Cite as: Keith M. Lundin, Lundin On Chapter 13, § 126.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
At any time after confirmation but before the completion of payments under the plan, the plan can be modified “upon request of the debtor, the trustee or the holder of an allowed unsecured claim.”1 Prior to the 1984 amendments to § 1329, only the Chapter 13 debtor had standing to seek postconfirmation modification of the plan.2 After the 1984 amendments, there is no doubt that the Chapter 13 trustee has standing to seek modification of the plan after confirmation.3
After the 1984 amendments, allowed unsecured claim holders have standing to seek postconfirmation modification.4 When a lienholder does not have an allowable secured claim—for example, when the lien can be stripped off because there is no value in the collateral to secure the claim5—the lienholder would have standing to seek modification under § 1329.6 By negative implication, secured claim holders do not have standing to seek modification after confirmation,7 and an unsecured claim holder that has failed to file a proof of claim or whose claim has been disallowed lacks standing as well.8
Although a straightforward reading of § 1329(a) precludes modification of a plan after confirmation on the motion of the bankruptcy court, there are reported decisions in which bankruptcy courts have invoked the tests cross-referenced in § 1329(b)(1) to require a postconfirmation modification.9 The Bankruptcy Appellate Panels for the First and Tenth Circuits have reversed bankruptcy court orders that required debtors or debtors’ attorneys to modify a confirmed Chapter 13 plan.
In Muessel v. Pappalardo (In re Muessel),10 the debtor moved to refinance a mortgage to pay off the confirmed Chapter 13 plan. The bankruptcy court, without objection from the trustee or an allowed unsecured claim holder, granted the motion but also ordered the debtor to further amend the plan to provide a 100 percent dividend for unsecured creditors. The Bankruptcy Appellate Panel for the First Circuit reversed with this clear statement that the bankruptcy court was out of bounds:
Nothing in the Bankruptcy Code authorizes the bankruptcy court to either draft or dictate the provisions of a Chapter 13 plan. . . . The Bankruptcy Code expressly limits the universe of persons who may propose or request modification of a confirmed Chapter 13 plan to the debtor, the Chapter 13 trustee and unsecured creditors. 11 U.S.C. § 1329(a). The bankruptcy court is statutorily excluded from that universe of persons.11
Along the same lines, bankruptcy courts have used modification to express distaste for Chapter 13 plans that purport to discharge student loans.12 In Haddox v. Johnson (In re Haddox),13 the confirmed plan provided for the abatement and discharge of student loan interest. Two years after confirmation in an unrelated case,14 the Bankruptcy Court for the Western District of Oklahoma ordered debtor’s counsel to purge similar student loan provisions from all confirmed plans in which counsel had represented other debtors. When the attorney moved to purge the offending language from the Haddox confirmation order, Haddox hired new counsel and objected. The Bankruptcy Appellate Panel for the Tenth Circuit sternly granted the debtor relief, finding that the bankruptcy court exceeded its jurisdiction:
[W]e question the bankruptcy court’s subject matter jurisdiction . . . . Although styled a “Motion to Delete,” the Motion was, in substance, a request to modify the plan. Plan modification is governed by § 1329 . . . . Section 1329(a) provides for modification only upon the request of the “debtor, the trustee, or the holder of an allowed unsecured claim.” By statute, at least, it does not appear that a bankruptcy court may sua sponte modify a confirmed plan.15
Muessel and Haddox are well reasoned. Modification after confirmation is the prerogative of Chapter 13 trustees and the holders of allowed unsecured claims.
Section 1329(a) is unclear whether an allowed unsecured claim holder has standing to request modification of a plan to change the treatment of a secured claim held by the same creditor. For example, imagine an undersecured creditor whose claim was bifurcated at confirmation under § 506(a). The Code does not tell us whether that creditor could assert its allowed unsecured claim as the source of standing for a motion to modify the confirmed plan with respect to the treatment of its allowed secured claim. The plain language of § 1329(a)(1) might be read to permit this result because such a creditor is “the holder of an allowed unsecured claim.” Section 1329(a) does not limit the modification rights of an allowed unsecured claim holder to modifications that affect only the movant’s allowed unsecured claim. This standing question could become important when an undersecured claimant moves to modify a plan after confirmation to improve the treatment of the secured portion of its claim to reflect changes in circumstances after confirmation of the original plan.16
The statute is not clear whether an allowed postpetition unsecured claim holder17 has standing to seek postconfirmation modification. Because it is most often the debtor who seeks to modify a plan to manage a postpetition claim,18 the courts have not reported a decision on the question. That § 1305(b) contemplates allowance or disallowance of a postpetition claim in essentially the same manner as a claim that arose before the petition19 suggests that the holder of an allowed unsecured postpetition claim should have the same standing as the holder of an ordinary allowed unsecured claim holder for purposes of § 1329(a). Some support for this view is found in § 1329(a)(1), which permits the holder of an allowed unsecured claim to move for postconfirmation modification to “increase or reduce the amount of payments on claims of a particular class provided for by the plan.”20 Chapter 13 debtors are permitted by § 1322(b)(6) to “provide for the payment of all or any part of any claim allowed under § 1305.”21 If the original plan provided for payment of allowed postpetition claims, then the holders of such claims should have standing under § 1329(a)(1) to seek to modify the confirmed plan to increase or reduce the amount of payments to the class.
Postconfirmation modification is not permitted after “completion of payments under [the] plan.”22 This phrase of art is not defined by the Bankruptcy Code. Like so many other seemingly simple phrases in the Code, “completion of payments under the plan” is subject to several possible interpretations.23
Completion of payments under a Chapter 13 plan could be measured in terms of the passage of time—for example, if the confirmed plan required the debtor to make payments for 36 months, when 36 months pass, the debtor has completed the payments required by the plan. Completion of payments could mean the payment of a certain amount of money into the plan—for example, many plans require the debtor to pay a sum certain or “base” amount to the Chapter 13 trustee;24 once the trustee has received that amount, the debtor could be said to have completed payments under the plan. Often Chapter 13 plans require the debtor to pay a certain percentage of unsecured claims—once the debtor has paid that percentage of unsecured claims, the debtor could be said to have completed payments under the plan.25 “Completion of payments” may involve some very mechanical considerations—is a plan completed when the debtor tenders to the trustee sufficient funds to make the payments required by the confirmed plan or when creditors have received all to which they are entitled under the plan? Entry of the discharge order under § 1328 is another candidate for the point in time at which the debtor has completed payments under the plan.26
The angels dancing on the head of this pin are frequent visitors to the bankruptcy courts. In Casper v. McCullough (In re Casper),27 the confirmed plan called for payment of 10 percent of unsecured claims over 60 months. Because priority claims were allowed at lower amounts than scheduled and because several claim holders did not file proofs of claim, the debtors were able to tender a lump sum to the trustee approximately two years after confirmation in an amount sufficient to pay 10 percent of the allowed claims of unsecured creditors. Two days after receiving the money from the debtors, the Chapter 13 trustee moved to modify the plan, claiming the debtors could pay 80 percent of allowed unsecured claims over the original 60-month period. The district court on appeal held that the Chapter 13 trustee’s motion to modify was untimely under § 1329 because the debtor had completed payments under the plan:
[W]hen a debtor completes his or her obligation to a class of creditors as provided in a plan, his or her payments are complete. . . . The bankruptcy courts should look to the substance of the plan and the nature of the debtor’s total obligation to the allowed creditors in order to discern when payments under a plan are completed. . . . [T]his court does not consider the number of payments or the duration of a plan as controlling. . . . [W]hen the debtor completes payments under the plan to the Trustee which satisfies his or her percentage obligation to each class of creditors, there is no period between that point and the point at which the bankruptcy court enters an order discharging the debt within which an amendment is possible. . . . Accordingly, the “completion of payments” under 11 U.S.C. § 1329(a) occurs when the debtor pays to the Trustee, the full amount the plan requires the debtor to pay which satisfies the percentage the debtor proposed to pay to a class of creditors.28
Similar facts produced exactly the opposite outcome in In re McKinney.29 The confirmed plan in McKinney provided zero percent distribution to unsecured claim holders, and there were no secured creditors. The debtor scheduled priority debt of $10,000 and projected that it would take more than 36 months to pay just the priority debt. The actual priority claims filed totaled substantially less than $10,000, and the debtor needed only 12 months to pay the allowed priority claims in full. The Chapter 13 trustee did the right thing—moved to modify to require the debtor to pay for three years and increase the dividend to unsecured claim holders. The debtor argued that the plan as confirmed was completed and could not be modified. The bankruptcy court granted the trustee’s motion, finding an “implied” three-year term of the plan:
The parties intended that this plan continue for a period of at least 3 years; this requirement was incorporated into the plan by implication. . . . [W]here the terms of a confirmed plan reveal themselves to be internally inconsistent the debtors must continue their plan payments, at a minimum, for a time sufficient to meet the requirements of § 1325(b)(1).30
These cases suggest an interesting premium on stealth and speed at modification after confirmation. The cases following Casper instruct that debtors able to pay off a Chapter 13 plan in advance of the original projected duration should quietly tender to the Chapter 13 trustee all of the money necessary to pay the plan in full and should not request modification under § 1329. Tendering the balance required by the plan completes the plan under Casper and cuts off any motion by the trustee or the holder of an allowed unsecured claim to increase payments to creditors or to extend the plan.31
A few days can make all the difference. In In re Profit,32 the confirmed plan provided that the debtors “shall turn over their tax refunds to the trustee for the term of the plan.”33 The debtors remitted tax refunds for 1995 and 1996. In 1998, the debtors applied their refund to 1999 tax liability. On December 13, 2000, the trustee moved to modify the plan to increase payments when the debtor’s employer forgave a mortgage on the debtors’ residence that freed up disposable income.34 On January 19, 2001, the debtors tendered the amount of their 1998 tax refund to the trustee in an effort to complete payments under the plan. The bankruptcy court held that the trustee’s motion to modify was timely: “Because the Debtors applied the 1998 refund to the 1999 liability instead of paying the refund to the Trustee . . . the Debtors had not completed their plan prior to the Motion to Modify.”35
In one reported decision, the debtors exercised some control over the completion of payments with a provision of the confirmed plan. In In re McNichols,36 the proposed plan stated that the debtors
have the option at any time after confirmation to prepay the monthly installments due . . . using exempt assets or funds borrowed from friends or relatives. Upon receipt of such funds by the Office of the Chapter 13 Trustee . . . the “completion of payments” under this plan shall be deemed to have occurred for purposes of 11 U.S.C. § 1329 irrespective of whether such Trustee shall have completed the making of disbursements of available funds.37
The bankruptcy court overruled the trustee’s objection to this plan, finding the proposed definition of completion of payments was not inconsistent with § 1329 and did not impermissibly restrict modification after confirmation.
Modification after confirmation is motion practice. Bankruptcy Rule 2002(a)(5) requires that the trustee and all creditors be given 20 days’ notice of “the time fixed to accept or reject a proposed modification of a plan.” Bankruptcy Rule 3015(g) states that a request to modify a plan under § 1329 of the Code “shall identify the proponent and shall be filed together with the proposed modification.” Bankruptcy Rule 3015(g) then requires that “not less than 20 days’ notice by mail” be given “of the time fixed for filing objections and, if an objection is filed, the hearing to consider the proposed modification . . . .” The rule requires that a copy or summary of the proposed modification shall be included with the notice.
Bankruptcy Rule 3015(g) requires that any objection to a proposed modification “shall be filed and served on the debtor, the trustee and any other entity designated by the court, and shall be transmitted to the United States trustee.” Any objection to a proposed postconfirmation modification is treated as a contested matter under Bankruptcy Rule 9014. The reported decisions suggest some ambivalence about how strictly the bankruptcy courts enforce deadlines for objecting to postconfirmation modifications.38 Arguably, modification after confirmation is enough like confirmation of the original plan that the courts should apply similar standards with respect to the timeliness of objections.39
It has been held that a Chapter 13 debtor cannot modify a confirmed plan without filing a motion and giving notice to all scheduled creditors that explains the effects of the proposed modified plan.40 Postconfirmation modification is not permitted based only upon a consensual agreement between the debtor and the creditor affected by the (proposed) modification.41 When the debtor failed to serve the trustee with a proposed order modifying the Chapter 13 plan, it was held that the trustee could challenge that postconfirmation modification after the order became final.42
Practice varies as to who is responsible for giving notice43 and the timing of any hearing on the motion. In some jurisdictions, debtor’s counsel mails a written notice to all creditors that fixes a period in which to file written objections. In the absence of a timely written objection, the modification will become the plan under § 1329(b)(2) without a hearing.44 If a timely written objection is filed, it is set for hearing.
In other jurisdictions, motions for postconfirmation modification are set for hearing, with or without objection from any party in interest. If the modification is disapproved, the original plan remains in effect; if the modified plan is not disapproved, the modified plan becomes the plan.45 The modified plan is then entitled to the preclusive effects of confirmation under § 1327.46 For example, applying §§ 1327 and 1329, it was held that a modified plan cannot be collaterally attacked by the filing of amended proofs of claim by a creditor that failed to object to the proposed modified plan.47 Just as at confirmation of the original plan, failure to object to modification leaves a dissatisfied creditor bound by the modified plan even if the modified plan would not have been approved had the creditor timely objected.48
One reported decision analyzes when a modification that changes the debtor’s payment into the plan becomes effective for the purpose of determining whether the debtor is in default. In In re Taylor,49 the confirmed plan required the debtor to increase payments to $490 per month beginning in April of 1997. On March 25, 1997, the debtor moved to modify the plan to reduce plan payments to $170 per month, and the debtor began making payments at the lower $170-per-month amount. On August 12, 1997, the modified plan was approved, but in the interim the Chapter 13 trustee moved to dismiss the case for default in payments under the original confirmed plan.
The bankruptcy court found § 1329(b)(2) ambiguous with respect to whether the controlling plan is the original confirmed plan or the modified plan in the time between the filing of a postconfirmation modification and approval of the modified plan. The court resolved the ambiguity in favor of the debtor’s reading:
To this Court, it makes more sense to read § 1329(b)(2) to mean that the proposed modified plan becomes the controlling plan for debtor’s performance upon filing and giving notice to creditors, and that it remains the controlling document unless later disapproved “after notice and a hearing . . . .” Construing (b)(2) in that manner would seem to provide incentive to debtors whose circumstances no longer permit payment at the confirmed rate to promptly seek relief from that rate by proposing a modified plan. . . . If the modified plan is disapproved, the debtors then have the option of performing under the earlier confirmed plan or face dismissal. . . . The alternative of construing (b)(2) to require continuing payments at the confirmed rate until a modified plan is actually confirmed requires the debtor to do what the motion to modify argues the debtor is unable to do.50
The Taylor court noted that § 1329 permits the Chapter 13 trustee or an allowed unsecured claim holder to propose a modified plan thus, raising the “unexpected circumstance” that a Chapter 13 debtor would have an obligation to commence making payment at the increased rate when the trustee or an allowed unsecured claim holder moves to modify to increase plan payments.
Taylor should be contrasted with In re Walters,51 in which the bankruptcy court held that preconfirmation modification under § 1323 does not retroactively alter the debtor’s obligation to commence making payments under § 1326 consistent with the original plan. The debtor in Walters was precluded from curing default under the original plan by simply lowering the plan payment by preconfirmation amendment.52
Modification under § 1329 is one option for the debtor who experiences trouble consummating the plan. Other options include the debtor’s right to convert or dismiss the case at any time.53 Some courts view postconfirmation modification under § 1329 as a debtor’s obligation when the plan proves to be impossible to complete in its original form: it has been held that the debtor is required to seek to modify rather than simply default in payments when the debtor encounters postconfirmation financial difficulties.54
Postconfirmation modification can be abusive. For example, when the original confirmed plan required the debtor to sell a house in a certain period of time, Bankruptcy Rule 9011 sanctions were imposed on debtor’s counsel for signing a motion for postconfirmation modification with the sole purpose of avoiding the commitment to sell the house.55
Standing to object to a proposed postconfirmation modification is available to all creditors, to the trustee and, possibly, to the U.S. trustee. However, modification after confirmation is not just a second bite at the apple for a creditor that failed to stop confirmation of the original plan. For example, a creditor that failed to object to confirmation of the original plan lacks standing to object to a postconfirmation modification that treats the creditor exactly as did the original plan.56 A creditor’s failure to object to confirmation precluded that creditor’s postconfirmation motion to modify the plan to require the debtor to pay tax refunds to the Chapter 13 trustee—that the creditor could have raised a disposable-income-test objection to confirmation of the original plan precluded the same argument disguised as a motion to modify under § 1329.57 In contrast, the Bankruptcy Appellate Panel for the Ninth Circuit held that the Chapter 13 trustee is not precluded from seeking postconfirmation modification to reflect an increase in the debtor’s disposable income even though the trustee did not raise a § 1325(b) objection at confirmation of the original plan.58
A contested hearing on a proposed postconfirmation modification is essentially the same as a contested original confirmation hearing.59 The burdens of proof can be more confusing because, unlike the original plan,60 a postconfirmation modification can be proposed by someone other than the debtor. It has been held that the proponent of the plan modification bears the burden to prove the conditions for approval of the modified plan.61 This puts the Chapter 13 trustee or the holder of an allowed unsecured claim in the awkward position of proving a plan modification over the objection of the debtor, who will then have to perform the plan as modified. Discussed elsewhere,62 the courts are not completely in agreement how to assign the burdens of proof at the original hearing on confirmation. With respect to the requirements for confirmation in § 1325(a), most courts assign the burden of proof to the debtor—the proponent of the original plan. When the trustee or an allowed unsecured claim holder is the proponent of plan modification, it is likely that the debtor will be assigned the defensive burdens of proof. The trustee or allowed unsecured claim holder will have the burdens normally assigned to the debtor, including the ultimate burden of persuasion with respect to each of the § 1325(a) elements. Faced with the argument that the Chapter 13 trustee had the burden to prove good faith with respect to the trustee’s proposed postconfirmation modification, one court refused to put the trustee to this awkward task.63
Appealing an order granting or denying a motion to modify faces some of the same finality problems as appealing the grant or denial of confirmation of the original plan.64 In Vincent v. Fairbanks Capital Corp. (In re Vincent),65 the Bankruptcy Appellate Panel for the Eighth Circuit held that an order denying a Chapter 13 debtor’s motion to modify a plan after confirmation was not final for purposes of appellate review. The BAP reasoned from Eighth Circuit authority that “denial of the modification of a confirmed plan bestows no more finality on the bankruptcy court’s order than the denial of confirmation of a plan.”66 The BAP explained, “all that is needed is a final order of dismissal or modification and then either party may appeal the final disposition.”67 Vincent is consistent with the majority view that a Chapter 13 debtor cannot directly appeal the denial of confirmation of a plan but must suffer dismissal before the denial of confirmation is final for purposes of appellate review.68
Whatever sense this rule makes when it is the debtor’s plan that has been denied confirmation, it is hard to see any sense in applying the same rule when a modification is proposed by the trustee or the holder of an allowed unsecured claim. If a trustee’s motion or an unsecured claim holder’s motion to modify is denied, the debtor’s confirmed plan continues in effect. If the order denying the motion to modify is not final, when and how would the trustee or creditor accomplish appellate review of the bankruptcy court’s denial of modification? A different rule is needed for the finality of an order denying modification after confirmation when the moving party isn’t the debtor.
1 11 U.S.C. § 1329(a).
2 Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455 (9th Cir. 1988) (Prior to October 8, 1984, the effective date of the 1984 amendments, only the Chapter 13 debtor had standing to seek a postconfirmation modification under § 1329.). Accord In re Mosley, 74 B.R. 791 (Bankr. C.D. Cal. 1987); In re Boone, 53 B.R. 78 (Bankr. E.D. Va. 1985); In re Fluharty, 23 B.R. 426 (Bankr. N.D. Ohio 1982). Contra In re Koonce, 54 B.R. 643 (Bankr. D.S.C. 1985) (Nothing in [former] § 1329(a) expressly precludes the trustee from seeking a postconfirmation modification. 1984 amendments merely confirm that the trustee always had standing to seek to modify a confirmed plan. Court permits postconfirmation modification on trustee’s motion to increase dividend to unsecured claim holders to 100% to reflect that debtors won $1,300,000 in the Massachusetts State Lottery.).
3 See, e.g., In re Powers, 140 B.R. 476 (Bankr. N.D. Ill. 1992) (Chapter 13 trustee has standing to seek postconfirmation modification to increase dividend to unsecured claim holders to reflect postconfirmation income from liquidation of debtor’s interest in real property.).
4 Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430 (B.A.P. 9th Cir. 1997) (Max Recovery, Inc., assignee of two credit card claims, has standing as the holder of an allowed unsecured claim to seek modification after confirmation under § 1329.).
5 See, e.g., the discussion of wholly unsecured home mortgages in § 80.13 Modification of Unsecured Home Mortgage: Before and After BAPCPA and § 80.15 Unsecured Home Mortgages after BAPCPA.
6 See In re Bernardes, 267 B.R. 690 (Bankr. D.N.J. 2001) (Wholly unsecured third mortgage holder has standing to seek modification under § 1329 because, after cramdown under the confirmed plan, mortgage holder is an unsecured creditor.).
7 In re Stewart, 247 B.R. 515, 520 (Bankr. M.D. Fla. 2000) (Mortgage holder lacks standing to modify plan after confirmation when creditor failed to timely file a proof of claim and as a result will not be paid an arrearage. “The only entities with standing to seek modification of a confirmed Chapter 13 plan are the debtor, the trustee, and the holder of an unsecured claim. . . . EMC is not the holder of an unsecured claim.”); In re Rosenthal, 233 B.R. 815, 818 & n.1 (Bankr. C.D. Ill. 1999) (Creditor lacks standing to seek modification under § 1329 because creditor holds a secured claim by virtue of a cosigner. Debt was a co-signed student loan. “[T]he CREDITOR is not the type of entity that can request a modification. As it holds a co-signed obligation, it is a secured creditor and only a debtor, the Trustee or the holder of an unsecured claim can seek modification.” In a footnote, “it could be argued that as to the MILLWOOD co-signed loan, the CREDITOR is now unsecured, as MILLWOOD has taken bankruptcy and discharged his obligation to the CREDITOR. However, at the time of the DEBTOR’s bankruptcy filing and confirmation of her plan the CREDITOR held the co-signature of MILLWOOD and was secured.”).
8 An unsecured claim holder that has failed to file a proof of claim, and on whose behalf no claim has been filed by the debtor or trustee, cannot have an “allowable” claim in the Chapter 13 case. See 11 U.S.C. §§ 501, 502. See§ 135.1 Timing, Procedure and Evidence Presumption, § 135.2 Allowance and Objections to Claims: Changes by BAPCPA and § 135.5 Failure to File Proof of Claim.
9 See, e.g., In re Flaming, No. 02-03680, 2003 WL 22848925 (Bankr. D. Idaho Nov. 10, 2003) (unpublished) (Without an objection from a creditor or the trustee, debtor’s motion to pay off confirmed plan from a postpetition inheritance is denied because inheritance was income for purposes of the disposable income test and § 1325(b) prohibits confirmation of the modified plan.); Collier v. Valley Fed. Sav. Bank (In re Collier), 198 B.R. 816 (Bankr. N.D. Ala. 1996) (On its own motion, court applies disposable income test to modify confirmed plan to pay creditors excess insurance proceeds from destruction of rental property.). But see In re Stewart, 247 B.R. 515, 520 (Bankr. M.D. Fla. 2000) (“EMC’s unsubstantiated suggestion that the Court has the power to compel Debtor to modify her plan because it fails to provide for any arrearage to EMC is without merit.”).
10 292 B.R. 712 (B.A.P. 1st Cir. 2003).
11 292 B.R. at 716.
13 Nos. WO-03-048, 00-20020-NLJ, 2003 WL 22681412 (B.A.P. 10th Cir. Nov. 12, 2003) (unpublished).
14 See In re Lemons, 285 B.R. 327 (Bankr. W.D. Okla. 2002). See also In re Hensley, 249 B.R. 318 (Bankr. W.D. Okla. 2000) (Debtors’ attorneys ordered to modify confirmed plans to delete provisions finding undue hardship for purposes of § 523(a)(8) or face sanctions under Bankruptcy Rule 9011.).
15 2003 WL 22681412, at *3.
16 See, e.g., In re Klus, 173 B.R. 51 (Bankr. D. Conn. 1994) (Undersecured mortgage holder with a claim that was bifurcated under § 506(a) and stripped down in a Chapter 13 plan confirmed before the Supreme Court’s decision in Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993), cannot amend the plan after confirmation under § 1329 to eliminate the unsecured portion of its claim and realize the protection from modification declared in Nobelman.).
18 See § 261.1 [ To Provide for Postpetition Claims ] § 127.4 To Provide for Postpetition Claims.
20 11 U.S.C. § 1329(a)(1) (emphasis added). See also § 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.
21 11 U.S.C. § 1322(b)(6). See § 204.1 [ Providing for Postpetition Claims ] § 113.6 Providing for Postpetition Claims.
22 11 U.S.C. § 1329(a).
23 The same phrase describes when a debtor is entitled to a discharge under § 1328(a). See § 343.1 [ Timing and Procedure for Discharge and Objecting to Discharge ] § 156.1 Timing and Procedure for Discharge and Objecting to Discharge.
24 See § 170.1 [ Methods of Paying Unsecured Claims ] § 101.3 Methods of Paying Unsecured Claims.
25 See § 170.1 [ Methods of Paying Unsecured Claims ] § 101.3 Methods of Paying Unsecured Claims.
26 See § 343.1 [ Timing and Procedure for Discharge and Objecting to Discharge ] § 156.1 Timing and Procedure for Discharge and Objecting to Discharge.
27 154 B.R. 243 (N.D. Ill. 1993).
28 154 B.R. at 246. Accord In re Jacobs, 263 B.R. 39, 44 (Bankr. N.D.N.Y. 2001) (Trustee’s motion to modify to increase dividend to unsecured creditors is time barred because debtors completed payments under the plan. Confirmed plan called for 60 payments and not less than 10% to unsecured creditors. Debtors made 60 payments, and unsecureds actually received a 14% dividend. While preparing to close the case, trustee received $20,000 on account of the debtors’ interest in an asset scheduled five years earlier with a value of $1.00. Trustee moved to modify to distribute the $20,000 to unsecured creditors. “[W]hen a debtor completes his obligations as provided for in the terms of a confirmed plan, that debtor has effected a completion of payments under such plan. . . . [T]he Debtors in the instant case have overpaid the base amount contemplated under the plan, have made all 60 payments as contemplated under the plan and have provided the class of unsecured creditors a dividend greater than that promised under the plan. Consequently, it cannot simply be said that the Debtors have not completed payments under the plan.”); In re Sounakhene, 249 B.R. 801, 804 (Bankr. S.D. Cal. 2000) (Trustee’s motion to modify plan to increase payments to unsecured creditors is untimely because debtors tendered a lump sum from the refinancing of their home to pay the plan in full before the trustee filed the motion. “Once the payments are complete, a motion to modify is time barred. . . . [I]t has generally been held that a plan is ‘complete’ when the debtor makes all the payments to the trustee. . . . [T]he plan . . . was completed when the Debtors paid the Trustee.”); In re Smith, 237 B.R. 621, 625–27 (Bankr. E.D. Tex. 1999) (Nothing in Bankruptcy Code prevents a Chapter 13 debtor from prepaying a plan with a gift from family members without notice to creditors. Creditor’s objection to lump-sum payoff was an attempt to “transpose the real issue of the Debtor’s entitlement to discharge under the language of § 1328(a) into a dispute regarding a post-confirmation modification of a chapter 13 plan under § 1329(a). . . . [T]he Debtor has not sought, nor does she need, a plan modification. . . . [T]his Debtor has completed all payments required by the confirmed Chapter 13 plan and is entitled to the entry of a discharge order under § 1328(a).”); In re Bergolla, 232 B.R. 515, 517–18 (Bankr. S.D. Fla. 1999) (Debtors are entitled to a discharge because they tendered to the trustee a lump-sum equivalent to the remaining payments under their 60-month plan from the sale of exempt homestead property. “Although 11 U.S.C. § 1329 permits the postconfirmation modification of a Chapter 13 Plan, the Court finds that modification of the Debtors [sic] plan in this case is unwarranted. . . . The Debtors should be granted a discharge.”); In re Torres, 193 B.R. 319 (Bankr. N.D. Cal. 1996) (Res judicata and § 1327 precluded a creditor’s motion to require the debtor to make payments for nine additional months to satisfy § 1325(b) when it turned out that unsecured claim holders were paid the 35% required by the confirmed plan in only 27 months.); In re DeBerry, 183 B.R. 716, 717 (Bankr. M.D.N.C. 1995) (Plan cannot be modified to provide for postpetition tax claim because proof of claim was filed after the debtor completed payments under the plan and any modification to pay the postpetition tax claim would exceed the five-year limitation in § 1322(c). “In this case the payments under the plan have been completed which renders Section 1329 inapplicable in this case. . . . Under [§ 1329(c)] a plan modified under Section 1329 may not provide for payments over a period that expires more than five years after the time the first payment was due under the original confirmed plan. Since the original plan provided for payments over a sixty-month period, the plan may not be modified under Section 1329 to provide for any additional payments.”); In re Jordan, 161 B.R. 670, 671 (Bankr. D. Minn. 1993) (Trustee’s motion to modify Chapter 13 plan after confirmation to require debtor to increase dividend to unsecured claim holders is denied because the debtor had already completed payments under the plan. Standard form plan provided that payments would continue “until all claims are paid the amounts payable under the plan.” The plan provided unsecured claim holders would be paid “50% of the amounts allowed.” By payroll deduction, the debtor paid the trustee an amount sufficient to pay 50% of unsecured claims. The wage withholding order apparently remained in effect, and the trustee collected an excess of $2,074.29. The trustee then moved to modify the plan to distribute the excess funds to unsecured claim holders. “Since the Plan is a percentage plan, Debtor has made all the required payments. . . . The Code states in no uncertain terms that the trustee may not amend at this juncture. . . . [C]ompletion of the payments requires the bankruptcy court to discharge the debts.”); In re Phelps, 149 B.R. 534, 537–39 (Bankr. N.D. Ill. 1993) (Section 1329(a) precludes a trustee’s motion to modify a Chapter 13 plan to increase the amount to be paid to unsecured creditors once the Chapter 13 debtor has paid to the trustee the amount necessary to pay unsecured claim holders the percentage promised to them by the plan. “The substance of a plan looks to the nature of the debtor’s obligation to the debtor’s creditors, not to the number of payments proposed. . . . [T]he Debtor’s plan promised the unsecured creditors a 10% dividend. Because fewer unsecured claims were filed than anticipated, the Debtor was able to pay the Trustee enough money to pay her unsecured creditors a 10% dividend in only 37 monthly payments. The fact that the plan called for 43 monthly payments is irrelevant. The Debtor has made all payments required of her by her Chapter 13 plan to the Trustee. . . . The next question is whether ‘completion of payments,’ as that phrase is used in § 1329(a), means: (1) completion of payments by the debtor to the trustee only . . . or (2) completion of payments both by the debtor to the trustee and by the trustee to the creditors. . . . [T]he court cannot conclude that Congress intended the phrase ‘completion of payments’ in § 1329(a) to refer to the completion of payments by the trustee to creditors in addition to the completion of payments by the debtor to the trustee, because to so interpret § 1329(a) could lead to an absurd result when § 1329(a) is read in conjunction with § 1328(a). Section 1328(a) provides that a Chapter 13 debtor is given a discharge ‘[a]s soon as practicable upon completion of payments by the debtor under the plan.’ § 1328(a). If ‘completion of payments’ in § 1329 means both completion of payments by the debtor to the trustee and by the trustee to the creditors under the plan, the trustee would have the right to seek to amend the plan to increase the amount the debtor’s unsecured creditors with allowed claims would receive after the debtor had received a discharge. Thus, in theory, the debtor could be compelled to pay discharged debts under a modified plan. Congress could never have intended such an absurd result. . . . Thus, the court holds that ‘completion of payments,’ as that phrase is used in § 1329(a), means completion of payments by the debtor to the trustee.”); In re Moss, 91 B.R. 563 (Bankr. C.D. Cal. 1988) (Under § 1329(a), plan cannot be modified after payments are completed. When Chapter 13 debtor completed payments approximately seven months earlier than the 36 months originally projected, Chapter 13 trustee cannot modify to require additional payments.); In re Pritchett, 55 B.R. 557 (Bankr. W.D. Va. 1985) (Section 1329 does not permit postconfirmation modification to provide for postpetition creditors where the debtor has completed all plan payments.).
29 191 B.R. 866 (Bankr. D. Or. 1996).
30 191 B.R. at 867–69.
31 See § 266.1 [ To Increase Payments to Creditors ] § 127.9 To Increase Payments to Creditors for discussion of plan modifications that increase payments to creditors; see § 268.1 [ To Extend or Reduce the Time for Payments ] § 127.11 To Extend or Reduce the Time for Payments for discussion of plan modifications that extend or reduce the time for payments under the plan.
32 269 B.R. 51 (Bankr. D. Nev. 2001), rev’d on other grounds, 283 B.R. 567 (B.A.P. 9th Cir. 2002).
33 269 B.R. at 55.
34 See §§ 266.1 [ To Increase Payments to Creditors ] § 127.9 To Increase Payments to Creditors and 267.1 [ To Account for Payments Other Than under the Plan ] § 127.10 To Account for Payments Other Than under the Plan.
35 269 B.R. at 56.
36 249 B.R. 160 (Bankr. N.D. Ill. 2000).
37 249 B.R. at 173 n.8.
38 Compare Rakestraw v. Hood (In re Hood), 211 B.R. 334, 335 (Bankr. W.D. Ark. 1997) (“Motion to Have Debt Declared Nondischargeable” filed more than a month after deadline for objections is not effective to stop confirmation of modified plan that included postpetition dog bite debt but provided no payment. “The plaintiff now urges this Court to treat the motion to have the debt declared nondischargeable as an objection to the modification. In order to object to the plan modification, Rakestraw was required to file her objection on or before February 3, 1997. Having failed to file an objection, the modification was confirmed by operation of law as well as by Order entered February 11, 1997. Thus, even were the motion filed in the main case, and properly directed to confirmation rather than dischargeability, it was filed beyond the deadline for filing objections and thus comes too late.”), with In re Mathews, 208 B.R. 506, 509 (Bankr. N.D. Ala. 1997) (Applying Pioneer Investment Services Co. v. Brunswick Associates, Ltd. Partnership, 507 U.S. 380, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993), court considers late-filed objection to modification to include postconfirmation mortgage defaults. “[T]here would be no prejudice to the debtor if the pleadings are considered on their merits. This is particularly true because of the mortgagee’s intervening request for relief from stay, a request that raises issues similar to those considered in reviewing an objection to a request to modify a confirmed plan.” Court allows modification, refuses relief from stay and denies attorney’s fees under mortgage contract because untimely objection and motion for stay relief were unreasonable and unnecessary.).
40 In re Lynch, 109 B.R. 792 (Bankr. W.D. Tenn. 1989). Accord In re Bagby, 218 B.R. 878, 885–86 (Bankr. W.D. Tenn. 1998) (Postconfirmation motions to add postpetition claims for check-cashing services and to provide a separate classification are denied because debtors failed to comply with notice requirements of Bankruptcy Rule 3015(g). Debtors used “deferred presentment service providers” to obtain cash advances in exchange for personal checks after filing Chapter 13 cases. By motion in one case and by agreed order in another, debtors sought to “add” the postpetition check cashing claims to their Chapter 13 plans with special classifications to pay the claims in full with attorneys’ fees and extra charges. Court found that check-cashing services did have postpetition claims and reluctantly that these claims were for property or services necessary to the debtors’ performance under the plan and, because the debtors (mistakenly) did not believe that trustee approval was required, the check-cashing services held claims that were allowable as postpetition claims under § 1305. However, the proposed modifications were denied for lack of proper notice. “The motion does not specify how the added claims are to be classified in the modified plan, how the payment of 100% of these Creditors’ claims will affect the payment of prepetition unsecured claims, and what adjustments will be ‘necessary to comply with the modification prayed for herein.’ . . . [T]he motion and notice provided to creditors . . . did not adequately inform general unsecured pre-petition creditors of the potential effects of the proposed modification. . . . The modification of a confirmed Chapter 13 plan is not a matter for private negotiation between the debtor, the trustee, and a particular creditor. All creditors are entitled to notice and an opportunity to object to a proposed modification, unless the court orders otherwise with respect to creditors who are not affected by the proposed modification. Fed.R. Bankr. P. 3015(g). Proposed dilution or delay in payment of the claims of unsecured pre-petition creditors requires notice to all such creditors calculated to specifically inform them of the effects of the proposed modification on their claims and the procedure for filing a written objection. . . . [T]he effect of placing post-petition claims in Class 1 unsecured, even in a case where the proposed distribution to general unsecured pre-petition creditors is 100%, is to increase the possibility that general unsecured creditors will receive no distribution under the plan. No notice of the delay in distribution to general unsecured creditors was given . . . .”).
41 In re Lynch, 109 B.R. 792 (Bankr. W.D. Tenn. 1989). Accord In re Bagby, 218 B.R. 878, 886 (Bankr. W.D. Tenn. 1998) (“The modification of a confirmed Chapter 13 plan is not a matter for private negotiation between the debtor, the trustee, and a particular creditor.”); In re Goodwin, 183 B.R. 329 (Bankr. S.D. Ga. 1995) (Debtor cannot allow a late-filed proof of claim by agreement with a creditor where the debtor is not willing to increase payments into the plan to maintain the original dividend for unsecured claim holders. The debtor’s agreement with the late-filing creditor is a modification that cannot be accomplished after confirmation without complying with the provisions of the Code and Rules for postconfirmation modification.).
42 In re Powers, 140 B.R. 476 (Bankr. N.D. Ill. 1992).
43 Bankruptcy Rules 2002(a) and 3015(g) both provide, “The clerk, or some other person as the court may direct, shall give . . . notice by mail.”
44 See In re Moore, 247 B.R. 677, 681 (Bankr. W.D. Mich. 2000) (“It is not the court’s position that every proposed modification to a confirmed Chapter 13 plan requires a hearing. The notice with opportunity to object procedure set forth in LBR 9013(c) is an appropriate method for approving plan modifications permitted under Section 1329(a).”); Rakestraw v. Hood (In re Hood), 211 B.R. 334, 335 (Bankr. W.D. Ark. 1997) (“In order to object to the plan modification, Rakestraw was required to file her objection on or before February 3, 1997. Having failed to file an objection, the modification was confirmed by operation of law as well as by Order entered February 11, 1997.”); In re Eves, 67 B.R. 964 (Bankr. N.D. Ohio 1986).
45 11 U.S.C. § 1329(b)(2).
46 See discussion beginning at § 120.1 11 U.S.C. § 1327: Overview.
47 In re Rincon, 133 B.R. 594 (Bankr. N.D. Tex. 1991).
48 See, e.g., In re Schanlaber, No. 01-91067, 2003 WL 245233 (Bankr. C.D. Ill. Feb. 4, 2003) (unpublished) (Failure to object to modification of plan leaves car lender bound by modified plan that surrenders car and treats the deficiency as an unsecured claim.).
49 215 B.R. 882 (Bankr. S.D. Cal. 1997).
50 215 B.R. at 884.
51 223 B.R. 710 (Bankr. W.D. Mo. 1998).
52 See §§ 209.1 [ Timing, Procedure and Form ] § 114.1 Timing, Procedure and Form, 210.1 [ To Correct Errors in Original Plan ] § 114.2 To Correct Errors in Original Plan and 211.1 [ To Reflect Changed Circumstances ] § 114.3 To Reflect Changed Circumstances for further discussion of In re Walters, 223 B.R. 710 (Bankr. W.D. Mo. 1998), and preconfirmation modification.
54 See In re Bolton, 43 B.R. 48 (Bankr. E.D.N.Y. 1984).
55 In re Reid, 92 B.R. 21 (Bankr. D. Conn. 1988).
56 In re Harvey, 213 F.3d 318, 319, 322 (7th Cir. 2000) (Section 1327(a) and principles of res judicata preclude objection to same provision in modified plan when creditor did not object to lien-stripping provision of original plan. Confirmed plan provided that “[u]pon payment of the allowed secured claim as indicated, any lien held by GMAC on said vehicle shall be void and title to said vehicle shall be released to debtor.” GMAC received a long form and a short form of the plan; only the long form contained the lien stripping provision. Plan was confirmed without objection. Sixteen months later, debtor moved to modify other provisions of the plan, and GMAC objected to lien-stripping provision. GMAC claimed it was confused by the two different versions of the plan. “If GMAC was genuinely uncertain about the combined effect of the short and long forms (a total of four pages), it was obligated to raise this issue with the bankruptcy court prior to the original plan confirmation.”); In re York, 250 B.R. 842, 848 (Bankr. D. Del. 2000) (Student loan creditor that failed to object to confirmation of plan that provided for discharge of postpetition interest cannot object to a modified plan that does not change the treatment of the student loan. “ECMC is bound by the plan. To allow ECMC to object to a proposed modified confirmed plan in which Debtors seek to change only a provision unrelated to ECMC jeopardizes established precedent. . . . [R]es judicata precludes ECMC from objecting to Debtors’ proposed modified plan pursuant to which ECMC’s treatment is unchanged from the confirmed plan.”); In re Edwards, 190 B.R. 91, 95–96 (Bankr. M.D. Tenn. 1995) (“Because there was no objection by Chrysler to the treatment it was initially afforded under the originally confirmed plan, and therefore no disposable income inquiry was conducted, the Court overrules Chrysler’s objection to the debtor’s motion to incur credit. In short plain terms, because the disposable income test was not called into play at confirmation, the Court will not now make it an additional requirement to modification of this plan. The treatment afforded to the creditors has not changed. To do so would be to allow Chrysler to evade the binding effect of the confirmation order in contravention of § 1327(a), and impose an additional requirement to modification that was not imposed upon confirmation.”); In re Eason, 178 B.R. 908, 912–14 (Bankr. M.D. Ga. 1994) (IRS lacks standing to object to modification of a plan after confirmation where modified plan does not change the treatment of the IRS, notwithstanding that IRS had a good objection to confirmation of the original plan. Original plan proposed to pay the IRS in full without interest. The best-interests-of-creditors-test calculation at confirmation of the original plan would have required the debtor to pay interest. IRS did not object to confirmation. More than two years after confirmation, the debtor modified the plan to lengthen the repayment period, but the modified plan did not change the treatment of the IRS. “Section 1327 of the Bankruptcy Code prevents a creditor from asserting after confirmation and during the term of the plan, any rights other than those provided for it by the confirmed plan. . . . [S]everal decisions have held that an order confirming a Chapter 13 plan is res judicata as to all justiciable issues which were or could have been decided at the confirmation hearing. . . . This court recognizes that some courts have rejected res judicata in regard to Bankruptcy Code § 1329 motions. . . . However, such view ignores the concept that the parties should be able to rely on the confirmed plan absent a change in the debtor’s circumstances or postconfirmation default by the debtor. The doctrine of res judicata prohibits modifications based on issues that were or could have been litigated at confirmation, such as the issue of payment of interest on unsecured claims. . . . The proposed postconfirmation modification does not alter the status or treatment of the IRS’s claim from that shown in the original confirmed Chapter 13 plan. . . . [T]he binding effect of § 1327 of the Code, as well as the doctrine of res judicata, preclude the IRS from objecting now.”); In re Baldwin, 97 B.R. 965 (Bankr. N.D. Ind. 1989) (Chapter 13 trustee’s objection to postconfirmation modification is denied when debtor’s proposed treatment of trustee’s fees is not changed in the modified plan and the trustee did not object to confirmation of the original plan. At time of original confirmation, Chapter 13 trustee applied a reduced percentage to certain kinds of payments through the plan. At the time of confirmation of the modified plan, the trustee’s fees had increased. Debtor’s proposal to modify the plan to change the treatment of other creditors was not an opportunity for the trustee to seek an increase in fees.); In re Stage, 79 B.R. 487 (Bankr. S.D. Cal. 1987) (Real estate-secured creditor that failed to object to original plan lacks standing to object to a postconfirmation modification that treats the claim holder exactly as did the original plan.).
57 In re Grissom, 137 B.R. 689 (Bankr. W.D. Tenn. 1992). Accord In re Torres, 193 B.R. 319 (Bankr. N.D. Cal. 1996) (Not just any objection to confirmation by the trustee triggers disposable-income-test analysis. At confirmation of the original plan, trustee objected to exempt property. No other objection was raised. Confirmed plan proposed to pay unsecured claim holders 35% without specifying a minimum repayment period. When it turned out that unsecured claim holders were paid 35% in 27 months, a creditor moved to require the debtor to make payments for nine more months to satisfy § 1325(b). Res judicata and § 1327 barred modification because neither an unsecured claim holder nor the trustee raised the § 1325(b) argument at confirmation of the original plan.).
58 McDonald v. Louquet (In re Louquet), 125 B.R. 267 (B.A.P. 9th Cir. 1991). Accord In re Fields, 269 B.R. 177 (Bankr. S.D. Ohio 2001) (Trustee’s failure to object to confirmation does not bar motion to modify plan to increase payments under § 1329 when it turns out that percentage plan will pay in full in less than 36 months.).
60 See § 97.3 [ Who Can File Plan? ] § 72.4 Who Can File Plan?.
61 Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430 (B.A.P. 9th Cir. 1997) (As the proponent of the plan modification to increase the plan length and change the percentage plan to a “pot” plan, Max Recovery, Inc., has the burden of proof to support the modified plan.); In re Edwards, 190 B.R. 91, 93–95 (Bankr. M.D. Tenn. 1995) (“The procedural posture of this case is somewhat unusual in that the debtor requested permission to incur credit, and Chrysler then filed an objection to the debtor’s motion, along with the motion to modify under § 1329. It is therefore Chrysler’s initial burden to demonstrate that its modification under the plan is warranted, and the debtor’s burden to show that his motion to incur credit is appropriate. . . . Chrysler presented no evidence relative to any of the requirements of sections 1322(a), 1322(b), 1322(c) or 1325(a). . . . In other words, whether the modification as put forth by Chrysler meets all of the prerequisites of 1329, irrespective of whether the disposable income test is among those prerequisites, is a mystery to the Court. Chrysler, therefore, failed to carry its burden as the movant for modification under § 1329.”); In re Haas, 76 B.R. 114 (Bankr. S.D. Ohio 1987). See § 257.1 [ Changed-Circumstances Requirement? ] § 126.5 Changed-Circumstances Requirement? for discussion of the burden of proving “changed circumstances” for purposes of postconfirmation modification under § 1329.
62 See § 217.1 [ Burden of Proof ] § 115.3 Burden of Proof.
63 See Southtrust Mobile Servs., Inc. v. Englebert, 137 B.R. 975 (N.D. Ala. 1992), discussed in § 254.1 [ Application of Tests for Confirmation ] § 126.2 Application of Tests for Confirmation.
64 See § 117.4 Appeal of Grant or Denial of Confirmation and § 117.5 Appeal of Grant or Denial of Confirmation after BAPCPA for discussion of appeal of grant or denial of confirmation.
65 301 B.R. 734 (B.A.P. 8th Cir. 2003).
66 301 B.R. at 738.
67 301 B.R. at 738.
68 See § 117.4 Appeal of Grant or Denial of Confirmation and § 117.5 Appeal of Grant or Denial of Confirmation after BAPCPA. See, e.g., Lewis v. United States, 992 F.2d 767 (8th Cir. 1993).