, even if property of the estate vests in the debtor at confirmation, that does not necessarily mean that the estate no longer exists. The estate can continue to exist as a legal entity after confirmation even if it holds no property. . . . ‘There must be an “estate” upon and after confirmation, and that estate consists of the property and future earnings of the debtor dedicated to fulfillment of the Chapter 13 plan.’ . . . We think that the opposing line of cases is ‘premised upon the mistaken belief that revesting under § 1327(b) transforms property of the estate into property of the debtor.’ . . . The post-petition debts in the present case were incurred for feed and veterinary services for debtors’ hog herd and should be considered administrative expenses necessary to preserve the estate pursuant to § 503(b)(1)(A). . . . [T]he Chapter 13 estate continued post-confirmation.”); Eden v. Robert A. Chapski, Ltd. (In re Eden), No. 03 CV 00116, 2003 WL 21147830, at *4 (N.D. Ill. May 14, 2003) (unpublished) (Aspen) (“Like the plan in [Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner)], Eden’s plan provides that property of the estate will vest in the debtor upon confirmation of the plan. . . . Under Heath, to the extent Eden’s wages were not necessary to fulfill his $1088.00 monthly payment to the bankruptcy trustee, they were not the property of the bankruptcy estate. Eden did not present . . . evidence that the payments to Chapski interfered with his ability to meet his obligations under the Chapter 13 plan.”); Price v. United States (In re Price), 130 B.R. 259 (N.D. Ill. Apr. 1, 1991) (Rovner) (At least to the extent that postconfirmation income is funding the Chapter 13 plan, the estate continues to exist after confirmation.); In re Foreman, 378 B.R. 717 (Bankr. S.D. Ga. Nov. 26, 2007) (Dalis) (Applying Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), debtor’s postconfirmation wrongful death claim is not property of estate, absent showing that it is necessary for plan completion.); In re Jemison, No. 07-40761, 2007 WL 2669222, at *1–*3 (Bankr. N.D. Ala. Sept. 6, 2007) (unpublished) (Robinson) (Sua sponte, court denies confirmation of plans that postpone revesting of property of the estate. Citing Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), and Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner): “Although some courts find ‘tension’ between Sections 1306 and 1327, this Court finds none. . . . [W]hen it comes time for property of the estate to be returned to the debtor at confirmation, the plan and order of confirmation should provide for the estate to retain a sufficient portion of the debtor’s future earnings, and occasionally other property, to fund the plan. . . . ‘“[T]he plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.”’ . . . Each plan now under consideration provides that all property of the estate will not vest in the debtor until the case is closed, dismissed or converted. Much of the property to be retained by the estates in these cases will not be used to fund the debtors’ plans or serve any other legitimate purpose contemplated by the plans or the Code . . . . Other than garnering extended automatic stay protection, from the debtors’ perspective, there can be no other reason for the plans now under consideration to propose a delay in vesting all the estates’ property in the debtors. . . . This Court does not interpret Sections 1322(b)(9) and 1327(b) as permitting an arbitrary delay in the vesting of the estate’s property in the debtor in excess of the portion reasonably anticipated as needed to fund the plan within the confines of the Code. . . . [O]nly that portion of the estate’s property reasonably calculated to provide for the payment of the plan over the applicable commitment period should be retained by the estate, and the remainder must be returned to the debtor. The estate is not a safe harbor in which debtors may moor their property, including earnings, for protection from post-petition creditors.”); In re Baxter, 374 B.R. 292 (Bankr. M.D. Ala. Aug. 20, 2007) (Williams) (Applying Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), and Muse v. Accord Human Resources, Inc., 129 Fed. Appx. 487 (11th Cir. Apr. 15, 2005) (unpublished) (Black, Hull, Pryor), and distinguishing Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. May 20, 2002) (Carnes, Fay, Hunt), cause of action for violation of automatic stay and for violation of Fair Debt Collection Practices Act that accrued after confirmation is unnecessary for execution of plan, and proceeds from that lawsuit are not property of Chapter 13 estate; settlement proceeds can be disposable income for purposes of trustee’s postconfirmation modification under § 1329.), order denying certification for direct appeal, No. 06-10672, 2007 WL 2848829 (Bankr. M.D. Ala. Sept. 24, 2007) (unpublished) (Williams).); Saylor v. Select Portfolio Servicing, Inc. (In re Saylor), Nos. 02-80576, 06-8035, 2007 WL 128789 (Bankr. M.D. La. Jan. 12, 2007) (unpublished) (Sawyer) (Confirmation vested home in debtor; under “estate transformation” approach, Telfair v. First Union Mortgage Corp., 216 F.3d 1333, 1340 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), debtor’s complaint that mortgage creditor improperly assessed postconfirmation charges did not impact bankruptcy estate and was dismissed with prejudice.); Han v. GE Capital Small Bus. Fin. Corp. (In re Han), Nos. 00-42086, 05-03012, 2005 WL 2456933 (Bankr. N.D. Fla. Sept. 28, 2005) (unpublished) (Mahoney) (Because property of the estate vested in the debtor at confirmation under § 1327(b) as interpreted in Telfair v. First Union Mortgage Corp. (In re Telfair), 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), direct payments by debtor after confirmation were not property of estate and were not protected by automatic stay; GE did not violate stay by applying postconfirmation direct payments to prepetition arrearages or by charging excessive interest.); In re Drew, 325 B.R. 765 (Bankr. N.D. Ill. June 23, 2005) (Citing Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), when debtors refinance real property postconfirmation and realize cash, refinancing proceeds are property of the estate subject to capture by trustee’s motion to modify because proceeds were acquired by debtors for use in making payments under confirmed plans.); McGlockling v. Chrysler Fin. Co. (In re McGlockling), 296 B.R. 884, 887 (Bankr. S.D. Ga. Feb. 24, 2003) (Davis) (Applying “estate transformation” approach from Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001),a debtor’s car is necessary to successful reorganization and remained property of the estate after confirmation. “The Eleventh Circuit has adopted the estate transformation approach and vests most of the property of the estate in the debtor. . . . ‘[T]he plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.’ . . . The term ‘necessary,’ however, creates ambiguities as to what should be included in the post-confirmation estate. . . . Debtor’s car is necessary for his successful reorganization.”); In re Tomasevic, 279 B.R. 358 (Bankr. M.D. Fla. June 14, 2002) (Corcoran) (Citing Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), bankruptcy court lost jurisdiction at confirmation over debtor’s action for postpetition violations of Real Estate Settlement Procedures Act.); EconoLube N’ Tune, Inc. v. Frausto (In re Frausto), 259 B.R. 201, 208–17 (Bankr. N.D. Ala. Dec. 12, 2000) (Cohen) (Applying “estate transformation approach” from Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), $100,000 settlement of prepetition lawsuit vested in debtor at confirmation and is not property of Chapter 13 estate; postpetition creditor can garnish the settlement proceeds to collect a postpetition judgment. Confirmed plan required payments from debtor’s future income. Eighteen months after confirmation, debtor entered into a franchise agreement with EconoLube. Debtor breached the franchise agreement. EconoLube took a judgment for $94,438.09. Also after confirmation, the Chapter 13 trustee received $100,000 in settlement of the debtor’s prepetition lawsuit against Subway Restaurants. EconoLube sought to garnish the settlement proceeds to collect its postpetition judgment. “Under Telfair and section 1327(b), all of the property the debtor owned when his case was confirmed (other than that, ‘necessary to the fulfillment of the plan,’) vested in the debtor at confirmation. That property included the now settled lawsuit, the proceeds of that suit, and any property the debtor acquired after confirmation that was also not ‘necessary to the fulfillment of the plan.’ Thus, pursuant to section 1327(c), neither the lawsuit (nor any proceeds from it) can now be considered property of this bankruptcy estate. . . . Once property of the estate is transferred back to the debtor pursuant to 1327(b), only pre-petition creditors, who are bound by the plan pursuant to 1327(a) and have been specifically divested of any interest in that property pursuant to 1327(c), are precluded from pursuing that property.”); In re Carter, 258 B.R. 526, 527–28 (Bankr. S.D. Ga. Jan. 18, 2001) (Dalis) (Applying Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), cause of action for injuries from an automobile accident three years after confirmation of a 100% plan did not become property of the Chapter 13 estate because the lawsuit was not necessary to fulfillment of the plan; it is unnecessary to reopen the Chapter 13 case to amend the schedules to avoid the defense of judicial estoppel in the state court tort action. “In Telfair, the court adopted the ‘estate transformation’ approach as the law of the Eleventh Circuit, whereby Bankruptcy Code § 1306(a)(2) and 1327(b) are read to mean that ‘the plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.’ . . . Applying Telfair, any property interest acquired by the debtors after November 21, 1995, not necessary to fulfill the plan, became property of the debtors. The tort claim arose in October 1998, almost three years after confirmation and was not necessary for the plan; therefore, the claim was not property of the bankruptcy estate. . . . The tort claim belongs to the debtors and not the bankruptcy estate.”); Providian Nat’l Bank v. Vitt (In re Vitt), 250 B.R. 711, 718–20 (Bankr. D. Colo. May 31, 2000) (Brooks) (“This Court agrees with the reasoning in [In re Root, 61 B.R. 984 (Bankr. D. Colo. July 1, 1986) (Brumbaugh)] and [In re Thompson, 142 B.R. 961 (Bankr. D. Colo. July 14, 1992) (Brumbaugh)] and finds that 11 U.S.C. § 1327(b) does transfer to the debtor most, if not all, of the property in the estate at the time of confirmation, but does not terminate the estate. . . . Debtor was to actually surrender—i.e. give up, relinquish or yield—to Norwest and Plaintiff her possession or control of her interest in the Property before or at confirmation, or at the effective date of the plan. In conjunction with the express provisions of 11 U.S.C. § 1327(b), the Amended Chapter 13 Plan indeed vested all of the property of the estate in the debtor, except for (1) those sums necessary to be actually paid to the Chapter 13 during the course of a confirmed plan and (2) the Property which was surrendered to Norwest and Plaintiffs. . . . Debtor was complying with the Plan by [granting relief from the stay for] the foreclosure to go forward and by seeking the confirmation of the Amended Chapter 13 Plan. . . . Debtor failed to surrender her interest in the Property in contravention of the express requirements of her Plan. . . . [T]he ownership interest after the foreclosure sale and prior to confirmation consisted of bare title, a right of possession during the redemption period and a right of redemption. . . . After confirmation of the Chapter 13 Plan, the Debtor was vested in (1) title to the Property and (2) a right of redemption. . . . The Debtor’s interest in the Property—title to the Property, the right of possession and the right of redemption—was property of the estate until the Property was surrendered because the Property and the surrender thereof was [sic] necessary to the fulfillment of the Amended Chapter 13 Plan. As a result of the Debtor’s [postconfirmation] execution of the Deed of Trust the plan was not fulfilled. A further consequence of the Debtor’s actions is that the money received by the Debtor from [the postconfirmation purchaser]—in place or in lieu of the actual surrender of the Property—also constituted property of the estate.” The debtor’s sale in violation of the confirmation order was voided, the surrender required by the plan was validated and a hearing was scheduled to award sanctions against the debtor for violating the surrender provisions of the confirmed plan.); Lauria v. Titan Sec. Ltd. (In re Lauria), 243 B.R. 705, 709 (Bankr. N.D. Ill. Jan. 26, 2000) (Squires) (Postconfirmation payments pursuant to a prepetition noncompete agreement are property of the estate and are subject to turnover on a debtor’s complaint under § 542(a) because the payments are necessary to implementation of the plan. “The fact that the Debtor’s plan has been confirmed does not prevent the payments from becoming and continuing to be property of the estate, notwithstanding the revesting provisions of the Debtor’s plan and the provisions of 11 U.S.C. § 1327(b). . . . [P]roperty constituting earnings necessary for the implementation of a Chapter 13 plan remains property of the estate after the confirmation of the plan under 11 U.S.C. § 1306(a)(2).”); Strong v. United States (In re Strong), 203 B.R. 105, 115–16 (Bankr. N.D. Ill. Dec. 10, 1996) (Squires) (Although estate property vested in the debtor at confirmation, debtor can use the claims objection process to determine the extent of the IRS’s allowed secured claim. “This Court, however, adheres to the view that once a Chapter 13 plan is confirmed, and that plan provides that the property of the estate revests in the debtor, only such future income necessary to fund the confirmed plan remains property of the estate. . . . [T]he bankruptcy estate no longer has an interest in the residence that [the debtors] seek to be valued. The IRS’s secured portion of its claim was modified by § 1322(b)(2) upon confirmation of the Plan to the extent it is now being allowed in a definite sum. Under § 506(a), however, the Court has the power to determine the value of the residence for purposes of this matter as of the time of confirmation. . . . Because the Debtors’ Plan did not specifically propose set payments to the IRS or definite amounts for the respective secured, priority unsecured, and general unsecured portions of its claim, nothing in the Plan or confirmation order bars the Court from making that determination at this point in time.”); In re Leavell, 190 B.R. 536 (Bankr. E.D. Va. Nov. 28, 1995) (St. John) (Postpetition creditor did not violate automatic stay by taking judgment and garnishing debtor’s postpetition earnings because, although estate continues to exist after confirmation, only postpetition earnings necessary to fund the Chapter 13 plan are property of the postconfirmation estate. Confirmed plan provided that property of the estate vested in the debtor. Court reserves the question whether property acquired postpetition would be protected by the automatic stay.); In re Markowicz, 150 B.R. 461, 462 (Bankr. D. Nev. Jan. 21, 1993) (Riegle) (“[B]y virtue of 11 U.S.C. § 1327(b), property acquired by a chapter 13 debtor post-petition that is not committed to the funding of a plan is not property of the estate. . . . [P]ost-confirmation earnings not committed to the funding of a plan vest in the debtor upon confirmation. . . . [T]he post-confirmation levy of the IRS to collect post-petition taxes did not violate the automatic stay.”); In re Thompson, 142 B.R. 961 (Bankr. D. Colo. July 14, 1992) (Brumbaugh) (To give appropriate effect to §§ 541, 1306 and 1327(b), at confirmation postpetition earnings revest in the debtor except to the extent that the plan or order of confirmation requires that future earnings be paid to the trustee. Postconfirmation earnings that are paid to the Chapter 13 trustee remain property of the estate. All other property vests in the debtor at confirmation and ceases to be protected by the automatic stay from the collection efforts of a postpetition creditor.); American Gen. Fin., Inc. v. McKnight (In re McKnight), 136 B.R. 891, 894 (Bankr. S.D. Ga. Feb. 14, 1992) (Dalis) (“The bankruptcy estate did not disappear upon confirmation. To the contrary, the bankruptcy estate continues and consists of the post-petition earnings of the debtor devoted to plan payments. . . . [O]nly post-petition earnings devoted to plan payments constitute post-confirmation property of the estate and are protected under the stay of § 362(a). Under the terms of this plan, all other property of the estate vested in the debtor and became property of the debtor upon confirmation, which includes post-petition earnings not devoted to plan payments. . . . Having determined that the post-petition earnings of the debtor not devoted to plan payments vested in the debtor at confirmation pursuant to the order of confirmation and § 1327(b) and are no longer property of the estate, but are property of the debtor, the stay of § 362(a) does not apply to the collection efforts of . . . a post-petition creditor, to enforce payment of its debt by continuing garnishment under applicable state law to the exclusion of post-petition earnings devoted to plan payments, which remain property of the estate.”); In re Ziegler, 136 B.R. 497, 502 (Bankr. N.D. Ill. Jan. 23, 1992) (Squires) (Although plan contained no provision undoing the vesting effect of § 1327(b), the court “respectfully disagrees with the position taken in [Mason v. Williams, 51 B.R. 548 (D. Or. Apr. 2, 1985) (Frye),] and its progeny that all property of the estate vests in the debtor upon confirmation and thereafter no estate subsequently exists. . . . [V]esting, like confirmation, is a temporal event which occurs once in the case and does not preclude the coming into existence of property of the bankruptcy estate in futuro. . . . Earnings from a debtor’s services created post-confirmation needed or committed to fund the confirmed plan become property of the estate when they come into being to be later paid to the trustee, and are protected by the stay of § 362(a)(3) and (a)(4) against post-petition claims. The remainder of the earnings are more properly characterized as the debtor’s property and not automatically protected by the automatic stay from post-petition claims. . . . The court’s construction providing a mddle rather than an all or nothing approach is buttressed by § 1322(a)(1).”); In re Clarke, 71 B.R. 747 (Bankr. E.D. Pa. Apr. 10, 1987) (Scholl) (Confirmation vests property of the estate in the debtor; however, the estate does not disappear, and the property that vests in the debtor at confirmation remains subject to the automatic stay. A postpetition creditor needs relief from the stay to seek collection from the debtor or from property that vested in the debtor upon confirmation.); In re Root, 61 B.R. 984 (Bankr. D. Colo. July 1, 1986) (Brumbaugh) (Confirmation does not cause the disintegration of the Chapter 13 estate. Rather, any property that has been designated in the plan or order of confirmation as necessary for the execution of the plan—for example, postpetition wages up to the amount of the required plan payments—remains “property of the estate.” Any property that has not been designated as necessary for the execution of the plan revests in the debtor and is no longer property of the estate.).

 

29  Barbosa v. Soloman, 235 F.3d 31, 37 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas) (On trustee’s postconfirmation motion to modify the plan to increase payments to unsecured claim holders, although real property vested in the debtors at confirmation free and clear of the claims of creditors, estate did not cease to exist but continues “to be funded by the Debtors’ regular income and post-petition assets as specified in section 1306(a).” Accordingly, appreciation in value of property can be captured for unsecured claim holders by motion to modify the confirmed plan.), aff’g sub nom. 243 B.R. 562, 567 (D. Mass. Jan. 12, 2000) (Keeton) (Even if property vested in the debtor at confirmation under § 1327(b), “I rule, as a matter of law, that the proceeds of the sale of interests in the realty may become and continue to be ‘property of the estate’ of the debtor(s) in bankruptcy even though the debtors rather than their estate in bankruptcy had title to the realty and never conveyed it to their estate in bankruptcy.”), aff’g on other grounds In re Barbosa, 236 B.R. 540, 550, 551–52 (Bankr. D. Mass. July 30, 1999) (Feeney) (Postpetition appreciation in investment property is captured by the best-interests-of-creditors test at modification after confirmation notwithstanding that property of the estate vested in the debtor at confirmation. Court adopts “fourth approach” from City of Chicago v. Fisher (In re Fisher), 203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen), that “‘the property of the estate which vests in a debtor at confirmation is that which is property of the estate as of the date of confirmation. Section 1306(a) then operates to replenish the estate post-confirmation until the case is closed[,] converted or dismissed.’” Arguably, appreciation in property after confirmation also vested in the debtors pursuant to § 1327(b); however, “there is something unsavory about Chapter 13 Debtors ‘stripping down’ a mortgage under § 506(a) and (d) and receiving the ‘super’ discharge provided by § 1328(a) while walking away with substantial cash proceeds due to the appreciation in value of their Property, without amending their plan to satisfy the claims of their unsecured creditors. . . . [T]he spectacle of the Debtors profiting while in bankruptcy is disconcerting and may be indicative of a bad faith manipulation of the Code.”); Chung-Chan v. Bankowski (In re Chung-Chan), No. 09-CV-10926-PBS, 2009 WL 3837846 (D. Mass. Nov. 17, 2009) (Saris) (Applying Barbosa v. Soloman, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas), bankruptcy estate continues to exist after confirmation and is funded by regular income and postpetition assets under § 1306(a); postconfirmation settlement of adversary proceeding with mortgage creditor belonged to bankruptcy estate.); United States v. Harchar, 371 B.R. 254, 268, 265 (N.D. Ohio June 6, 2007) (Gaughan) (Court follows “growing majority of other courts to address the issue that property acquired after confirmation of the chapter 13 plan is property of the estate.” This approach “harmonizes Sections 1327 and 1306 by giving effect to the requirement that property continues to enter the estate until the case is closed, dismissed or converted,” citing Barbosa v. Soloman, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas).); Chicago v. Fisher (In re Fisher), 203 B.R. 958, 962–64 (N.D. Ill. Jan. 7, 1997) (Aspen) (At confirmation, property of the estate vests in the debtor absent a plan provision to the contrary, thus city did not violate automatic stay by booting, towing and crushing the debtor’s car on account of unpaid postconfirmation parking tickets. “Although the pertinent statutes are not crystal clear, we are still constrained by their text, which suggests to us the following interpretation: First, § 1306(a) defines ‘property of the estate’ to include property and earnings acquired by the debtor after the case’s commencement. While the case is pending, the post-petition property and earnings are added to the estate until confirmation, the event that triggers § 1327(b) and ‘vests’ the property of the estate in the debtor. That is, the property interests comprising the preconfirmation estate property are transferred to the debtor at confirmation, and this ‘vesting’ is free and clear of the claims or interests of creditors provided for by the plan, § 1327(b), (c). Finally, the property of the estate once again accumulates property by operation of § 1306(a) until the case is ‘closed, dismissed, or converted.’ . . . Applying our interpretation in the instant case, we hold that the City did not violate § 362(a)(3) of the automatic stay. Section 362(a)(3) prohibits only actions to obtain possession of, or exercise control over, ‘property of the estate.’ Fisher’s car was property of the estate at the time of the plan’s confirmation, but under § 1327(b) vested in her when the plan was confirmed; the plan did not provide otherwise. Thus, at the time the City took the actions at issue here, the car was no longer property of the estate protected by § 362(a)(3).”); Moser v. Mullican (In re Mullican), 417 B.R. 389, 399–400 (Bankr. E.D. Tex. Sept. 30, 2008) (Rhoades) (Postconfirmation inheritance was property of estate at conversion to Chapter 7. “[M]ost courts seem to have adopted an approach treating all post-confirmation earnings and post-confirmation property as property of the estate under § 1306(a) . . . . [M]ost courts analyzing post-petition windfalls, such as an inheritance, have found them to be property of a Chapter 13 estate. . . . With respect to post-confirmation property, this Court concludes that the approach adopted by the courts in [United States v. Harchar, 371 B.R. 254 (N.D. Ohio June 6, 2007) (Gaughan),] and Barbosa [v. Soloman, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas),] among others, is the most logical reconciliation of §§ 1306(a) and 1327(b). . . . The estate is not extinguished by confirmation, but rather is comprised of new property acquired by the debtor post-confirmation, whether via inheritance, wages or other means.”); In re Wetzel, 381 B.R. 247, 253, 254 (Bankr. E.D. Wis. Jan. 29, 2008) (Kelley) (Discussing “three basic interpretations of the tension between §§ 1306(a)(1) and 1327(b),” postconfirmation acquisitions and windfalls—including inheritance in this case—become property of estate. “[O]nly those property interests existing at confirmation revest in the debtor. The estate is not extinguished by confirmation, but rather is comprised of new property acquired by the debtor post-confirmation, whether via inheritance, wages or other means. Under this rule, the Debtors’ post-confirmation inheritance and post-confirmation business income is [sic] property of the estate, and is [sic] the proper subject of a plan modification.”); In re Van Stelle, 354 B.R. 157, 172–73 (Bankr. W.D. Mich. Oct. 4, 2006) (Hughes) (Insurance proceeds from destruction of car vested in debtor by exemption under § 522(l) or at confirmation under § 1327(b), and § 363(b) does not force lienholder to allow use of insurance proceeds to purchase replacement collateral. “Section 1327(b) and Section 1306(a) are reconcilable. . . . [P]roperty that had become property of the estate in a Chapter 13 proceeding either by operation of Section 541 or Section 1306 prior to confirmation will again become the debtor’s property upon confirmation by operation of Section 1327(b) unless the plan or confirmation order provides otherwise. However, the bankruptcy estate will continue regardless of whether it is depleted of property at confirmation so that it will be available to serve as a receptacle under Section 1306 for debtor’s post-confirmation acquisition of property.”); In re Brensing, 337 B.R. 376, 384–85 (Bankr. D. Kan. Jan. 24, 2006) (Berger) (“Nowhere in § 1327(b) does it state that property of the estate converts into property of the debtor upon confirmation and nowhere in this section does it state that § 1306 ceases to operate after confirmation of the plan. Section 1306 is most easily read to continue in effect after confirmation of the debtor’s plan. If upon confirmation of the debtor’s plan the property of the estate revests in the debtor and remains property of the estate, then such property remains subject to the terms of the confirmed plan and is entitled to all of the protections afforded under § 362(a). To hold otherwise renders § 1306 virtually irrelevant. . . . A Chapter 13 debtor’s post-confirmation bankruptcy estate consists of that property that exists on the petition date plus any additional property that is added postpetition by operation of § 1306(a). By remaining property of the bankruptcy estate, the debtor’s property is protected from pre- and postpetition creditors alike, allowing the debtor an effective reorganization during the pendency of her case. This is the most harmonious interpretation and application of these sections.” Rejecting Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), neither § 1306(a) nor § 1327(b) “return[s] to the debtor that property of the bankruptcy estate that is not necessary for completion of the debtor’s plan.”); In re Nott, 269 B.R. 250, 257 (Bankr. M.D. Fla. Sept. 29, 2000) (Glenn) (“[P]roperty of a chapter 13 estate that is in existence and disclosed as of the date of confirmation vests in the Debtor pursuant to § 1327(b). Any property acquired postconfirmation, however, is property of the estate pursuant to § 1306(a).”), probably overruled by Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001); Montclair Property Owners Ass’n, Inc. v. Reynard (In re Reynard), 250 B.R. 241, 245–49 (Bankr. E.D. Va. June 27, 2000) (Mayer) (Section 1327(b) vests in the debtor at confirmation all property of the estate, but estate continues to exist to receive property described in § 1306(a) acquired after confirmation; homeowner association needs relief from the stay to collect postpetition assessments from postpetition wages that remain property of the estate. “On the one hand, § 1306(a) seems to include in the chapter 13 estate all property acquired by a debtor after confirmation including future earnings. On the other hand, § 1327(b) seems to revest all property of the estate in the debtor, resulting in an estate without assets. . . . [Section] 1327(b) cannot be read so expansively as to terminate the then-present chapter 13 estate and eliminate the potential future chapter 13 assets without depriving § 1306(a) of all meaning. The only manner in which the two provisions can be read in harmony is if the assets of the chapter 13 estate as of the date of the confirmation of the chapter 13 plan vest in the debtor, the estate continues and assets set out in § 1306(a) acquired after confirmation become property of the chapter 13 estate when acquired. . . . This construction gives effect to § 1306(b) which provides that ‘the debtor shall remain in possession of all property of the estate.’ . . . It also gives meaning to § 347(a) which provides that 90 days after the final distribution in a chapter 13 case, the trustee shall stop payment on outstanding checks ‘and remaining property of the estate shall be paid into the court.’ . . . The effect of conversion under § 348(f)(2) reinforces the conclusion that a chapter 13 estate survives confirmation. . . . Section 1306(a) itself does not distinguish between property that is necessary for the success of the chapter 13 plan and property that is not necessary. . . . If any estate remains by virtue of § 1306(a) after confirmation, then all the property enumerated in § 1306(a) should become property of the post-confirmation chapter 13 estate. . . . All post-confirmation earnings—not just the amount of the plan payment—are necessary for the success of a chapter 13 plan and must be property of the post-confirmation chapter 13 estate.”); Holden v. United States (In re Holden), 236 B.R. 156, 163 (Bankr. D. Vt. July 21, 1999) (Conrad) (Tax refund for postconfirmation tax year became property of the estate notwithstanding vesting of property in the debtor at confirmation under § 1327(b). “[W]e adopt the fourth view of the interplay between § 1306(a) and § 1327(b), and hold that upon confirmation of a Chapter 13 plan, all property of the estate is emptied from the estate and revested in the Debtors under § 1327(b). Such property is no longer property of the estate. Immediately after confirmation, the estate begins to be refilled by property acquired by Debtors post-confirmation. That property is protected by the automatic stay and remains so until the case is closed, converted, or dismissed.”); In re Rangel, 233 B.R. 191, 194–98 (Bankr. D. Mass. Apr. 23, 1999) (Hillman) (Adopting “fourth approach” from Chicago v. Fisher (In re Fisher), 203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen), homestead vested in debtor at confirmation and debtor does not need court order to hire real estate broker to sell the house; however, debtor must notice the sale and modify the confirmed plan to make a lump-sum payment to pay off the plan. Confirmed plan provided that all property of the estate would vest in the debtor. Approximately 14 months after confirmation, the debtor filed a motion to employ a real estate broker to sell homestead and pay off 10% plan. “Sections 1306(a) and 1327(b) are difficult to reconcile. . . . [T]hree lines of cases have emerged. . . . The first line holds that property of the estate ceases to exist after confirmation of the plan. . . . The second line of cases holds that the Chapter 13 estate continues after confirmation of the Chapter 13 plan. . . . The third line of cases holds that all but the property of the estate which a debtor needs to fund the Chapter 13 plan vests in that debtor post-confirmation. . . . City of Chicago v. Fisher . . . presented a fourth approach. In an effort to reconcile both §§ 1306(a) and 1327(b), the court concluded that the property of the estate which vests in a debtor at confirmation is that which is property of the estate as of the date of confirmation. . . . Section 1306(a) then operates to replenish the estate post-confirmation until the case is closed[,] converted or dismissed. . . . [S]uch a ruling would bring into the estate post-confirmation income and assets, it does not run afoul of § 348(f) which would exclude such assets from the Chapter 7 estate in the event of a good faith conversion. . . . [A]s a result of the vesting language in the Order of Confirmation, the Property, including the equity above the mortgage and the Debtor’s exemption, vested in the Debtor on confirmation and is no longer property of the estate. As such, the Debtor was not required to file an application to employ the Broker . . . . Debtor is required to comply with Fed.R.Bank.P 4001 and 6004 during the course [of] his Chapter 13 case.”); In re Guentert, 206 B.R. 958, 962–63 (Bankr. W.D. Mo. May 19, 1997) (Federman) (Applying City of Chicago v. Fisher (In re Fisher), 203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen), life insurance proceeds on debtor who died after confirmation are property of the Chapter 13 estate and must be considered to determine whether proposal to use the insurance proceeds to pay off the confirmed plan satisfies best interests of creditors test. “Fisher . . . resolves [the] conflict between section 1306 and section 1327 . . . . [P]roperty that was identified and not distributed under the plan at confirmation becomes property of the debtor. Property that comes into the estate post-confirmation remains property of the estate. I, therefore, find that the insurance proceeds are property of the estate.” Debtor allowed opportunity to prove exemption in proceeds.).

 

30  See Annese v. Kolenda (In re Kolenda), 212 B.R. 851, 853–55 (W.D. Mich. Aug. 18, 1997) (Hillman) (Postpetition lender willfully violated automatic stay by retitling and repossessing car acquired by the debtor after confirmation because estate continued and was protected by automatic stay notwithstanding § 1327(b). A year after confirmation, debtors acquired a car. Debtors borrowed $1,316, using car as collateral. After default and despite warnings from debtors’ bankruptcy counsel, creditor changed the title and repossessed and sold the car. Bankruptcy court found a willful violation of the stay and awarded damages of $7,316. Discussing the interaction of §§ 1327(b) and 1306(a), district court found three approaches: “Under . . . the ‘estate termination’ approach . . . the estate vests with the debtor and the estate ceases to exist. . . . [Under] the ‘estate transformation’ approach . . . after confirmation, only plan-essential property remains in the estate . . . . Under . . . the ‘estate preservation’ approach . . . section 1327(b) is understood to remove no property from the estate. . . . [T]he third approach, the estate preservation approach, makes the most sense . . . . Section 1327(a) appears to address the vesting of property that is in the estate at the time of the confirmation. . . . Here, the car at issue was not acquired until after the confirmation of a plan. Accordingly, section 1327(b) does not appear to say anything about this particular property. Section 1306(a), in contrast, clearly provides that post-petition earnings and acquisitions are part of the estate. . . . I therefore conclude that even if the property in the estate at the time of confirmation is transferred to the debtor under § 1327(b), the estate continues to exist, and property acquired post-confirmation is added to the estate until the case is ‘closed, dismissed, or converted.’”); In re Fisher, 198 B.R. 721, 732–34 (Bankr. N.D. Ill. Aug. 1, 1996) (Wedoff) (“Section 1327(b) should be read, consistent with the rest of Chapter 13, as fixing the debtor’s right to possess and deal with estate property after confirmation. . . . The estate, however, remains intact after confirmation.” Court reviews three interpretations of “vesting” effect of confirmation. Court rejects position that the estate comes to an end altogether because this view fails to account for postpetition property under §  1306(a), fails to deal with conversion under § 348 and fails to explain a Chapter 13 trustee’s obligation to account for the estate after confirmation. The “transformation” view that confirmation does not terminate the estate but reduces the estate to property involved in the debtor’s performance under the plan fails of analysis for many of the same reasons. The third view—that vesting under § 1327(b) removes no property from the estate—proves too much unless a careful definition of “vesting” is fashioned. Court seems to choose third view. “[B]ecause of the continuing right of the debtor to convert a Chapter 13 case after plan confirmation, the role of the estate as a reserve source of creditor payments continues after confirmation, and so the estate itself must continue, subject to the protections of the Bankruptcy Code, undiminished by the confirmation. . . . For the best interest test to apply meaningfully to modified plans in Chapter 13, the estate must continue after confirmation, without transferring the assets of the estate to the debtor. . . . [T]he conflicting language of the individual statutory provisions of the Bankruptcy Code should be read to accomplish the continuation of the estate after confirmation of a Chapter 13 plan. Thus, Section 1306(a) does add the debtor’s postpetition earnings and acquisitions to the estate until the case is closed, dismissed or converted . . . . Section 348(f)(2) creates a full estate . . . and the Chapter 13 trustee, reporting on the administration of the estate, pursuant to Sections 1302(b)(1) and 704(9) has a meaningful task . . . . Section 1327(b) . . . cannot be seen as transferring to the debtor all or most of the property of the estate without producing an anomaly, repugnant to the rest of Chapter 13.” Applying this interpretation, the debtor’s car “continued to be property of the estate after her Chapter 13 case was confirmed, and by taking action to obtain possession of the car, the city violated the automatic stay as defined by Section 362(a)(3). A creditor in the position of the city is required to obtain relief from the stay, pursuant to Section 362(d), prior to enforcing its rights against estate property.”), rev’d, 203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen); In re Aneiro, 72 B.R. 424 (Bankr. S.D. Cal. Apr. 15, 1987) (Malugen) (The revesting of property in the debtor upon confirmation of a Chapter 13 case under § 1327 does not affect the existence of the estate and does not transform property of the estate into property of the debtor. An executory contract assumed in the confirmed plan remained property of the estate at confirmation although it revested in the debtor. Because the lease remained property of the estate, it could not be modified under § 363(b) without court approval.).

 

31  Woodard v. Taco Bueno Rests., Inc., No. 4:05-CV-804-Y, 2006 WL 3542693, at *2, *9 (N.D. Tex. Dec. 8, 2006) (unpublished) (Means) (Employment discrimination action that accrued two years after confirmation was property of Chapter 13 estate, but court declined to apply judicial estoppel due to “law’s uncertainty in this [Fifth] circuit as to the status of assets acquired by a debtor after the confirmation of his chapter 13 bankruptcy plan and as to the duty of the debtor to disclose those belatedly acquired assets.” Court discussed four views of vesting effect of confirmation: (1) estate-termination approach, where all property of estate becomes debtor’s property upon confirmation, as explained in Telfair v. First Union Mortgage Corp., 216 F.3d 1333, 1340 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch); (2) estate-preservation approach, where all property remains in estate until discharge, dismissal or conversion, as explained in Telfair, 216 F.3d at 1340; (3) “splitting the baby” or estate-transformation approach, where only such property as is necessary for plan execution remains in estate, as adopted by Telfair, 216 F.3d at 1340; and (4) cessation-of-estate approach, where upon confirmation all property vests fully in debtor, as explained in Barbosa v. Doreen, 235 F.3d 31, 36–37 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas). District court adopted fifth approach, one giving “full meaning” to “vesting” under combination of § 1306 and § 1327, as conditional right to “enjoy” an asset but one that “the debtor does not enjoy until he faithfully completed his obligations under the plan and is entitled to a discharge.”). See also West Virginia State Tax Dep’t v. Mullins (In re Mullins), No. 2:00-0571, 2009 WL 3160361, at *6 (S.D. W. Va. Sept. 30, 2009) (Copenhaver) (In appeal decided nine years after bankruptcy court’s order, postconfirmation tax liens did not violate automatic stay because confirmed plan did not overcome vesting of estate property in debtors. Reviewing various approaches to vesting at confirmation, district court adopted Woodard v. Taco Bueno Restaurants, Inc., No. 4:05-CV-804-Y, 2006 WL 3542693 (N.D. Tex. Dec. 8, 2006) (unpublished) (Means), “as the most logical resolution of such inconsistency as may exist between sections 1306(a) and 1327(b).”).

 

32  See Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001) Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner); Security Bank of Marshalltown v. Neiman, 1 F.3d 687 (8th Cir. Aug. 2, 1993) (McMillian, Beam, Sachs).

 

33  See Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274–75 (11th Cir. Feb. 5, 2010) (Marcus, Fay, Anderson) (When confirmed plan overcame vesting effect of confirmation and debtor failed to amend schedules to reveal postconfirmation employment discrimination lawsuit, judicial estoppel applied notwithstanding that full-payment plan was completed nine months after filing of lawsuit. “[A]ll qualified property acquired by Robinson during the pendency of her bankruptcy belonged to her bankruptcy estate and not her personally. . . . [W]hen Robinson filed her claim against Tyson while her bankruptcy was still pending, the claim vested in the bankruptcy estate and Robinson had a duty to notice the suit to all creditors. . . . By failing to update her bankruptcy schedule to reflect her pending claim, Robinson represented that she had no legal claims to the bankruptcy court while simultaneously pursuing her legal claim against Tyson in the district court. These actions, both taken under oath, are clearly inconsistent. . . . [T]he motive to conceal stems from the possibility of defrauding the courts and not from any actual fraudulent result.”); Waldron v. Brown (In re Waldron), 536 F.3d 1239 (11th Cir. Aug. 4, 2008) (Edmondson, Pryor, Johnson) (Distinguishing Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), adopting Barbosa v. Soloman, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas), and citing City of Chicago v. Fisher (In re Fisher), 203 B.R. 958, 962 (N.D. Ill. Jan. 7, 1997) (Aspen), uninsured motorist benefits from postconfirmation personal injury were property of estate because assets acquired after confirmation become property of estate. “As one court has explained, some property of the estate is vested in the debtor at confirmation, under section 1327(b), but property acquired later vests in the estate, under section 1306(a), until the case ends or is converted[.]” Bankruptcy court did not abuse its discretion by requiring debtors to amend schedules to disclose settlement of postpetition personal injury action. “The district court and bankruptcy court read our precedents as recognizing a debtor’s continuing duty to disclose changes in his financial situation during the pendency of his bankruptcy.”). See also Rodriguez v. Countrywide Home Loans, Inc. (In re Rodriguez), 421 B.R. 356, 374, 378, 380 (Bankr. S.D. Tex. Dec. 9, 2009) (Isgur) (Mortgage lender must file Bankruptcy Rule 2016 application before collecting reimbursable fees and costs during Chapter 13 case because postconfirmation earnings remain property of estate. Analyzing four approaches to vesting under § 1327(b), court adopted estate-reconciliation approach announced in Waldron v. Brown (In re Waldron), 536 F.3d 1239, 1243 (11th Cir. Aug. 4, 2008) (Edmondson, Pryor, Johnson). Reconciliation approach is “only one of the four approaches that interpret §§ 1327(b) and 1306(a)(2) in harmony.” Reconciliation approach “determines that Rule 2016 applies to acts to collect fees from post-confirmation earnings of the debtor because such earnings are property of the estate.” Rule 2016 continues to apply when fees and expenses were assessed during bankruptcy but not collected until after discharge. Assuming that literal reading would terminate Rule 2016 on discharge, § 105 would then present issue whether Countrywide had prevented debtors from obtaining fresh start by “obviating the Debtor’s ability to implement § 1322(b)(5).”).

 

34  Woodard v. Taco Bueno Rests., Inc., No. 4:05-CV-804-Y, 2006 WL 3542693 (N.D. Tex. Dec. 8, 2006) (unpublished) (Means).

 

35  2006 WL 3542693, at *8–*9.

 

36  Judicial estoppel is discussed in § 47.7 [ Causes of Action ] § 46.11  Causes of Action—Including Judicial Estoppel Issues.

 

37  2006 WL 3542693, at *12.

 

38  203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen).

 

39  See § 124.3  Does Confirmation Dissolve the Stay?.

 

40  Chicago v. Fisher (In re Fisher), 203 B.R. 958, 962 (N.D. Ill. Jan. 7, 1997) (Aspen). Accord Barbosa v. Soloman, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas).

 

41  115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner).

 

42  Income deduction orders are discussed beginning at § 125.1  Order to Debtor’s Employer.

 

43  115 F.3d at 522–23.

 

44  See In re Heath, 198 B.R. 298 (S.D. Ind. July 15, 1996) (Barker), aff’d, 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner).

 

45  115 F.3d at 524.

 

46  Chicago v. Fisher (In re Fisher), 203 B.R. 958, 962 (N.D. Ill. Jan. 7, 1997) (Aspen).

 

47  See discussion beginning at § 124.1  Procedure.See, e.g., Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001) (Adopting “estate transformation approach,” payments by the debtor directly to a mortgage holder were not property of the estate after confirmation, and the mortgage holder’s application of payments to attorney fees and insurance premiums did not violate the automatic stay.); Eden v. Robert A. Chapski, Ltd. (In re Eden), No. 03 CV 00116, 2003 WL 21147830 (N.D. Ill. May 14, 2003) (unpublished) (Aspen) (Applying Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), automatic stay did not protect postconfirmation payments to former spouse’s domestic relations attorney because the payments were not necessary to performance under the plan and were not property of the Chapter 13 estate after confirmation.).

 

48  See, e.g., In re Forte, 341 B.R. 859, 866 (Bankr. N.D. Ill. Oct. 6, 2005) (Black) (Citing Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), absent plan provision preserving estate until case is closed, bankruptcy court would lack jurisdiction to consider trustee’s motion to modify plan after confirmation to capture proceeds from refinancing of the debtor’s home. “The holding in Black is that bankruptcy courts have no jurisdiction to deal with property of the debtor after confirmation. Accordingly, a bankruptcy court has no jurisdiction to entertain a motion by a trustee or creditor under § 1329 seeking to take property acquired by a debtor after confirmation unless the court concludes that the property is property of the bankruptcy estate rather than property of the debtor. . . . The revesting provision in the confirmation order in this case is much more inclusive than that in Black, revesting all of the Debtors’ property into the bankruptcy estate. Although the language in Black raises a question whether this inclusive revesting provision is objectionable, to this point its efficacy has not been attacked by any party. . . . [G]iving full effect to the revesting provision in the confirmation order, I conclude that the proceeds of the Debtor’s refinancing became property of the bankruptcy estate by operation of that confirmation order. . . . I do have subject matter jurisdiction under Black to decide the Trustee’s § 1329 motion.”); In re Tomasevic, 279 B.R. 358, 362 (Bankr. M.D. Fla. June 14, 2002) (Corcoran) (Citing Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), bankruptcy court lacks jurisdiction over debtor’s action for postpetition violations of Real Estate Settlement Procedures Act by a creditor being paid “outside the plan.” “These disputes have no connection with the debtor’s performance or payment under the debtor’s Chapter 13 plan. . . . [T]hese disputes implicate no issue with respect to property of the estate. . . . Wilshire is not being treated in the plan, and this dispute therefore does not affect the debtor’s payments to other creditors under the plan. . . .[T]he court has no jurisdiction over this dispute between Wilshire and the debtor.”); Shuman v. Kashkashian (In re Shuman), 277 B.R. 638 (Bankr. E.D. Pa. Dec. 21 2001) (Fox) (Because estate property revested in the debtor at confirmation, bankruptcy court lacks jurisdiction over debtor’s lawsuit against former counsel for fraud, misrepresentation and unjust enrichment.). But see Cable v. Ivy Tech State College (In re Cable), 200 F.3d 467, 470–72 (7th Cir. Dec. 28, 1999) (Easterbrook, Kanne, Evans) (Citing Bankruptcy Rule 6009 and distinguishing Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), “debtor in possession” in a Chapter 13 case has standing to file, prosecute and appeal an action under the Americans With Disabilities Act. Prior to conversion from Chapter 7, debtor filed an ADA suit. Chapter 7 trustee was a named party plaintiff. Unhappy with Chapter 7 trustee’s proposed settlement of the ADA suit, debtor converted to Chapter 13. Confirmation order in Chapter 13 required payment of proceeds from lawsuit to creditors in the event of recovery. The court found that Bankruptcy Rule 6009 applied in a Chapter 13 case to give the “debtor in possession” authority to prosecute a pending action. The ADA suit was property of the Chapter 13 estate and under § 1306(b), “Chapter 13 grants the debtor possession of the estate’s property . . . . The chose in action, here a discrimination case, belongs to the estate and was being prosecuted for the benefit of its creditors. It would frustrate the essential purpose of § 1306 to grant the debtor possession of the chose in action yet prohibit him from pursuing it for the benefit of the estate.” The court distinguished Heath: “Heath holds that the trustee may bring actions only for the benefit of the estate, rather than for the benefit of the debtor. . . . Here, the plan specifically directs that the potential proceeds . . . benefit the estate and its creditors. . . . Heath and the cases cited therein do not concern the authority of debtors-in-possession under Chapter 11 or 13. . . . Heath itself deals with Chapter 13, but not specifically with a debtor-in-possession. While this Court stated that the trustee exercises exclusive authority to sue and be sued, see Heath, 115 F.3d at 523, we did not address the situation presented when a debtor-in-possession acts, pursuant to its statutory command, in the role of trustee. . . . To say that the trustee has ‘exclusive authority’ does not mean that the debtor-in-possession cannot act as a trustee and therefore enjoy that same authority. . . . The Chapter 13 debtor has standing to bring claims that benefit the estate.”).

 

49  See § 207.1 [ Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) ] § 113.11  Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) for plan provision that overcomes the vesting effect in § 1327(b).

 

50  In re Jemison, No. 07-40761, 2007 WL 2669222, at *1–*3 (Bankr. N.D. Ala. Sept. 6, 2007) (unpublished) (Robinson) (Citing Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), and Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner): “Although some courts find ‘tension’ between Sections 1306 and 1327, this Court finds none. . . . [W]hen it comes time for property of the estate to be returned to the debtor at confirmation, the plan and order of confirmation should provide for the estate to retain a sufficient portion of the debtor’s future earnings, and occasionally other property, to fund the plan. . . . ‘“[T]he plan upon confirmation returns so much of that property to the debtor’s control as is not necessary to the fulfillment of the plan.”’ . . . Each plan now under consideration provides that all property of the estate will not vest in the debtor until the case is closed, dismissed or converted. Much of the property to be retained by the estates in these cases will not be used to fund the debtors’ plans or serve any other legitimate purpose contemplated by the plans or the Code . . . . Other than garnering extended automatic stay protection, from the debtors’ perspective, there can be no other reason for the plans now under consideration to propose a delay in vesting all the estates’ property in the debtors. . . . [O]nly that portion of the estate’s property reasonably calculated to provide for the payment of the plan over the applicable commitment period should be retained by the estate, and the remainder must be returned to the debtor. The estate is not a safe harbor in which debtors may moor their property, including earnings, for protection from post-petition creditors.”).

 

51  216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001).

 

52  Curing default and maintaining payments on a home mortgage are discussed beginning at § 81.1  Overview: General Rules for Saving Debtor’s Home.

 

53  This is a really bad idea. See §§ 59.1 [ Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise ] § 53.10  Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise, 147.1 [ Direct Payment of Mortgage or Payment by Trustee ] § 85.6  Direct Payment of Mortgage or Payment by Trustee and 454.2 [ Direct Payment of Secured Debt after BAPCPA ] § 74.9  Direct Payment of Secured Debt after BAPCPA.

 

54  216 F.3d at 1340.

 

55  216 F.3d at 1340. See also Henthorn v. GMAC Mortgage Corp. (In re Henthorn), No. 03-4156, 2005 WL 293646, at *2 (3d Cir. Feb. 9, 2005) (unpublished) (Scirica, McKee, Chertoff) (Because plan provided that debtor would make home mortgage payments directly to GMAC Mortgage, debtor cannot challenge $845 charge for costs and attorney fees collected by GMAC when debtor sold real property and satisfied mortgage after confirmation. “The plan itself excluded the mortgaged property and the corresponding lien agreement with GMAC from bankruptcy, and the property re-vested in plaintiffs upon confirmation. 11 U.S.C. § 1327(b). Plaintiffs then sold the property, and satisfied their obligations to GMAC, ‘outside’ of bankruptcy. . . . Having excluded their contractual relationship with GMAC from the plan—a decision that, among other things, allowed plaintiffs to sell the mortgaged property without oversight from the Bankruptcy Court, payment of bankruptcy trustee’s fees, or remittance of any profits on the sale to creditors with stripped liens—plaintiffs cannot later, post-confirmation, invoke § 506(b) and § 105(a) to superintend the ‘reasonableness’ of fees collected by GMAC from the proceeds of the sale of its collateral.”); Saylor v. Select Portfolio Servicing, Inc. (In re Saylor), Nos. 02-80576, 06-8035, 2007 WL 128789 (Bankr. M.D. La. Jan. 12, 2007) (unpublished) (Sawyer) (Confirmation vested home in debtor; under “estate transformation” approach, Telfair v. First Union Mortgage Corp., 216 F.3d 1333, 1340 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), debtor’s complaint that mortgage creditor improperly assessed postconfirmation charges did not impact bankruptcy estate and was dismissed with prejudice.).

 

56  For other reasons, see §§ 59.1 [ Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise ] § 53.10  Make Payments to Creditors Unless Plan or Confirmation Order Provides Otherwise, 147.1 [ Direct Payment of Mortgage or Payment by Trustee ] § 85.6  Direct Payment of Mortgage or Payment by Trustee and 454.2 [ Direct Payment of Secured Debt after BAPCPA ] § 74.9  Direct Payment of Secured Debt after BAPCPA.

 

57  124 F.3d 1201 (10th Cir. Aug. 26, 1997) (Baldock, Holloway, Murphy).

 

58  124 F.3d at 1207–08. See §§ 447.1 [ Lien Retention, Including in No-Discharge Cases ] § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases and 560.1 [ Effects of Discharge on Liens after BAPCPA ] § 162.4  Effects of Discharge on Liens after BAPCPA for discussion of amendments by BAPCPA to § 1325(a)(5) concerning retention of liens.

 

59  See § 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

60  11 U.S.C. § 1327(c).

 

61  See § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

62  176 B.R. 498 (Bankr. D. Minn. Jan. 6, 1995) (Kishel).

 

63  176 B.R. at 503.

 

64  237 B.R. 443 (Bankr. N.D. Ill. Aug. 17, 1999) (Lefkow).

 

65  237 B.R. at 446. Section 1325(a)(5) was amended by BAPCPA to specifically address retention of liens. See §§ 447.1 [ Lien Retention, Including in No-Discharge Cases ] § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases and 560.1 [ Effects of Discharge on Liens after BAPCPA ] § 162.4  Effects of Discharge on Liens after BAPCPA.

 

66  See §§ 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens and 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For.

 

67  See, e.g., Cen-Pen Corp. v. Hanson, 58 F.3d 89, 94 (4th Cir. June 22, 1995) (Wilkinson, Hamilton, Heaney) (Notwithstanding that plan clearly treated a lienholder as an unsecured creditor and proposed to void the lien of any creditor that failed to object to confirmation or to file a proof of claim, confirmation did not invalidate mortgage holder’s lien because the plan failed to “provide for” the lienholder’s claim for purposes of § 1327(c). “As a general matter, a plan ‘provides for’ a claim or interest when it acknowledges the claim or interest and makes explicit provision for its treatment. . . . If a Chapter 13 plan does not address a creditor’s lien (for instance, by expressly providing for payment of an allowed secured claim and cancellation of the lien), that lien passes through the bankruptcy process intact, absent the initiation of an adversary proceeding. . . . Several courts have held that a plan ‘provides for’ the lien held by a secured creditor only when it provides for payment to the creditor in an amount equal to its security. . . . Because listing Cen-Pen as an unsecured creditor would have entitled it only to approximately 25 percent of its claim, the plan did not ‘provide for’ Cen-Pen’s claim and its liens survived the Chapter 13 confirmation.”); Russo v. Seidler (In re Seidler), 44 F.3d 945 (11th Cir. Feb. 13, 1995) (Kravitch, Birch, Hoeveler) (Vesting of property in the debtor at confirmation under § 1327(c) did not moot the appeal of an order in a separate adversary proceeding because the plan made no provision for payment of putative lien based on order in the separate adversary proceeding that the lien had been satisfied prepetition. The predicate for the vesting of property free and clear of liens under § 1327(c) is that the plan provides for the creditor. A plan that does not list a creditor because the debtor believes that the “creditor” does not have a claim in the bankruptcy case does not “provide for” the creditor and thus precludes any effect of confirmation on the putative lien rights of that creditor.); In re Lee, 182 B.R. 354, 358–59 (Bankr. S.D. Ga. May 23, 1995) (Walker) (Confirmed plan that does not “provide for” the lien of a bank on a car does not affect the in rem rights of the bank. “Whether a secured creditor’s in rem rights survive confirmation depends upon whether the claim is ‘provided for’ within the meaning of section 1327(c). . . . Where a plan does not provide for a secured claim, both the plan and the Code contemplate that the property will not vest in the debtor free and clear, and the creditor’s security interest will survive the bankruptcy proceedings. . . . The Bank in this case is not ‘provided for’ by the plan because it receives no payment on the value of its interest in Debtors’ vehicle. . . . Confirmation of Debtors’ plan, therefore, did not extinguish the in rem rights of the Bank in the collateral, and the Bank may now seek to protect its security interest.”); Honesdale Nat’l Bank v. Mordenti (In re Mordenti), 164 B.R. 37 (Bankr. M.D. Pa. July 13, 1993) (Thomas) (Although property of the estate vests in the debtor at confirmation under § 1327(c), where the plan failed to provide for a second mortgage, the property that vested in the debtor at confirmation vested subject to the second mortgage. Because the debtor did not offer adequate protection in response to the creditor’s postconfirmation request for relief from the stay, the second mortgage holder is entitled to termination of the stay.).

 

68  See §§ 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay? and 245.1 [ Postpetition Claims and Relief from the Stay ] § 124.5  Postpetition Claims and Relief from the Stay. See, e.g., Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001) (Mortgage holder’s application of plan payments to attorneys’ fees and insurance premiums did not violate automatic stay or discharge injunction because under “estate transformation approach” payments by the debtor directly to the mortgage holder were not property of the estate after confirmation.); Eden v. Robert A. Chapski, Ltd. (In re Eden), No. 03 CV 00116, 2003 WL 21147830 (N.D. Ill. May 14, 2003) (unpublished) (Aspen) (Postconfirmation payments to former spouse’s domestic relations attorney were not property of the Chapter 13 estate, were not protected by the automatic stay and were not subject to turnover because confirmed plan vested estate in the debtor under § 1327(b) and the debtor failed to prove that payments to the attorney interfered with payments required by the confirmed plan.); Ujlaky v. Ujlaky (In re Ujlaky), Nos. 98-03626, 1:01-CV-359, 2001 WL 36088108 (W.D. Mich. Nov. 14, 2001) (unpublished) (Quist) (Because estate vested in joint debtors at confirmation, postconfirmation divorce decree that divided property and allocated Chapter 13 plan payments did not implicate stay and did not impact property of bankruptcy estate.); Chicago v. Fisher (In re Fisher), 203 B.R. 958 (N.D. Ill. Jan. 7, 1997) (Aspen) (City did not violate automatic stay by booting, towing and crushing the debtor’s car on account of postpetition unpaid parking tickets because the car vested in the debtor at confirmation under § 1327(b) and ceased to be protected by the automatic stay from the collection efforts of a postpetition creditor.); In re Dagen, 386 B.R. 777 (Bankr. D. Colo. Mar. 26, 2008) (Brown) (Adopting estate-termination approach— “confirmation vests all property, including post-confirmation income necessary to fund the plan, in the Debtor”— property of estate ceases to be protected by automatic stay; but, when confirmed plan provided for full payment of priority prepetition support obligations, creditor is bound to accept payments from trustee. Neither plan nor automatic stay prohibited collection of postpetition support.); Wilson v. Home-Savers, LLC (In re Wilson), Nos. 01-00092, 06-10037, 2006 WL 2348539 (Bankr. D.D.C. July 17, 2006) (unpublished) (Teel) (Because property of Chapter 13 estate vested in debtor at confirmation under § 1327(b), debtor cannot use automatic stay or § 549 to attack postconfirmation transaction in which debtor executed deed and deed of trust to avoid foreclosure.); In re Markowicz, 150 B.R. 461, 462 (Bankr. D. Nev. Jan. 21, 1993) (Riegle) (“[B]y virtue of 11 U.S.C. § 1327(b), property acquired by a chapter 13 debtor post-petition that is not committed to the funding of a plan is not property of the estate. . . . [P]ost-confirmation earnings not committed to the funding of a plan vest in the debtor upon confirmation. . . . [T]he post-confirmation levy of the IRS to collect post-petition taxes did not violate the automatic stay.”).

 

69  11 U.S.C. § 362(c)(1). See § 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?.

 

70  See 11 U.S.C. § 362(a)(5), discussed in § 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?.

 

71  See § 245.1 [ Postpetition Claims and Relief from the Stay ] § 124.5  Postpetition Claims and Relief from the Stay. See, e.g., EconoLube N’ Tune, Inc. v. Frausto (In re Frausto), 259 B.R. 201 (Bankr. N.D. Ala. Dec. 12, 2000) (Cohen) (Applying “estate transformation approach” from Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), $100,000 settlement of prepetition lawsuit vested in debtor at confirmation and is not property of Chapter 13 estate; postpetition creditor can garnish the settlement proceeds to collect a postpetition judgment.).

 

72  See above in this section.

 

73  In re Jackson, 403 B.R. 95 (Bankr. D. Idaho Mar. 5, 2009) (Pappas).

 

74  403 B.R. at 99–100 (“As the Court sees it, confirmation of a chapter 13 plan operates to adjust the rights of creditors and the debtor in relation to the assets existing at that time. However, because it necessarily takes years for a debtor to perform a plan, a debtor’s acquisition of significant post- petition assets can not [sic] be seen to inure solely to the benefit of any post-petition creditors. . . . Because this interpretation best balances the interests of all creditors, the Court holds that, under § 1327(b), a provision in a confirmed plan that property ‘revest’ in the debtor applies solely to property in existence at the time of confirmation. Any assets acquired by the debtor after confirmation, but before the case is closed, converted or dismissed, become property of the bankruptcy estate under § 1306(a).”).

 

75  150 B.R. 461 (Bankr. D. Nev. Jan. 21, 1993) (Riegle).

 

76  See, e.g., Montclair Property Owners Ass’n, Inc. v. Reynard (In re Reynard), 250 B.R. 241 (Bankr. E.D. Va. June 27, 2000) (Mayer) (Section 1327(b) vests in the debtor at confirmation all property of the estate, but estate continues to exist to receive property described in § 1306(a) acquired after confirmation; homeowner association needs relief from the stay to collect postpetition assessments from postpetition wages that remain property of the estate.).

 

77  150 B.R. at 462. See also In re Santangelo, 325 B.R. 874, 879, 882 (Bankr. M.D. Fla. Mar. 22, 2005) (Jennemann) (Though confirmed plan provided that pre- and post-petition property of the debtors would be deemed property of the estate, debtors’ claim in a class action against Fairbanks Capital was not committed to creditors and vested in the debtors at confirmation; barring debtors from participating in class action for failure to file a claim did not violate automatic stay. Debtors were victims and members of a class in a lawsuit against Fairbanks Capital. Chapter 13 plan provided 100% dividend to unsecured creditors and provided “[a]ll pre and post petition property of the debtor(s) herein, including but not limited to wages or other earnings, shall be deemed property of this estate in bankruptcy and as such shall be protected post-confirmation and pre-confirmation.” Under Eleventh Circuit law, only assets needed to make payments under the plan are protected. See Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch). Thus, debtors’ claim against Fairbanks was no longer property of the estate because the debtors were not relying upon any recovery from Fairbanks to pay any portion of their Chapter 13 plan. “Pursuant to the decision in Telfair, when property is not necessary to the fulfillment of the plan, the property is revested in the debtor and no longer constitutes property of the estate.” Accordingly, activity in the class action did not violate automatic stay.).

 

78  See, e.g., Holden v. United States (In re Holden), 236 B.R. 156, 163 (Bankr. D. Vt. July 21, 1999) (Conrad) (Tax refund for postconfirmation tax year became property of the estate protected by the automatic stay notwithstanding the vesting of property in the debtor at confirmation under § 1327(b) because the court adopted the “fourth view . . . immediately after confirmation, the estate begins to be refilled by property acquired by Debtors post-confirmation. That property is protected by the automatic stay and remains so until the case is closed, converted, or dismissed.”); Clark v. United States (In re Clark), 207 B.R. 559, 563–64 (Bankr. S.D. Ohio Mar. 20, 1997) (Waldron) (In a jurisdiction in which the confirmation order overcomes the vesting effect of § 1327(b), IRS violated stay by levying on postpetition wages to collect a postpetition tax claim. “[T]he Trustee is clearly correct that most chapter 13 cases across the nation do not delay the revesting of the property of the estate in debtors as the ‘Dayton Plans’ do. . . . [T]he confirmation order provides that all property of the debtor and of the estate as defined by § 1306(a), which expressly includes postpetition earnings, . . . shall remain property of the estate and shall vest in the debtor only upon dismissal, discharge or conversion. . . . [T]he debtors’ postpetition wages remain property of the estate, and have not revested in the debtors; and, as a result, remain protected by the automatic stay. The Service may not take any action to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate, nor may the Service act to create, perfect, or enforce any lien against property of the estate, without first obtaining relief from the stay. . . . [T]he Service directly violated the provisions of § 362(a)(3) and (4).” Debtor awarded $2,385 for attorneys’ fees.).

 

79  See §§ 238.2 [ Effects of Confirmation on Postpetition Claims ] § 122.4  Effects of Confirmation on Postpetition Claims and 245.1 [ Postpetition Claims and Relief from the Stay ] § 124.5  Postpetition Claims and Relief from the Stay.

 

80  See §§ 204.1 [ Providing for Postpetition Claims ] § 113.6  Providing for Postpetition Claims, 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA and 524.1 [ Postpetition Claims ] § 137.2  Postpetition Claims after BAPCPA.

 

81  See below in this section, and see §§ 207.1 [ Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) ] § 113.11  Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) and 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

82  No. 09-13222, 2010 WL 597224 (11th Cir. Feb. 22, 2010) (unpublished) (Dubina, Pryor, Anderson).

 

83  2010 WL 597224, at *2 (“This exception [§ 362(b)(2)(B)] applies here because, pursuant to 11 U.S.C. § 1327(b), after Rodriguez’s plan was confirmed by the bankruptcy court, all of Rodriguez’s property not necessary to fulfill the requirements of the plan was revested with Rodriguez personally as a matter of law. 11 U.S.C. § 1327(b); Telfair v. First Union Mortgage Corporation, 216 F.3d 1333, 1340 (11th Cir. [July 7, 2000) (Tjoflat, Marcus, Kravitch)]. Therefore, subsequent to confirmation, the property was ‘not property of the estate’ and subject to the § 362(b)(2)(B) child support exception.”). See also In re Dagen, 386 B.R. 777 (Bankr. D. Colo. Mar. 26, 2008) (Brown) (Adopting estate-termination approach— “confirmation vests all property, including post-confirmation income necessary to fund the plan, in the Debtor”— property of estate ceases to be protected by automatic stay, but when confirmed plan provided for full payment of priority prepetition support obligations, creditor is bound to accept payments from trustee. Neither plan nor automatic stay prohibited collection of postpetition support obligations.).

 

84  11 U.S.C. § 503(b) provides in part: “There shall be allowed administrative expenses . . . including—(1)(A) the actual, necessary costs and expenses of preserving the estate.”

 

85  See discussion beginning at § 73.1  Plan Must Provide Full Payment and discussion beginning at § 136.1  Treatment of Priority Claims.

 

86  See §§ 238.2 [ Effects of Confirmation on Postpetition Claims ] § 122.4  Effects of Confirmation on Postpetition Claims, 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA and 524.1 [ Postpetition Claims ] § 137.2  Postpetition Claims after BAPCPA. See, e.g., Security Bank of Marshalltown v. Neiman,1 F.3d 687, 691 (8th Cir. Aug. 2, 1993) (McMillian, Beam, Sachs) (Postconfirmation debts for feed and veterinary services are administrative expenses necessary for the preservation of the Chapter 13 “estate” of a debtor engaged in hog farming, notwithstanding confirmation of a plan that did not specifically preserve the estate. “‘There must be an “estate” upon and after confirmation, and that estate consists of the property and future earnings of the debtor dedicated to fulfillment of the Chapter 13 plan.’”); In re Criss, 85 B.R. 459 (Bankr. N.D. Ohio May 12, 1988) (Baxter) (In dicta, § 1327(b) vests all assets of the estate in the debtor at confirmation; consequently, there remains no estate to preserve and utility bills that accrue after confirmation cannot be administrative expenses under § 503.); In re Gyulafia, 65 B.R. 913 (Bankr. D. Kan. Oct. 10, 1986) (Franklin) (Because § 1327 vests property of the estate in the debtor and releases the estate of all claims and interests of creditors, taxes that accrue postconfirmation are incurred by the debtor, not by the estate, and cannot be administrative expenses under § 503.).

 

87  See §§ 49.1 [ Available and Important in Chapter 13 Cases ] § 48.1  Available and Important in Chapter 13 Cases and 49.2 [ Timing and Procedure ] § 48.4  Timing and Procedure.

 

88  11 U.S.C. § 522(b)(1) (“Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate that property listed in either paragraph (2), or in the alternative, paragraph (3) of this subsection.”).

 

89  208 B.R. 598 (Bankr. S.D. Ga. Mar. 3, 1997) (Davis), rev’d, 168 F.3d 442 (11th Cir. Feb. 23, 1999) (Hatchett, Birch, Keith).

 

90  208 B.R. at 601.

 

91  221 B.R. 11 (Bankr. N.D. Ala. May 1, 1998) (Sledge).

 

92  206 B.R. 958 (Bankr. W.D. Mo. May 19, 1997) (Federman).

 

93  See also §§ 160.1 [ In General: Plan Payments vs. Hypothetical Liquidation ] § 90.1  In General: Plan Payments vs. Hypothetical Liquidation and 161.1 [ Exemption Issues ] § 90.2  Exemption Issues.

 

94  375 B.R. 362 (Bankr. W.D. Mich. Sept. 5, 2007) (Hughes).

 

95  See, e.g., Reathaford v. Countrywide Home Loans, Inc. (In re Reathaford), Nos. 05-24282-13, 07-6077, 2007 WL 2903044 (Bankr. D. Kan. Oct. 2, 2007) (unpublished) (Somers) (Citing Autos, Inc. v. Gowin, No. 05-3415, 2007 WL 2269443, at *3–*4 (10th Cir. Aug. 9, 2007) (unpublished) (Tacha, Tymkovich, Holmes), debtor had standing to pursue violations of automatic stay and of Fair Debt Collection Practices Act when confirmation order did not vest property in debtor until discharge or dismissal and nothing in confirmation order vested property of estate in trustee.); Sanchez v. Ameriquest Mortgage Co. (In re Sanchez), 372 B.R. 289, 301 (Bankr. S.D. Tex. July 24, 2007) (Bohm) (Under plan, property of estate did not vest in debtors until discharge; estate continues to exist and court has jurisdiction over debtors’ complaint attacking Ameriquest’s collection of pre- and postconfirmation charges from estate property. Even if estate ceased to exist, court would retain jurisdiction under Fifth Circuit’s “‘more exacting theory of post-confirmation bankruptcy jurisdiction’ which limits the jurisdiction of bankruptcy courts, once a debtor’s estate ceases to exist, to those matters pertaining to the implementation or execution of the plan. Bank of Louisiana v. Craig’s Stores of Tex., Inc. (In re Craig’s Stores of Tex., Inc.), 266 F.3d 388, 390–91 (5th Cir. [Oct. 3, 2001) (Jones, DeMoss, Benavides]); see also In re U.S. Brass, 301 F.3d 296, 304 (5th Cir. [July 31, 2002) (Duhe, Barksdale, Dennis)].”); Wilson v. Home-Savers, LLC (In re Wilson), Nos. 01-00092, 06-10037, 2006 WL 2348539 (Bankr. D.D.C. Aug. 17, 2006) (unpublished) (Teel) (Because property of Chapter 13 estate vested in debtor at confirmation under § 1327(b), debtor cannot use automatic stay or § 549 to attack postconfirmation transaction in which debtor executed deed and deed of trust to avoid foreclosure.). See also Ramos v. Castillo (In re Castillo), No. 09-5005, 2009 WL 3854261 (Bankr. S.D. Tex. Nov. 17, 2009) (unpublished) (Steen) (When confirmed plan provided that property of estate would not vest in debtors until discharge, right to prosecute state court lawsuit remained vested in estate, subject to administration by trustee and bankruptcy court; debtors had no authority to prosecute claims in state court, and debtors’ action in state court violated automatic stay. Confirmation of plan had not adjudicated title to property or determined rights of other parties claiming interest in property.).

 

96  See § 47.7 [ Causes of Action ] § 46.11  Causes of Action—Including Judicial Estoppel Issues.

 

97  See, e.g., Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274–75 (11th Cir. Feb. 5, 2010) (Marcus, Fay, Anderson) (When confirmed plan overcame vesting effect of confirmation and debtor failed to amend schedules to reveal postconfirmation employment discrimination lawsuit, judicial estoppel applied notwithstanding that full-payment plan was completed nine months after filing of lawsuit.).

 

98  See In re Henneghan, No. 03-01216, 2009 WL 2855835, at *1 (Bankr. D.D.C. June 15, 2009) (unpublished) (Teel) (Because confirmed plan overcame vesting effect of § 1327(b), unscheduled lender liability claim remained property of the estate until it vested in debtor at discharge. “Section 1327(b) does not distinguish between property of the estate that was scheduled versus estate property that was not scheduled. Unless the plan or the confirmation order provides otherwise, the property of the estate vesting in a debtor pursuant to § 1327(b) includes unscheduled property. Accordingly, the property of the estate that vested in Henneghan upon the entry of the discharge order included the unscheduled lender liability claim.”); In re Carter, 258 B.R. 526 (Bankr. S.D. Ga. Jan. 18, 2001) (Dalis) (Applying Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (Jan. 8, 2001), cause of action for injuries from an automobile accident three years after confirmation of a 100% plan did not become property of the Chapter 13 estate because the lawsuit was not necessary to fulfillment of the plan; it is unnecessary to reopen the Chapter 13 case to amend the schedules to avoid the defense of judicial estoppel in the state court tort action.).

 

99  See, e.g., Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274–75 (11th Cir. Feb. 5, 2010) (Marcus, Fay, Anderson) (“[W]hen Robinson filed her claim against Tyson while her bankruptcy was still pending, the claim vested in the bankruptcy estate and Robinson had a duty to notice the suit to all creditors. . . . By failing to update her bankruptcy schedule to reflect her pending claim, Robinson represented that she had no legal claims to the bankruptcy court while simultaneously pursuing her legal claim against Tyson in the district court. These actions, both taken under oath, are clearly inconsistent. . . . [T]he motive to conceal stems from the possibility of defrauding the courts and not from any actual fraudulent result.”); Consumer Portfolio Servs., Inc. v. Coleman (In re Coleman), No. 01-70473-CMS-13, 2007 WL 1526651 (Bankr. N.D. Ala. May 24, 2007) (unpublished) (Stilson) (Under confirmation order, vesting in debtor did not occur until discharge, but preconfirmation cause of action for alleged violation of Alabama UCC’s notice-of-sale requirements did not vest in debtor because it was not scheduled. As a result, debtor is barred by lack of standing and res judicata effect of confirmation from pursuing cause of action.); In re Harvey, 356 B.R. 557, 565 (Bankr. S.D. Ga. Sept. 1, 2006) (Davis) (Postconfirmation causes of action for automobile accident injuries became property of estate under § 1306 and “are not deemed to be retroactively vested in the debtor as of confirmation” by operation of § 1327. “[T]hey must be scheduled so that the Trustee’s or a creditor’s right to seek modification is a meaningful right. If they are not scheduled, they remain property of the estate pursuant to Section 1306 and 554(d).” Court examined Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. July 7, 2000) (Tjoflat, Marcus, Kravitch), Witko v. Menotte (In re Witko), 374 F.3d 1040 (11th Cir. June 25, 2004) (Black, Marcus, Smith), and Muse v. Accord Human Resources, Inc., 129 Fed. Appx. 487 (11th Cir. Apr. 15, 2005) (unpublished) (Black, Hull, Pryor). In Telfair, circuit adopted estate-transformation approach to resolving §§ 1306(a) and 1327(b), holding that “confirmation returns so much of property to the debtor’s control as is not necessary to the fulfillment of the plan.” 216 F.3d at 1340. In Witko, circuit concluded that postpetition malpractice cause of action was not property of the estate, but case had been converted to Chapter 7 and court did not consider §§ 1306(a) and 1327(b). In Muse, which was not binding authority because not published, court held postconfirmation wage claim was not property of estate, but there was “no assertion that it was necessary for the plan.” 129 Fed. Appx. at 490. Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. May 20, 2002) (Carnes, Fay, Hunt), and Ajaka v. BrooksAmerica Mortgage Corp., 453 F.3d 1339 (11th Cir. June 29, 2006) (Anderson, Barkett, Bowman), compelled holding that Chapter 13 debtor has continuing duty to amend schedules, even after confirmation. Postconfirmation assets may be necessary to plan, especially in context of possible modification of plan and in light of no abandonment of asset under § 554.).

 

100  See § 207.1 [ Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) ] § 113.11  Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b). See, e.g., Hildebrand v. Hays Imps., Inc. (In re Johnson), 279 B.R. 218, 229 (Bankr. M.D. Tenn. June 6, 2002) (Lundin) (Provision of confirmed plan that “all property shall remain property of the estate and shall vest in the debtor(s) only upon dismissal, discharge or conversion” overcame the vesting effect of § 1327(b) with respect to an avoidance action against a lienholder.); Clark v. United States (In re Clark), 207 B.R. 559, 563–64 (Bankr. S.D. Ohio Mar. 20, 1997) (Waldron) (“[T]he Trustee is clearly correct that most chapter 13 cases across the nation do not delay the revesting of the property of the estate in debtors as the ‘Dayton Plans’ do. . . . [T]he confirmation order provides that all property of the debtor and of the estate as defined by § 1306(a), which expressly includes postpetition earnings, . . . shall remain property of the estate and shall vest in the debtor only upon dismissal, discharge or conversion.”).

 

101  See § 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?. See, e.g., Patterson v. Homecomings Fin. LLC, 425 B.R. 499, 505, 501 (E.D. Wis. Mar. 24, 2010) (Clevert) (When confirmation order delayed revesting of property in debtors until discharge, conversion or dismissal, complaint stated cause of action for stay violations based on collection of undisclosed charges by mortgage holder at refinancing during Chapter 13 case. “[C]ourt is unpersuaded that money obtained from a mortgage on a homestead does not constitute proceeds of the real property and thus estate property under the bankruptcy court’s confirmation order in the Pattersons’ case. The funds were generated from the homestead, which at all times was estate property.” Complaint for stay violation was actionable under Price v. Rochford, 947 F.2d 829, 830–31 (7th Cir. June 10, 1991) (Cudahy, Coffey, Fairchild), which held that § 362(h) [now (k)] “creates a cause of action which may be enforced even after bankruptcy proceedings have terminated.”); Mudd v. Jacobson (In re Jacobson), 231 B.R. 763, 767 (Bankr. D. Ariz. Mar. 12, 1999) (Case) (Provision of plan overcoming the vesting effect of § 1327(b) prohibits postconfirmation collection of interest by child support creditor with a nondischargeable, priority claim.); Clark v. United States (In re Clark), 207 B.R. 559, 563–64 (Bankr. S.D. Ohio Mar. 20, 1997) (Waldron) (In a jurisdiction in which the confirmation order overcomes the vesting effect of § 1327(b), IRS violated stay by levying on postpetition wages to collect a postpetition tax claim. “[T]he confirmation order provides that all property of the debtor and of the estate as defined by § 1306(a), which expressly includes postpetition earnings, . . . shall remain property of the estate and shall vest in the debtor only upon dismissal, discharge or conversion. . . . [T]he debtors’ postpetition wages remain property of the estate, and have not revested in the debtors; and, as a result, remain protected by the automatic stay. The Service may not take any action to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate, nor may the Service act to create, perfect, or enforce any lien against property of the estate, without first obtaining relief from the stay. . . . [T]he Service directly violated the provisions of § 362(a)(3) and (4).”). See also In re Murray, 350 B.R. 408 (Bankr. S.D. Ohio Sept. 13, 2006) (Waldron) (Because plan overcame vesting effect in § 1327(b), home remained property of Chapter 13 estate within exclusive jurisdiction of bankruptcy court under 28 U.S.C. § 1334(e)(1) notwithstanding that no automatic stay came into effect under § 362(c)(4).).

 

102  See §§ 238.2 [ Effects of Confirmation on Postpetition Claims ] § 122.4  Effects of Confirmation on Postpetition Claims, 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay? and 245.1 [ Postpetition Claims and Relief from the Stay ] § 124.5  Postpetition Claims and Relief from the Stay.

 

103  See Hamilton v. Washington Mut. Bank, FA (In re Colon), 345 B.R. 723 (Bankr. D. Kan. Sept. 9, 2005) (Karlin) (Confirmed plan that delayed vesting of property until final report preserved trustee’s standing to avoid unperfected mortgage.). Trustee avoidance powers are discussed in § 60.1 [ Avoidance and Recovery Powers ] § 53.12  Avoidance and Recovery Powers.

 

104  See §§ 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property and 263.1 [ To Sell or Refinance Property of the Estate ] § 127.6  To Sell or Refinance Property of the Estate. See also Fatsis v. Braunstein (In re Fatsis), 405 B.R. 1 (B.A.P. 1st Cir. Apr. 4, 2009) (Vaughn, Kornreich, Tester) (When confirmed plan overcame vesting effect in § 1327(b) and prohibited debtors from alienating property of the estate without court permission, after conversion from Chapter 13, Chapter 7 trustee recovers sanctions for contempt based on debtor’s unauthorized sale of stock. Confirmed plan preserved estate and provided “[t]he debtor(s) shall not transfer, sell or otherwise alienate property of the estate other than in accordance with the confirmed plan or other order of the bankruptcy court.” During the Chapter 13 case and without court permission, debtor sold stock and used proceeds. “[U]nder the express terms of the Confirmation Order, the Stock remained nonexempt property of the Debtor’s estate after confirmation of his plan. By selling the Stock without bankruptcy court approval, the Debtor violated the clear and unambiguous terms of the Confirmation Order.” BAP affirms civil contempt judgment in the amount of the sales price of the stock.); In re Aneiro, 72 B.R. 424 (Bankr. S.D. Cal. Apr. 15, 1987) (Malugen) (The revesting of property in the debtor upon confirmation of a Chapter 13 case under § 1327 does not affect the existence of the estate and does not transform property of the estate into property of the debtor. An executory contract assumed in the confirmed plan remained property of the estate at confirmation although it revested in the debtor. Because the lease remained property of the estate, it could not be modified under § 363(b) without court approval.).

 

105  11 U.S.C. § 503(b)(1)(A).

 

106  Administrative expenses for the preservation of the estate are granted second priority by § 507(a)(2) and are treated by most plans as entitled to full payment under § 1322(a)(2). See discussion beginning at § 73.1  Plan Must Provide Full Payment and discussion beginning at § 136.1  Treatment of Priority Claims. The question whether administrative expenses can also be postpetition claims under § 1305 is not easily answered. See § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

107  See discussion of modification after confirmation beginning at § 126.1  Standing, Timing and Procedure See, e.g., In re Morgan, 299 B.R. 118 (Bankr. D. Md. Sept. 17, 2003) (Keir) (Because confirmed plan delayed vesting of property, plan had to be modified under § 1329 when debtor moved to sell real property six months after confirmation; best-interests-of-creditors test must be recalculated at time of modification with result that creditors capture appreciation.); In re Furgeson, 263 B.R. 28, 35–36 (Bankr. N.D.N.Y. Mar. 22, 2001) (Gerling) (Settlement proceeds from action for stay violation did not vest in the debtors at confirmation because confirmation order conditioned revesting “upon the approval of the Court and the Chapter 13 trustee”; proceeds can be used to increase payments to creditors on the trustee’s motion to modify the plan after confirmation. “[T]he Debtors’ Confirmation Orders provide for something other than the automatic revesting suggested in Code § 1327(b) . . . . As such, there can be no revesting of estate property in the Debtors without approval of this Court and the Trustee.”). See also Murphy v. O’Donnell (In re Murphy), 474 F.3d 143, 154 (4th Cir. Jan. 18, 2007) (Williams, Traxler, Hamilton) (Without resolving five different interpretations of interplay between §§ 1306(a) and 1327(b), when debtor sells condominium 11 months after confirmation and realizes 51.6% increase in value, Chapter 13 trustee can use modification under § 1329 to force higher payment percentage to unsecured creditors notwithstanding that confirmed plan vested property in debtor. “Under [Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. Mar. 6, 1989) (Ervin, Murnaghan, Wilkinson),] a debtor cannot use plan confirmation as a license to shield himself from the reach of his creditors when he experiences a substantial and unanticipated change in his income. . . . [E]ven though property vested in Murphy upon confirmation, this fact did not prevent the Chapter 13 trustee from seeking to modify Murphy’s plan.”).

 

108  See, e.g., In re McIntyre, No. 08-34900-tmb13, 2009 WL 3823039 (Bankr. D. Or. Nov. 13, 2009) (unpublished) (Brown) (When confirmed plan did not preserve bankruptcy estate, adversary proceeding vested in debtors and debtors can divide settlement proceeds with attorney without paying settlement funds to trustee for plan distribution.); In re Hardin, 375 B.R. 506 (Bankr. E.D. Wis. Sept. 11, 2007) (McGarity) (When confirmation order vested car in debtors, insurance proceeds from destruction of car postconfirmation were payable to Ford only to extent of Ford’s secured claim, with excess belonging to debtors.); In re Grice, 319 B.R. 141, 146 (Bankr. E.D. Mich. Dec. 27, 2004) (Shefferly) (Because plan provided that all property of the estate vested in the debtor at confirmation, at hardship discharge, bankruptcy court rejects trustee’s argument that actual income in excess of projected disposable income should have been paid into the plan. “The Court rejects the contention that the Debtor has somehow misappropriated property of the estate. The Debtor’s plan . . . provides that, under § 1327(b) of the Bankruptcy Code, all property of the estate vested in the Debtor upon confirmation. . . . The Debtor’s income only became property of the estate to the extent that the income was projected disposable income. . . . The additional income, which was not projected as of confirmation, never became projected disposable income and remained vested in the Debtor. Neither the Code nor the confirmed plan obligated the Debtor in this case to pay the additional income to the Trustee. Therefore, her failure to do so does not evidence a lack of good faith or improper conduct that prevents a hardship discharge.”).

 

109  See § 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

110  See also §§ 104.2 [ Lien Retention ] § 74.12  Lien Retention before BAPCPA, 262.1 [ To Incur New Debt ] § 127.5  To Incur New Debt and 447.1 [ Lien Retention, Including in No-Discharge Cases ] § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases for discussion of § 1325(a)(5) and lien retention.

 

111  See §§ 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens, 238.1 [ Loss, Destruction or Surrender of Property after Confirmation ] § 122.3  Loss, Destruction or Surrender of Property after Confirmation and 264.1 [ To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim ] § 127.7  To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim. See, e.g., In re Hardin, 375 B.R. 506 (Bankr. E.D. Wis. Sept. 11, 2007) (McGarity) (When confirmation order vested car in debtors, insurance proceeds from destruction of car postconfirmation were payable to Ford only to extent of Ford’s secured claim, with excess belonging to debtors.).

 

112  See §§ 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens and 263.1 [ To Sell or Refinance Property of the Estate ] § 127.6  To Sell or Refinance Property of the Estate.

 

113  See § 319.1 [ In Cases Filed before October 22, 1994 ] § 145.1  In Cases Filed before October 22, 1994. See also § 533.1 [ Lienholders’ Rights at Conversion under § 348(f) ] § 145.3  Lienholders’ Rights at Conversion under § 348(f) after BAPCPA for discussion of lienholder rights at conversion after BAPCPA.

 

114  Domestic support obligations, as defined by BAPCPA in § 101(14A), are discussed in § 58.6  Domestic Support Obligation Exception after BAPCPA, § 73.3  Priority Claims Added or Changed by BAPCPA, § 73.4  Deferred Payments Are Permitted§ 73.5  Interest Not Required, with Exceptions, § 88.5  Domestic Support Obligations Assigned or Payable to Government: § 1322(a)(4) after BAPCPA, § 87.5  Priority Claims after BAPCPA, § 113.3  Domestic Support Obligations Must Be Current, § 136.21  Domestic Support Obligations after BAPCPA and § 159.5  Domestic Support Obligations: § 523(a)(5).

 

115  11 U.S.C. § 362(b)(2)(B). See §§ 68.2 [ Additional Protection for Postpetition Property and Income ] § 58.3  Additional Protection for Postpetition Property and Income, 69.1 [ Alimony and Support Exception ] § 58.5  Alimony and Support Exception, 246.1 [ Alimony and Support Collection after Confirmation ] § 124.6  Alimony and Support Collection after Confirmation and 430.1 [ Domestic Support Obligation Exception ] § 58.6  Domestic Support Obligation Exception after BAPCPA.

 

116  See §§ 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay? and 246.1 [ Alimony and Support Collection after Confirmation ] § 124.6  Alimony and Support Collection after Confirmation. See, e.g., Eden v. Robert A. Chapski, Ltd. (In re Eden), No. 03 CV 00116, 2003 WL 21147830 (N.D. Ill. May 14, 2003) (unpublished) (Aspen) (Applying Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), postconfirmation payments to former spouse’s domestic relations attorney were not property of the Chapter 13 estate and were not protected by the automatic stay because confirmed plan vested estate in the debtor under § 1327(b) and the debtor failed to prove that payments to the attorney interfered with payments required by the confirmed plan.).

 

117  BAPCPA expanded § 362(b)(2) to permit some collection of domestic support obligations from property of the estate or property of the debtor. See § 362(b)(2)(C), (F) and (G), discussed in § 430.1 [ Domestic Support Obligation Exception ] § 58.6  Domestic Support Obligation Exception after BAPCPA.

 

118  See § 73.1  Plan Must Provide Full Payment, § 73.2  What Claims Are Priority Claims? and § 136.20  Alimony, Maintenance and Support in Cases Filed after October 22, 1994. See also § 73.3  Priority Claims Added or Changed by BAPCPA§ 73.4  Deferred Payments Are Permitted§ 73.5  Interest Not Required, with Exceptions,§ 87.5  Priority Claims after BAPCPA, § 113.3  Domestic Support Obligations Must Be Current, § 136.21  Domestic Support Obligations after BAPCPA, § 156.4  Domestic Support Obligation Certification and § 159.5  Domestic Support Obligations: § 523(a)(5) for discussion of changes by BAPCPA to the requirements for confirmation and discharge with respect to domestic support obligations.

 

119  Mudd v. Jacobson (In re Jacobson), 231 B.R. 763, 767 (Bankr. D. Ariz. Mar. 12, 1999) (Case).

 

120  See, e.g., Florida Dep’t of Rev. v. Rodriguez (In re Rodriguez), No. 09-13222, 2010 WL 597224 (11th Cir. Feb. 22, 2010) (unpublished) (Dubina, Pryor, Anderson) (Florida Department of Revenue did not violate automatic stay by sending child support collection letters because property of the estate vested in the debtor at confirmation under § 1327(b) and exception to stay in § 362(b)(2)(B) applied; state did violate confirmation order by seeking to collect amounts in excess of that provided for in confirmed plan, and damages were appropriately assessed for contempt.); In re Dagen, 386 B.R. 777 (Bankr. D. Colo. Mar. 26, 2008) (Brown) (Adopting estate-termination approach—“confirmation vests all property, including post-confirmation income necessary to fund the plan, in the Debtor”—property of estate ceases to be protected by automatic stay, but when confirmed plan provided for full payment of priority prepetition support obligations, creditor is bound to accept payments from trustee.).

 

121  See, e.g., 11 U.S.C. § 363; Fed. R. Bankr. P. 6004. See also §§ 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property and 263.1 [ To Sell or Refinance Property of the Estate ] § 127.6  To Sell or Refinance Property of the Estate.

 

122  In re Walker, 20 B.R. 372 (Bankr. E.D. Va. May 12, 1982) (Shelley).

 

123  In re Rangel, 233 B.R. 191, 198 (Bankr. D. Mass. Apr. 23, 1999) (Hillman) (“[A]s a result of the vesting language in the Order of Confirmation, the Property, including the equity above the mortgage and the Debtor’s exemption, vested in the Debtor on confirmation and is no longer property of the estate. As such, the Debtor was not required to file an application to employ the Broker.”).

 

124  See 11 U.S.C. § 348(f)(1)(A).

 

125  See § 102.1 [ Surrender or Sale of Collateral ] § 74.5  Surrender or Sale of Collateral before BAPCPA.

 

126  See In re Drew, 325 B.R. 765 (Bankr. N.D. Ill. June 23, 2005) (Squires) (Citing Black v. United States Postal Service (In re Heath), 115 F.3d 521 (7th Cir. June 10, 1997) (Posner, Flaum, Rovner), when debtors refinance real property postconfirmation and realize cash, refinancing proceeds are property of the estate subject to capture by trustee’s motion to modify because proceeds were acquired by Debtors for use in making payments under confirmed plans.); In re Solis, 172 B.R. 530, 533 (Bankr. S.D.N.Y. Oct. 6, 1994) (Gallet) (Vesting of property in the debtor at confirmation under § 1327(b) does not preclude modification of plan after confirmation under § 1329 to require the debtor to pay to creditors proceeds from the postconfirmation sale of the debtor’s medical practice. “Debtor argues that his medical practice vested first in his estate . . . and then in him . . . thereby putting it beyond the reach of his creditors. A modification under section 1329 is not precluded by section 1327. Although section 1327(a) binds the debtor and the creditors, a confirmed plan may be modified at any time after confirmation before payment is completed. . . . To rule otherwise would render section 1329 meaningless.”). See discussion of modification after confirmation beginning at § 126.1  Standing, Timing and Procedure.

 

127  11 U.S.C. § 1129(a). See In re Powers, 435 B.R. 385, 389 (Bankr. N.D. Tex. June 24, 2010) (Jones) (Vioxx settlement proceeds received postpetition became property of estate, but since debtors had completed plan payments, it was too late to modify confirmed plan to capture proceeds; under § 1306(b), settlement proceeds belonged to debtors. “Court is inclined to endorse the view that estate property that exists at the time of confirmation vests in the debtor per section 1327(b), but property acquired by the debtor after confirmation becomes estate property under section 1306(a)(1). If the latter described property may potentially enhance the dividend to creditors, then the debtor, the trustee, or an unsecured creditor can move under section 1329 to modify the debtor’s chapter 13 plan to increase the debtor’s payments. . . . But the debtors here have completed their payments and have long since received their discharge. Section 1329 provides that a modification may be proposed ‘after confirmation . . . but before the completion of payments. . . .’”). See also § 253.1 [ Standing, Timing and Procedure ] § 126.1  Standing, Timing and Procedure.

 

128  See discussion of hardship discharge beginning at § 160.1  In General.

 

129  See, e.g., National City Bank v. Imbody (In re Imbody), 104 B.R. 830 (Bankr. N.D. Ohio Feb. 24, 1989) (Speer) (Debtor-in-possession’s unauthorized disposition of proceeds from sale of collateral results in nondischargeability under both § 523(a)(4) and § 523(a)(6).); American Sav. & Loan v. Webber (In re Webber), 99 B.R. 1001 (Bankr. D. Utah Apr. 7, 1989) (Boulden) (Chapter 11 debtor-in-possession’s unauthorized use of cash collateral constitutes breach of fiduciary duty to creditor under § 523(a)(4).); Frankel v. Frankel (In re Frankel), 77 B.R. 401 (Bankr. W.D.N.Y. Sept. 9, 1987) (Hayes) (Unauthorized sale of collateral by Chapter 11 debtor-in-possession constitutes fraud or defalcation while acting as a fiduciary.); In re Beazly, 62 B.R. 653 (Bankr. W.D. Mo. July 10, 1986) (Koger) (Section 523(a)(4) only applies to express trusts and not to constructive trustees such as a debtor-in-possession; however, unauthorized use of cash collateral constitutes willful and malicious injury within the meaning of § 523(a)(6).); Green River Prod. Credit Ass’n v. Alvey (In re Alvey), 56 B.R. 170 (Bankr. W.D. Ky. Dec. 31, 1985) (Deitz).

 

130  See, e.g., Baker v. Rank (In re Baker), 154 F.3d 534, 535–38 (5th Cir. Sept. 28, 1998) (Garwood, Jones, Wiener) (Misconduct by the debtors during their Chapter 13 case by using a contingent fee to take a vacation justified barring the debtors’ discharge after conversion to Chapter 7. The debtors were attorneys. During their Chapter 13 case they received a contingent fee of $11,700. After consulting with bankruptcy counsel, they used the contingent fee to take a vacation. Their bankruptcy attorney told them they could do so as long as they were current in their Chapter 13 payments. Three months later, the Chapter 13 case converted to Chapter 7 and a creditor filed a complaint to bar the debtors’ discharge based on the use of the contingent fee and § 727(a)(2). The court first determined that the contingent fee became property of the Chapter 7 estate after conversion. Court observed that the bankruptcy counsel’s advice with respect to the trip “was so patently wrong, no reasonable debtor, and, more importantly, no attorney of either of the Debtors’ caliber could reach such a conclusion.” Circuit affirms the denial of the debtors’ discharge in the Chapter 7 case.).

 

131  No. 697-61956-FRA13, 2000 WL 33716977 (Bankr. D. Or. Jan. 7, 2000) (unpublished) (Alley).

 

132  28 U.S.C. § 959(b).

 

133  Cause for dismissal under § 1307 is discussed beginning at § 152.2  Cause for Dismissal—In General.

 

134  2000 WL 33716977, at *2.