§ 126.5     Changed-Circumstances Requirement?
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 126.5, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

There is substantial case law support for the proposition that the proponent of a modified plan must demonstrate a change in circumstances to justify modification after confirmation.1 This changed-circumstances requirement is not found in the Code. The courts that have analyzed the issue at all have found that either res judicata or the effects of confirmation under § 13272 require something more than just the passage of time before the plan can be modified under § 1329.3 As explained by one court, a creditor’s motion to modify after confirmation “is confronted, to at least some degree, by the principle that a confirmation order is res judicata of the rights of the debtor vis-a-vis the creditor . . . unless a creditor is able to show evidence of a change in the debtor’s circumstances arising subsequent to confirmation.”4

[2]

A growing minority of courts have more carefully analyzed § 1329 to conclude that changed circumstances are not a requirement for modification of a plan after confirmation.5 This issue divides the circuits: the U.S. Courts of Appeals for the Fourth6 and Ninth7 Circuits have imposed a changed-circumstances requirement on the proponent of a postconfirmation modification; the Seventh Circuit8 has refused any such precondition. The First Circuit adopted the reasoning of the Seventh Circuit and rejected the “substantial and unanticipated test” but then hedged just slightly: “[P]arties requesting modifications of Chapter 13 plans must advance a legitimate reason for doing so, and they must strictly conform to the three limited circumstances set forth in § 1329.”9

[3]

This changed-circumstances requirement has been applied to debtors, creditors and trustees as proponents of modified plans, but there is some disagreement whether creditors have a greater burden than debtors. Without citation to the statute, it has been stated that the debtor’s power to modify “is much broader than that of a creditor.”10 In some districts, creditors have been held to a showing of “substantial changed circumstances” that were not taken into account at the original confirmation, while debtors are permitted to modify the plan after confirmation without proving extraordinary postconfirmation circumstances.11 One court observed that the changed-circumstances test “generally . . . has been applied equally strictly against debtors.”12

[4]

The courts imposing a changed-circumstances condition on modification have offered different and sometimes inconsistent formulations of this judge-made test. Some courts say that the proponent of a modification must only prove “changed circumstances” after confirmation of the original plan.13 Other courts have held that “substantial changed circumstances” are necessary to justify postconfirmation modification.14 Still other courts insist that only “substantial unanticipated changed circumstances” are sufficient to support postconfirmation modification.15 One court held that issues of disposable income are precluded at modification after confirmation unless the court finds a substantial change and circumstances that are “extraordinary.”16 Arguably in dicta,17 the Ninth Circuit formulated the test as “a substantial change in the debtor’s ability to pay since the confirmation hearing and that the prospect of the change had not already been taken into account at the time of confirmation.”18

[5]

It has been said that the unanticipated-changed-circumstances standard is an objective test: the court must “‘determine whether a debtor’s altered financial circumstances could have been reasonably anticipated at the time of confirmation by the parties seeking modification.’”19 A substantial change in circumstances does not necessarily require a catastrophic event,20 but the proponent of modification has been required to demonstrate some reason that upsets performance of the original plan.21

[6]

The changed-circumstances requirement is a slippery accommodation of res judicata, the binding effect of confirmation under § 1327(a),22 and the statutory right to modify a confirmed plan under § 1329. The reported decisions applying the requirement are fact-bound and offer no clear rules for decision.

[7]

A proposal to modify the plan to deal with an unscheduled debt was not supported by substantial and unanticipated circumstances notwithstanding that the claim arose from a state court divorce proceeding that took place after the petition and after the grant of relief from the stay.23 Modification to cure postconfirmation mortgage arrearages was allowed when the debtor’s altered financial condition was not anticipated at the time of confirmation.24 Reducing the dividend to unsecured claim holders from 70 percent to 5 percent and changing the treatment of a claim holder from fully secured to partially secured was allowed when the debtor’s valuation of a residence changed from the time of the petition to the time of the motion to modify.25 In In re Fitak,26 modification to require payment of the appreciated value of property into the plan was denied because the court found that appreciation was reasonably foreseeable;27 however, the court granted modification to require the debtor to pay into the plan the amount withdrawn from a retirement fund after confirmation. That several unsecured claim holders did not file proofs of claim, and thus the debtor’s plan will complete in less than three years, is28 or is not29 a substantial, unanticipated change in circumstances, depending on your point of view.

[8]

It has been held that a New York debtor’s decision to marry after confirmation and to assume responsibility to support a wife and minor child is a substantial change in financial circumstances that justifies reducing the unsecured dividend from 100 percent to 34 percent.30 But a Minnesota debtor’s decision to marry a disabled, unemployed man was “voluntary”; the resulting lack of income and increase in expenses were “not unanticipated or unforeseen” and could not support modification.31

[9]

An increase in the debtor’s income from $80,000 to $200,000 per year is a substantial change in circumstances that was either unanticipated or should have been disclosed to the bankruptcy court before the original plan was confirmed.32 The debtor’s recovery of $5,800 after confirmation as damages for violation of the automatic stay was both substantial and unanticipated, and the money goes to creditors on a trustee’s motion to modify under § 1329(a).33 Intentional deception by the debtor by understating expenses is insufficient to justify modification; however, a postconfirmation decrease in the debtor’s expenses is a substantial change warranting an increase of payments into the plan.34 When the debtor knew of the need to refinance a balloon note at confirmation of the original plan, circumstances have not changed and the debtor cannot refinance by modification under § 1329.35

[10]

That the debtors elected to pay college tuition rather than mortgages will not justify modification to manage the postconfirmation defaults.36 A car accident that destroyed the debtor’s van two and one-half years after confirmation is an unanticipated substantial change in circumstances.37 Sale of the debtor’s medical practice a few months after confirmation for $40,000 was not anticipated by creditors or the trustee and was “substantial.”38 Receipt of a postconfirmation tax refund of $1,698 is not a sufficient change in circumstances to disturb confirmation of a plan for a debtor who lives on $716 per month.39 Destruction of the debtor’s rental property after confirmation and a larger than expected settlement with the fire insurance company are unexpected extraordinary changes justifying modification to increase payments to creditors.40

[11]

The judge-made changed-circumstances test has an uncertain interaction with the statutory tests for modification of the plan. For example, when is a change in projected disposable income for purposes of § 1325(b)41sufficient to also constitute a substantial, unanticipated change in circumstances? One bankruptcy court denied a motion to modify to require the debtor to pay a tax refund into the plan when the court found that a tax refund of $3,447 for a debtor with a monthly income of $1,200 would result in “little or no increase at all in disposable income.”42 Will every change in income that was not projected be unanticipated? If the disposable income test does not apply to a modified plan,43 can a change in the debtor’s income after confirmation ever constitute a changed circumstance for purposes of § 1329? A significant decrease in the debtor’s income is considered a changed circumstance by most courts, justifying modification to reduce payments.44 What if disposable income increases because the debtor’s expenses decrease after confirmation? One court has held that a decrease in expenses can be a substantial change warranting a creditor’s motion to modify the plan to increase payments.45 How can the courts tell when the creditor is illegitimately relitigating disposable-income-test questions in the guise of proving changed circumstances for modification? It has been said that if the creditor asserts no facts not known at the time of the original confirmation, the creditor’s proposed modification should be denied.46

[12]

Reading a changed-circumstances test into postconfirmation modification under § 1329 could have interesting consequences when there are changes in bankruptcy law. For example, in 1993 the Supreme Court rewrote the rules for dealing with undersecured home mortgages in Nobelman v. American Savings Bank.47 Prior to Nobelman, many courts held that a Chapter 13 plan could bifurcate an undersecured home mortgage and strip off the lien with respect to the unsecured claim.48 After Nobelman, a creditor secured only by a security interest in real property that is the debtor’s principal residence is protected from modification by § 1322(b)(2) with respect to both the secured and the unsecured portions of its claim. Courts were required to give Nobelman retroactive effect: Because Nobelman was applied to the parties before the Supreme Court, the holding of Nobelman applied to all pending Chapter 13 cases “still open on direct review . . . .”49 Ordinarily, “open on direct review” means still subject to review on appeal. It was held that the rule in Nobelman applied to a Chapter 13 case in which confirmation was on appeal when the Supreme Court decided Nobelman.50

[13]

But what about modification after confirmation? Section 1329 can be interpreted as a broad statutory exception to the usual finality of orders in the federal courts.51 Was a Chapter 13 plan “still open on direct review” if the order of confirmation was final but modification of the plan under § 1329 was available? Could a mortgage holder use modification under § 1329 to require the plan to comply with Nobelman? Is Nobelman a changed circumstance that permits access to postconfirmation modification under § 1329?

[14]

Ordinary rules of statutory construction interpret § 1327(a) to preclude relitigation of the home mortgage bifurcation question once the confirmation order is final. The changed-circumstances test, if applied at all, should be confined to the role of a barrier to modification; it is not an exception to the binding effect of confirmation under § 1327(a). One reported decision refused to allow a mortgage holder to use § 1329 to undo bifurcation of its undersecured mortgage ordered before Nobelman.52

[15]

Changed circumstances should not be a separate condition for modification of a confirmed plan but should be considered as evidence bearing on other statutory tests for modification under § 1329(b)(1).53 For example, changed circumstances might be probative of the good faith of the proponent of the modified plan under §§ 1325(a)(3) and 1329(b)(1). The conditions for modification of a plan are fully set forth in § 1329(b). The changed-circumstances test is an unwarranted judicial reaction to the fear that the existing statutory restrictions on modifications are insufficient to protect the finality of confirmation orders.54 There is no evidence that Chapter 13 debtors have abused postconfirmation modification under § 1329 for insignificant or inappropriate purposes. If there is fear that creditors will abuse § 1329 by seeking modifications without justification, sanctions are available.55

[16]

There will be situations in which modification after confirmation is appropriate despite the absence of changed circumstances. Imagine a totally innocent omission of an item of expense in the debtor’s budget, leading to an erroneous calculation of the plan at confirmation. When discovered by the debtor during the first monthly cycle after confirmation, there will be no substantial unanticipated changed circumstance of the sort required by many of the cases. Nonetheless, it would be nonsensical to deny the debtor an opportunity to demonstrate that modification of the plan is appropriate. Section 1329(b)(1) provides ample control of modification of Chapter 13 plans. Application of an ill-defined, judge-made, changed-circumstances test has generated much uncertainty and unnecessary litigation with respect to postconfirmation modification.


 

1  See Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994); Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989); Atlantic Fin. Fed. v. Frost (In re Frost), 123 B.R. 254 (S.D. Ohio 1990); In re Fitak, 121 B.R. 224 (S.D. Ohio 1990); United States v. Evans, 77 B.R. 457 (E.D. Pa. 1987); In re Stinson, 302 B.R. 828 (Bankr. D. Md. 2003); In re Miller, No. 99-81339, 2002 WL 31115656 (Bankr. M.D.N.C. Apr. 19, 2002) (unpublished); In re Flennory, 280 B.R. 896 (Bankr. S.D. Ala. 2001); In re Jacobs, 263 B.R. 39 (Bankr. N.D.N.Y. 2001); In re Furgeson, 263 B.R. 28 (Bankr. N.D.N.Y. 2001); In re Conley, No. 97-16705-SSM, 2000 WL 1805324 (Bankr. E.D. Va. Sept. 28, 2000); In re Euler, 251 B.R. 740 (Bankr. M.D. Fla. 2000); In re Dunlap, 215 B.R. 867 (Bankr. E.D. Ark. 1997); In re Richardson, 192 B.R. 224 (Bankr. S.D. Cal. 1996); In re Nelson, 189 B.R. 748 (Bankr. D. Minn. 1995); In re Guernsey, 189 B.R. 477 (Bankr. D. Minn. 1995); In re Moore, 188 B.R. 671 (Bankr. D. Idaho 1995); In re Butler, 174 B.R. 44 (Bankr. M.D.N.C. 1994); In re Solis, 172 B.R. 530 (Bankr. S.D.N.Y. 1994); In re McCray, 172 B.R. 154 (Bankr. S.D. Ga. 1994); In re Wilson, 157 B.R. 389 (Bankr. S.D. Ohio 1993); In re Rimmer, 143 B.R. 871 (Bankr. W.D. Tenn. 1992); In re Algee, 142 B.R. 576 (Bankr. D.D.C. 1992); In re McNulty, 142 B.R. 106 (Bankr. D.N.J. 1992); In re Bostwick, 127 B.R. 419 (Bankr. N.D. Ill. 1991); In re Weissman, 126 B.R. 889 (Bankr. N.D. Ill. 1991); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990); In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990); In re Walker, 114 B.R. 847 (Bankr. N.D.N.Y. 1990); In re Gadlen, 110 B.R. 341 (Bankr. W.D. Tenn. 1990); In re Lynch, 109 B.R. 792 (Bankr. W.D. Tenn. 1989); In re Taylor, 99 B.R. 902 (Bankr. C.D. Ill. 1989); In re Baldwin, 97 B.R. 965 (Bankr. N.D. Ind. 1989); In re Szostek, 93 B.R. 399 (Bankr. E.D. Pa. 1988), aff’d, 886 F.2d 1405 (3d Cir. 1989); In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988); In re Mosley, 74 B.R. 791 (Bankr. C.D. Cal. 1987); In re DeMoss, 59 B.R. 90 (Bankr. W.D. La. 1986).

 

2  See discussion beginning at § 120.1  11 U.S.C. § 1327: Overview.

 

3  See Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989) (Doctrine of res judicata bars an increase in the amount of monthly payments only when there have been no unanticipated, substantial changes in debtor’s financial condition.); In re Fitak, 121 B.R. 224 (S.D. Ohio 1990) (Party requesting modification has the burden to show a substantial and unanticipated change in debtor’s circumstances, else the doctrine of res judicata operates as a bar to postconfirmation modification under § 1329(a).); In re Euler, 251 B.R. 740, 746 (Bankr. M.D. Fla. 2000) (“[P]rinciples of claim preclusion or res judicata bar a trustee from raising as grounds for modification facts that were known and could have been raised prior to confirmation of the debtor’s plan.”); In re Dunlap, 215 B.R. 867, 869 (Bankr. E.D. Ark. 1997) (“To avoid the preclusive effect of the principle of res judicata, the modification should be necessitated by an unanticipated, substantial change in circumstance affecting the debtor’s ability to pay.”); Collier v. Valley Fed. Sav. Bank (In re Collier), 198 B.R. 816, 817 (Bankr. N.D. Ala. 1996) (“‘The confirmation order is res judicata on the disposable income test, except in extraordinary circumstances.’”); In re Butler, 174 B.R. 44, 46 (Bankr. M.D.N.C. 1994) (“[R]es judicata does not bar issues that arise because the debtor’s circumstances have changed since confirmation. This is true because such issues could not have been raised at confirmation, since the circumstances giving rise to such issues did not exist at confirmation.”); In re Algee, 142 B.R. 576, 580 (Bankr. D.D.C. 1992) (“Modification of a plan to alter the treatment accorded a particular claim under the plan based on an issue that could have been litigated prior to confirmation is barred by the doctrine of res judicata. . . . Without the doctrine of res judicata as a brake on § 1329, 11 U.S.C. § 1327(a) would be rendered meaningless, with any confirmation issue subject to being revisited at whim.”); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990) (If there are no substantial and unanticipated changes after confirmation, doctrine of res judicata bars any postconfirmation modification.); In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990) (Confirmation order is res judicata of debtor’s compliance with the disposable income test, unless there are substantial, unanticipated changes in debtor’s ability to pay.).

 

4  In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988). But see Taylor v. First Union Mortgage Co. (In re Taylor), 208 B.R. 828, 833 (Bankr. E.D. Pa. 1997) (“We believe that there is much to be said for the [In re Witkowski, 16 F.3d 739 (7th Cir. 1994),] approach to § 1329(a).”).

 

5  See Barbosa v. Soloman, 235 F.3d 31, 41 (1st Cir. 2000) (Adopting the reasoning of In re Witkowski, 16 F.3d 739 (7th Cir. 1994), that sale of real property after confirmation was foreseeable does not preclude trustee’s motion to modify the plan to increase the dividend to unsecured claim holders to reflect the appreciated value of the property. “[W]e are compelled to concur with the district court and the bankruptcy court that the Witkowski approach is the more sensible one. . . . [M]otions to modify cannot be used to circumvent the appeals process for those creditors who failed to object [to] confirmation of a Chapter 13 or whose objections to confirmation have been overruled. . . . [P]arties requesting modifications of Chapter 13 plans must advance a legitimate reason for doing so, and they must strictly conform to the three limited circumstances set forth in § 1329. . . . [We] refrain from adopting the substantial and unanticipated test for seeking a modification pursuant to § 1329. . . . [T]he Trustee and Mellon were not precluded by res judicata from seeking an amendment to the plan.”); In re Witkowski, 16 F.3d 739, 743 (7th Cir. 1994) (Chapter 13 trustee need not show changed circumstances, unanticipated or otherwise, to seek modification of a plan after confirmation. “[N]either § 1329 nor the doctrine of res judicata impose [sic] any threshold change in circumstances standard.”); Ledford v. Brown (In re Brown), 219 B.R. 191, 195 (B.A.P. 6th Cir. 1998) (On trustee’s postconfirmation motion to require debtor to pay personal injury settlement proceeds to creditors, bankruptcy court improperly imposed an “unanticipated and substantial change in circumstances” threshold requirement. Citing In re Witkowski, 16 F.3d 739 (7th Cir. 1994), “[a]lthough the court may properly consider changed circumstances in the exercise of its discretion, § 1329 does not contain a requirement for unanticipated or substantial change as a prerequisite to modification.”); Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430 (B.A.P. 9th Cir. 1997) (Citing Powers v. Savage (In re Powers), 202 B.R. 618 (B.A.P. 9th Cir. 1996), § 1329 does not require the proponent of a plan modification to show changed circumstances.); Powers v. Savage (In re Powers), 202 B.R. 618, 622 (B.A.P. 9th Cir. 1996) (Approving In re Witkowski, 16 F.3d 739 (7th Cir. 1994), and rejecting the dicta in Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994), and Itule v. Heath (In re Heath), 182 B.R. 557 (B.A.P. 9th Cir. 1995), “[t]he plain language of § 1329 simply does not support a change in circumstances as a prerequisite to modification. . . .  We agree with Witkowski’s recognition that common-law res judicata does not apply when a contrary statutory purpose is evident. . . . [M]odification under § 1329 is not without limits. Section 1329(a)(1) limits the kinds of modifications that can be proposed. Furthermore, § 1329(b)(1) protects the parties from unwarranted modification motions by ensuring that the proposed modifications satisfy the same standards as required of the initial plan. . . . Although changed circumstances are not a prerequisite to modification, the court may properly consider them in exercise of its discretion.” That debtor’s income increased 48% between confirmation and modification justified modifying plan to increase payments to creditors.); In re Thomas, 291 B.R. 189, 193 (Bankr. M.D. Ala. 2003) (“[T]his Court is persuaded that the position espoused by the First and Seventh Circuits in [Barbosa v. Soloman, 235 F.3d 31 (1st Cir. 2000),] and [In re Witkowski, 16 F.3d 739 (7th Cir. 1994),] is correct. . . . [T]he Trustee is entitled to modify a confirmed plan if the statutorily mandated requirements are satisfied. The Court will not superimpose a ‘substantial change in cirucmstances’ requirement, because it is not supported by the text of Section 1329.”); In re Fields, 269 B.R. 177, 180 n.8 (Bankr. S.D. Ohio 2001) (In a footnote, “[i]t is noted that § 1329 does not require an unanticipated or substantial change as a prerequisite to modification. In re Brown, 219 B.R. 191, 194 (B.A.P. 6th Cir. 1998).”); In re Townley, 256 B.R. 697 (Bankr. D.N.J. 2000) (Bankruptcy Code does not impose an unanticipated-change-of-circumstances condition on modification of a Chapter 13 plan after confirmation.); In re Sounakhene, 249 B.R. 801, 803 (Bankr. S.D. Cal. 2000) (“A showing of substantially changed circumstances is not a prerequisite to plan modification.”); In re Meeks, 237 B.R. 856 (Bankr. M.D. Fla. 1999) (No changed-circumstances predicate to modification after confirmation, but § 1329 does not permit debtor to surrender car and treat deficiency as an unsecured claim.); In re Studer, 237 B.R. 189, 193 (Bankr. M.D. Fla. 1998) (On trustee’s motion to modify plan to capture postpetition accident settlement proceeds for distribution to creditors, “this Court adopts the latter position holding that Section 1329 does not require any showing of substantial change to justify modification of a Chapter 13 Plan. Therefore, the Trustee is not required to prove a substantial and unanticipated change in the Debtors’ circumstances to seek modification. Conversely, even if the more stringent test was required, in this case and upon these facts, a distribution of over $51,000 to these Debtors clearly constitute[s] a substantial and unanticipated change meriting modification. Therefore, under either analysis, modification of the current Chapter 13 Plan is appropriate to increase the payments made under the Plan.”); In re Barbosa, 236 B.R. 540, 547–48 (Bankr. D. Mass. 1999) (On trustee’s motion to modify plan to require debtor to pay creditors the appreciated value of property sold by the debtor after confirmation, there is no changed-circumstances requirement. “This Court adopts the approach taken by the Court in [In re Witkowski, 16 F.3d 739 (7th Cir. 1994)], with the caveat that motions to modify cannot be used to circumvent the appeals process for those creditors who have failed to object to confirmation of a Chapter 13 plan or whose objections to confirmation have been overruled. . . . [W]hile Witkowski may be a correct statement of the law, as a practical matter, parties requesting modifications of Chapter 13 plans must advance a legitimate reason for doing so, and they must strictly conform to the three limited circumstances set forth in § 1329.”), aff’d on other grounds, 243 B.R. 562 (D. Mass. 2000); Taylor v. First Union Mortgage Co. (In re Taylor), 208 B.R. 828, 833 (Bankr. E.D. Pa. 1997) (“We believe that there is much to be said for the [In re Witkowski, 16 F.3d 739 (7th Cir. 1994),] approach to § 1329(a).” However, equitable considerations prohibit modification in the last year of a five-year plan to bifurcate an unprotected mortgage and reallocate payments under the plan to retire the allowable secured claim in full rather than cure defaults.); In re Klus, 173 B.R. 51, 59 (Bankr. D. Conn. 1994) (“[W]hile I agree with the [In re Perkins, 111 B.R. 671 (Bankr. M.D. Tenn. 1990),] line of cases that a substantial, unanticipated change of circumstances is not a threshold requirement for modification under § 1329(a), the absence of such a change should be a factor in the exercise of the court’s discretion.”); In re Powers, 140 B.R. 476 (Bankr. N.D. Ill. 1992) (There is no changed-circumstances requirement in § 1329. “By its terms, § 1329 does not require the movant to demonstrate a substantial, unanticipated change in the debtor’s financial circumstances. . . . [T]here is nothing in § 1329 express or implied . . . suggesting the application of a change of circumstances test as a prerequisite to a trustee plan amendment under § 1329.” Trustee can move to modify plan after confirmation to increase dividend to unsecured claim holders to reflect income to the debtor from liquidation of real property.); In re Perkins, 111 B.R. 671 (Bankr. M.D. Tenn. 1990) (Section 1329(b)(1) fully circumscribes the standards for confirmation of a plan modification offered by an allowed unsecured claim holder or by the trustee. “Changed circumstances or unanticipated events after confirmation of the original plan may be evidence relative to one or more of the listed standards. Changed circumstances, unanticipated or otherwise, is not imposed by the Code as a threshold barrier to access to modification under § 1329.”); In re Jourdan, 108 B.R. 1020 (Bankr. N.D. Iowa 1989) (The requirement that a debtor demonstrate “changed circumstances” to justify modification of a plan after confirmation comes from the legislative history, not from the statute. There is no statutory requirement that the debtor show cause for modification after confirmation.).

 

6  Arnold v. Weast (In re Arnold), 869 F.2d 240, 241–43 (4th Cir. 1989) (“[I]t is well settled that a substantial change in the debtor’s financial condition after confirmation may warrant a change in the level of payments. . . . The doctrine of res judicata bars an increase in the amount of monthly payments only where there have been no unanticipated, substantial changes in the debtor’s financial condition.”).

 

7  Anderson v. Satterlee (In re Anderson), 21 F.3d 355, 358 (9th Cir. 1994) (In dicta, “[u]nder § 1329, the trustee may request modification of the debtor’s plan. . . . If the debtor or a creditor objects to the modification, the trustee ‘must bear the burden of showing a substantial change in the debtor’s ability to pay since the confirmation hearing and that the prospect of the change had not already been taken into account at the time of confirmation.’”). But see Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430 (B.A.P. 9th Cir. 1997) (Powers v. Savage (In re Powers), 202 B.R. 618 (B.A.P. 9th Cir. 1996), correctly concludes that changed circumstances are not a prerequisite to modification under § 1329.); Powers v. Savage (In re Powers), 202 B.R. 618, 622 (B.A.P. 9th Cir. 1996) (Approving In re Witkowski, 16 F.3d 739 (7th Cir. 1994), and rejecting the dicta in Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994), and Itule v. Heath (In re Heath), 182 B.R. 557 (B.A.P. 9th Cir. 1995), “[t]he plain language of § 1329 simply does not support a change in circumstances as a prerequisite to modification. . . .  We agree with Witkowski’s recognition that common-law res judicata does not apply when a contrary statutory purpose is evident.”).

 

8  In re Witkowski, 16 F.3d 739, 743 (7th Cir. 1994) (Chapter 13 trustee need not show changed circumstances, unanticipated or otherwise, to seek modification of a plan after confirmation. “[N]either § 1329 nor the doctrine of res judicata impose [sic] any threshold change in circumstances standard.”). Accord Ledford v. Brown (In re Brown), 219 B.R. 191, 195 (B.A.P. 6th Cir. 1998) (Citing In re Witkowski, 16 F.3d 739 (7th Cir. 1994), “[a]lthough the court may properly consider changed circumstances in the exercise of its discretion, § 1329 does not contain a requirement for unanticipated or substantial change as a prerequisite to modification.”); Powers v. Savage (In re Powers), 202 B.R. 618, 622 (B.A.P. 9th Cir. 1996) (Approving In re Witkowski, 16 F.3d 739 (7th Cir. 1994), and rejecting the dicta in Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994), and Itule v. Heath (In re Heath), 182 B.R. 557 (B.A.P. 9th Cir. 1995), “[t]he plain language of § 1329 simply does not support a change in circumstances as a prerequisite to modification. . . . We agree with Witkowski’s recognition that common-law res judicata does not apply when a contrary statutory purpose is evident.”).

 

9  Barbosa v. Soloman, 235 F.3d 31, 41 (1st Cir. 2000).

 

10  In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988) (“[U]nless a creditor is able to show evidence of a change in the debtor’s circumstances arising subsequent to confirmation, a motion under § 1329(a) cannot succeed. . . . The power of a debtor to request postconfirmation amendments is much broader than that of a creditor.” On creditor’s motion, court declined to allow modification solely on the ground that debtor deceived the court by understating expenses at the time of the original confirmation order. However, a postconfirmation decrease in the debtor’s expenses constitutes a substantial change warranting an increase in payments.).

 

11  Compare In re Szostek, 93 B.R. 399 (Bankr. E.D. Pa. 1988), aff’d, 886 F.2d 1405 (3d Cir. 1989) (Creditor moving for postconfirmation modification has burden to prove substantial changed circumstances not already taken into account at time of original confirmation.), with United States v. Evans, 77 B.R. 457 (E.D. Pa. 1987) (Debtor is permitted to modify plan after confirmation notwithstanding absence of extraordinary postconfirmation circumstances.). See also Taylor v. First Union Mortgage Co. (In re Taylor), 208 B.R. 828, 833 (Bankr. E.D. Pa. 1997) (“We believe that there is much to be said for the [In re Witkowski, 16 F.3d 739 (7th Cir. 1994),] approach to § 1329(a).”), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666, reh’g denied, 531 U.S. 1185, 121 S. Ct. 1173, 148 L. Ed. 2d 1030 (2001).

 

12  In re Algee, 142 B.R. 576, 580 (Bankr. D.D.C. 1992).

 

13  See, e.g., In re Lynch, 109 B.R. 792 (Bankr. W.D. Tenn. 1989) (Modification by debtor of a confirmed plan “should require a showing of changed circumstances rather than be granted routinely on the mere request of a debtor or other authorized party.”); In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988) (Unless a creditor is able to show evidence of a change in debtor’s circumstances arising subsequent to confirmation, a motion under § 1329(a) cannot succeed.); In re Mosley, 74 B.R. 791 (Bankr. C.D. Cal. 1987) (On proper showing of changed circumstance, a debtor may amend a plan after confirmation under § 1329.); In re Rimmer, 143 B.R. 871 (Bankr. W.D. Tenn. 1992); In re Gadlen, 110 B.R. 341 (Bankr. W.D. Tenn. 1990).

 

14  See Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989) (“[I]t is well settled that a substantial change in the debtor’s financial condition after confirmation may warrant a change in the level of payments.”); In re Szostek, 93 B.R. 399 (Bankr. E.D. Pa. 1988), aff’d, 886 F.2d 1405 (3d Cir. 1989) (Creditor moving for postconfirmation modification has burden to prove substantial changed circumstances not already taken into account at time of original confirmation.).

 

15  See In re Fitak, 121 B.R. 224 (S.D. Ohio 1990) (Party requesting modification has burden to show substantial and unanticipated change in debtor’s circumstances.); In re Stinson, 302 B.R. 828 (Bankr. D. Md. 2003) (Applying Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989), trustee’s motion to increase plan base two years after confirmation to capture equity upon sale of residence satisfies “substantial and unanticipated” test.); In re Miller, No. 99-81339, 2002 WL 31115656, at *3 (Bankr. M.D.N.C. Apr. 19, 2002) (unpublished) (“A plan modification permitted under § 1329 may be allowed upon a showing by the debtor of a substantial and unanticipated change in circumstances.”); In re Flennory, 280 B.R. 896, 897–98 (Bankr. S.D. Ala. 2001) (“There has been no major, unanticipated change in circumstances. . . . [A] standard of substantial change in circumstances is a necessity. Without some threshold requirement creditors could compel modification every time a debtor obtained a slight increase in income or decrease in an expense. . . . If fluctuations in income and expenses do not amount to a change substantial enough to give the debtor a significant increase in disposable income, then a creditor should not be permitted to seek to modify the debtor’s plan and vice versa.”); In re Jacobs, 263 B.R. 39, 46 (Bankr. N.D.N.Y. 2001) (“‘A trustee’s application [for plan modification] “should be limited to situations in which there has been a substantial change in the debtor’s income or expenses that was not anticipated at the time of the confirmation hearing.”’ . . . Such a change is unanticipated ‘where “a debtor’s altered financial circumstances could not have been reasonably anticipated at the time of confirmation by the parties seeking modification.”’”); In re Furgeson, 263 B.R. 28, 36–38 (Bankr. N.D.N.Y. 2001) (“‘A trustee’s application [for plan modification] “should be limited to situations in which there has been a substantial change in the debtor’s income or expenses that was not anticipated at the time of the confirmation hearing.”’ . . . Such a change is unanticipated ‘where “a debtor’s altered financial circumstances could not have been reasonably anticipated at the time of confirmation by the parties seeking modification.”’”); In re Conley, No. 97-16705-SSM, 2000 WL 1805324, at *2 (Bankr. E.D. Va. Sept. 28, 2000) (“[T]he Fourth Circuit appears to have sided with those that require some change in circumstances affecting the debtor’s ability to pay. Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989) . . . . At the very least, it seems clear that Congress, as the Fourth Circuit recognized in Arnold, intended that the debtor’s ability to pay could be reevaluated during the plan term if there was a significant and unanticipated change in the debtor’s financial circumstances.”); In re Euler, 251 B.R. 740, 746–47 (Bankr. M.D. Fla. 2000) (“[P]rinciples of claim preclusion or res judicata bar a trustee from raising as grounds for modification facts that were known and could have been raised prior to confirmation of the debtor’s plan. . . . Whether a change is unanticipated and thus could not have been raised prior to confirmation of the debtor’s plan is determined objectively. . . . [T]he test is whether the change could have been reasonably anticipated at the time of confirmation.”); In re Dunlap, 215 B.R. 867, 869 (Bankr. E.D. Ark. 1997) (“To avoid the preclusive effect of the principle of res judicata, the modification should be necessitated by an unanticipated, substantial change in circumstance affecting the debtor’s ability to pay.”); Collier v. Valley Fed. Sav. Bank (In re Collier), 198 B.R. 816, 817 (Bankr. N.D. Ala. 1996) (“[W]here ‘substantial unanticipated changes’ occur, post-confirmation modification of plan payments is appropriate.”); In re Richardson, 192 B.R. 224, 228 (Bankr. S.D. Cal. 1996) (Section 1329 requires “some change in circumstance not foreseeable at the time of confirmation.”); In re Nelson, 189 B.R. 748, 751 (Bankr. D. Minn. 1995) (“[T]he burden falls on the debtor to demonstrate that her circumstances have sufficiently changed adversely, to warrant the modification. . . . A debtor must demonstrate changed circumstances, or those circumstances which adversely affect a debtor’s ability to pay as required by the terms of the original plan. . . . Such modification is warranted only when an unanticipated change in circumstances affects implementation of the plan as confirmed.”); In re Guernsey, 189 B.R. 477, 482–83 (Bankr. D. Minn. 1995) (“Ordinarily, approval of proposed modification should be based on substantial changes in circumstances, either of the debtor or of allowed claims, that were unforeseeable at the time of confirmation; and, that either render the existing plan unfeasible, or that make possible substantially enhanced dividends to creditors.”); In re Butler, 174 B.R. 44, 47 (Bankr. M.D.N.C. 1994) (“[T]here must have been an unanticipated, substantial change of circumstances before a confirmed plan may be modified pursuant to § 1329.”); In re Solis, 172 B.R. 530, 532 (Bankr. S.D.N.Y. 1994) (“A trustee’s application ‘should be limited to situations in which there has been a substantial change in the debtor’s income or expenses that was not anticipated at the time of the confirmation hearing.’”); In re Wilson, 157 B.R. 389, 390 (Bankr. S.D. Ohio 1993) (“Although § 1329 of the Bankruptcy Code does not establish a standard for modification, courts have held that an allowed unsecured claimholder or trustee must show unanticipated and substantial change in a debtor’s circumstances to obtain modification over the opposition of the debtor.”); In re Algee, 142 B.R. 576, 580 (Bankr. D.D.C. 1992) (“[D]espite the seemingly unqualified language of 11 U.S.C. § 1329, courts have held that modification is not warranted unless there has been an unanticipated substantial change in circumstances.”); In re Weissman, 126 B.R. 889 (Bankr. N.D. Ill. 1991) (Debtor must demonstrate a substantial unanticipated change in circumstances affecting implementation of confirmed plan to justify postconfirmation modification.); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990) (“The general rule is that a plan can be modified postconfirmation where the movant can show unanticipated and substantial changes in the debtor’s condition postconfirmation which directly impacts on the debtor’s ability to perform under the terms of the confirmed plan where those issues raised as a basis for a postconfirmation modification were not in existence or could not have been reasonably anticipated at the time the plan was originally confirmed.”); In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990) (Confirmation order is res judicata of debtor’s compliance with disposable income test, “unless there are substantial, unanticipated changes in the debtor’s ability to pay under a plan.”); In re Baldwin, 97 B.R. 965 (Bankr. N.D. Ind. 1989) (Trustee has right to seek postconfirmation modification, but only if there has been a substantial change in debtor’s circumstances that was not anticipated at time of confirmation.).

 

16  In re McCray, 172 B.R. 154, 158 (Bankr. S.D. Ga. 1994) (“The plan in the case before the Court has been confirmed. Issues of disposable income are therefore precluded from being raised unless the court should find the circumstances ‘extraordinary.’ . . . [T]he receipt by Debtor of the tax refund in question is neither an ‘extraordinary’ nor ‘substantial’ change in Debtor’s circumstances which would justify disturbing the plan of reorganization.” Postconfirmation tax refund of $1,698 need not be applied to payments under the plan where the debtor lives on $716 per month.).

 

17  See Powers v. Savage (In re Powers), 202 B.R. 618, 622 (B.A.P. 9th Cir. 1996) (Approving In re Witkowski, 16 F.3d 739 (7th Cir. 1994), and rejecting the dicta in Anderson v. Satterlee (In re Anderson), 21 F.3d 355 (9th Cir. 1994), and Itule v. Heath (In re Heath), 182 B.R. 557 (B.A.P. 9th Cir. 1995), “[t]he plain language of § 1329 simply does not support a change in circumstances as a prerequisite to modification.”); Max Recovery, Inc. v. Than (In re Than), 215 B.R. 430 (B.A.P. 9th Cir. 1997) (accord).

 

18  Anderson v. Satterlee (In re Anderson), 21 F.3d 355, 358 (9th Cir. 1994).

 

19  In re Fitak, 121 B.R. 224, 227 (S.D. Ohio 1990). Accord In re Euler, 251 B.R. 740, 746–47 (Bankr. M.D. Fla. 2000) (“Whether a change is unanticipated and thus could not have been raised prior to confirmation of the debtor’s plan is determined objectively. . . . [T]he test is whether the change could have been reasonably anticipated at the time of confirmation.”); In re Butler, 174 B.R. 44, 47 (Bankr. M.D.N.C. 1994) (“[T]here has been an unanticipated, substantial change in circumstances as regards the debtors. . . . The accident some two and one-half years following confirmation in which the van was heavily damaged at a time when it was uninsured is not something that the debtors could or should have anticipated at the time of confirmation.”); In re Solis, 172 B.R. 530, 532 (Bankr. S.D.N.Y. 1994) (“An unanticipated change is one where ‘a debtor’s altered financial circumstances could not have been reasonably anticipated at the time of confirmation by the parties seeking modification.’”); In re Wilson, 157 B.R. 389, 390 (Bankr. S.D. Ohio 1993) (“Whether a change is ‘unanticipated’ is determined objectively; the test is whether the change could have been reasonably anticipated at the time of confirmation.”); In re Algee, 142 B.R. 576, 580 (Bankr. D.D.C. 1992) (“[M]odification is not warranted unless there has been an unanticipated substantial change in circumstances, a test applied on an objective basis.”); In re Bereolos, 126 B.R. 313, 332 (Bankr. N.D. Ind. 1990) (“[T]he reason for the postconfirmation arrears was unanticipated and substantial by an objective standard at the time the confirmed plan sought to be amended was confirmed. . . . The reason for the debtor’s altered financial condition was not in existence, or could not have been reasonably anticipated at the time of confirmation.”).

 

20  See United States v. Evans, 77 B.R. 457 (E.D. Pa. 1987) (Debtor is permitted to modify plan after confirmation notwithstanding absence of extraordinary postconfirmation circumstances.); In re McNulty, 142 B.R. 106, 109 (Bankr. D.N.J. 1992) (“There must be a showing of changed circumstances affecting the debtor’s ability to pay as required by the terms of the original plan. . . . Such circumstances, however, do not have to be extraordinary, as is required to obtain a hardship discharge.”); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990) (“A substantial change in circumstances does not necessarily require an extraordinary or catastrophic change in circumstances. . . . [The] test is, ‘whether a debtor’s altered financial circumstances could have been reasonably anticipated at the time of confirmation by the parties seeking modification.’”). But see In re McCray, 172 B.R. 154, 158 (Bankr. S.D. Ga. 1994) (“The plan in the case before the Court has been confirmed. Issues of disposable income are therefore precluded from being raised unless the court should find the circumstances ‘extraordinary.’ . . . [T]he receipt by Debtor of the tax refund in question is neither an ‘extraordinary’ nor ‘substantial’ change in Debtor’s circumstances which would justify disturbing the plan of reorganization.” Postconfirmation tax refund of $1,698 need not be applied to payments under the plan where the debtor lives on $716 per month.).

 

21  See In re Dunlap, 215 B.R. 867 (Bankr. E.D. Ark. 1997) (Proponent of modification must show an unanticipated, substantial change in circumstance that affects the debtor’s ability to pay.); In re McNulty, 142 B.R. 106, 109 (Bankr. D.N.J. 1992) (“There must be a showing of changed circumstances affecting the debtor’s ability to pay as required by the terms of the original plan.”); In re Weissman, 126 B.R. 889 (Bankr. N.D. Ill. 1991) (Changed circumstances must affect implementation of confirmed plan to justify postconfirmation modification.); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990) (Movant must show unanticipated and substantial changes in debtor’s condition, postconfirmation, which directly impact on debtor’s ability to perform under the terms of the confirmed plan.); In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990) (Proponent must show substantial, unanticipated changes in debtor’s ability to pay under plan.); In re Taylor, 99 B.R. 902 (Bankr. C.D. Ill. 1989) (Debtor can modify after confirmation only “when an unanticipated change in circumstances affects the implementation of the plan as confirmed.”); In re DeMoss, 59 B.R. 90 (Bankr. W.D. La. 1986) (Postconfirmation modification is not permitted absent special supporting reason such as illness or an unforeseen financial change.).

 

22  See § 229.1 [ 11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors ] § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors.

 

23  In re Weissman, 126 B.R. 889 (Bankr. N.D. Ill. 1991). Compare In re Wilson, 157 B.R. 389, 390–92 (Bankr. S.D. Ohio 1993) (Court denies trustee’s motion to modify plan to require the debtor to increase the dividend to unsecured claim holders where the debtor was relieved of one large debt in a postconfirmation domestic relations proceeding and the net effect was an increase of $267 per month in the debtor’s disposable income. “Although § 1329 of the Bankruptcy Code does not establish a standard for modification, courts have held that an allowed unsecured claimholder or trustee must show unanticipated and substantial change in a debtor’s circumstances to obtain modification over the opposition of the debtor. . . . Whether a change is ‘unanticipated’ is determined objectively; the test is whether the change could have been reasonably anticipated at the time of confirmation. . . . [W]here a debtor is separated or involved in divorce proceedings at the time of a creditor’s meeting or confirmation hearing, the fact that the non-filing spouse might be ordered by a Domestic Relations Court to pay a joint debt is not unanticipated under objective standards. Parties should anticipate such a result and should require such contingencies to be provided for in the plan. . . . If the divorce or separation is unanticipated, however, res judicata probably would not bar an otherwise appropriate modification. . . . [A] modest increase in a debtor’s income of $267 per month for 20 months is not a change which is so substantial that a trustee’s motion for modification should be granted over the debtor’s opposition. . . . Where there is no evidence of bad faith or even of the use of the Chapter 13 superdischarge, the Court cannot understand why the debtor should be penalized for filing a Chapter 13 instead of a Chapter 7. Elevating a modest improvement in financial condition to the status of a substantial change in circumstances would be such a penalty.”).

 

24  In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990).

 

25  Atlantic Fin. Fed. v. Frost (In re Frost), 123 B.R. 254 (S.D. Ohio 1990).

 

26  92 B.R. 243 (Bankr. S.D. Ohio 1988), aff’d, 121 B.R. 224 (S.D. Ohio 1990).

 

27  Accord In re Jacobs, 263 B.R. 39, 47–49 (Bankr. N.D.N.Y. 2001) (“[T]he appreciation value of an asset or the liquidation thereof bears no consequence on a debtor’s ability to pay based on future earnings determined at confirmation quite simply because the debtor has not experienced any substantial unanticipated change in financial position. . . . [T]he $20,000 plus settlement proceeds . . . represents the current appreciated value of the Debtors’ scheduled interest . . . . The Chapter 13 trustee has no more right to that interest today than she had at confirmation simply by virtue of its appreciation in value.”); In re Euler, 251 B.R. 740, 747 (Bankr. M.D. Fla. 2000) (Appreciation in the value of real property fails the unanticipated-changed-circumstances requirement: “Changes in the value of real estate can hardly be considered to be unanticipated. . . . The change of value alone is just an incident of ownership. [Citation omitted.] This situation is easily distinguishable from unanticipated events which occur post-confirmation dealing, for example, with the debtor’s substantial income increase, or acquisition of a new asset as a result of an inheritance, or a lottery winning. . . . [T]he Trustee could have anticipated the possibility that real estate may appreciate and objected to the Plan—on the basis that the Plan did not provide that the appreciated value of any real estate would be liquidated and applied toward the amount owed to unsecured creditors. . . . The Plan did not contain a provision providing that the equity of appreciated property would be used to increase the distribution to unsecured creditors. Absent such a provision, confirmation acts as res judicata on the issue of whether the proceeds from appreciated real property, existing at the time of confirmation, should be added to the debtor’s disposable income.”); In re Trumbas, 245 B.R. 764, 767 (Bankr. D. Mass. 2000) (Unsecured claim holder cannot require the debtor to refinance a home after confirmation to pay the appreciated value to unsecured creditors. “That the Debtor’s home would increase in value was foreseeable when the Court confirmed the Debtor’s plan in 1995. Neither FNMA nor the Debtor provided for the use of post-confirmation appreciation in value, either in the confirmation order or the parties’ stipulation, to fund the Debtor’s plan. And nothing in the Bankruptcy Code requires the Debtor—after diligently making 57 months of plan payments (out of 60 plan payments) under a confirmed plan—to incur new debt or to sell her home as a condition precedent to obtaining her discharge. I therefore decline to extend the scope of § 1329 to require the modification FNMA seeks to accomplish here.”). But see Barbosa v. Soloman, 235 F.3d 31 (1st Cir. 2000) (Adopting the reasoning of In re Witkowski, 16 F.3d 739 (7th Cir. 1994), that sale of real property after confirmation was foreseeable does not preclude trustee’s motion to modify the plan to increase the dividend to unsecured claim holders to reflect the appreciated value of the property.); In re Stinson, 302 B.R. 828 (Bankr. D. Md. 2003) (21% increase in the value of a residence in two years was substantial and unanticipated for purposes of the trustee’s motion to increase the plan base to capture the equity upon sale of the residence.).

 

28  In re Bostwick, 127 B.R. 419 (Bankr. N.D. Ill. 1991) (Court sustains trustee’s motion to modify plan after confirmation to increase dividend to unsecured claim holders to reflect that debtor successfully objected to a proof of claim and that several unsecured claim holders did not file proofs of claim. “The change in circumstances which will bring about a successful § 1329 motion should not be limited strictly to ‘a change in the debtor’s financial condition,’ i.e., to a change in his income or expenses, but may also include, as here, a change in the debtor’s ability to pay his creditors, irrespective of a change in his income and expenses. . . . There is a change in the debtor’s financial condition when several creditors, as here, do not file proofs of claim.”). See also In re Witkowski, 16 F.3d 739 (7th Cir. 1994) (Although there is no threshold change-in-circumstances predicate to modification under § 1329, bankruptcy court did not abuse its discretion by granting trustee’s motion to modify a “percentage plan” to become a “pot” plan where unsecured claim holders did not file proofs of claim and debtor’s 10% plan will be completed in less than the 47 months originally estimated at confirmation of the plan. Requiring the debtor to stay in the plan for the 47 months originally agreed to will increase the dividend to unsecured claim holders from 10% to 19%.); In re McKinney, 191 B.R. 866 (Bankr. D. Or. 1996) (Grants trustee’s motion to require payments for 36 months to increase the dividend to unsecured creditors. Plan as confirmed provided 0% to unsecured claim holders. There were no secured claims, and it was projected that full payment of priority claims would require more than three years. Priority claims as finally allowed were substantially less than anticipated and were paid in 12 months. On trustee’s motion, court required payments to continue for three years.).

 

29  In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990) (Confirmation order is res judicata of debtor’s compliance with the disposable income test “unless there are substantial, unanticipated changes in the debtor’s ability to pay under a plan already confirmed.” That several unsecured claim holders did not file proofs of claim, and thus the debtor’s plan would complete in less than three years, is not such a change in circumstance as to permit a trustee’s motion to modify.). See In re Guernsey, 189 B.R. 477, 483 (Bankr. D. Minn. 1995) (Modification two months before completion of payments to reduce dividend from 14% to 7%—the amount the debtors were able to pay during the five-year duration of the plan—is denied because shortfall resulted from either slightly higher secured claims than the debtors expected or a miscalculation of the allowed amount of the secured claim. “[T]he situation does not present cause” to modify the plan “especially at the end of the Plan period.”).

 

30  In re Walker, 114 B.R. 847 (Bankr. N.D.N.Y. 1990).

 

31  In re Nelson, 189 B.R. 748 (Bankr. D. Minn. 1995).

 

32  Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989).

 

33  In re Furgeson, 263 B.R. 28, 38 (Bankr. N.D.N.Y. 2001) (“[T]he acquisition of $5,800 by the Furgesons is clearly both unanticipated, considering it was not possible at confirmation for the Trustee to foresee the prosecution of the Debtors’ § 362(h) claim since the Debtors failed to notify him of the pending claim, and substantial, considering the unsecured creditors anticipate only a 5% dividend and the settlement sum constitutes over 80% of the total payout contemplated under the Furgeson Plan.”).

 

34  In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988).

 

35  In re DeMoss, 59 B.R. 90 (Bankr. W.D. La. 1986).

 

36  In re McNulty, 142 B.R. 106 (Bankr. D.N.J. 1992).

 

37  In re Butler, 174 B.R. 44, 47 (Bankr. M.D.N.C. 1994) (“[T]here has been an unanticipated, substantial change in circumstances as regards the debtors. . . . The accident some two and one-half years following confirmation in which the van was heavily damaged at a time when it was uninsured is not something that the debtors could or should have anticipated at the time of confirmation. . . . Given the fact that the damages are significant, that there are no insurance proceeds with which to make repairs, and that the debtors were dependent upon the van for transportation, the change in circumstances qualifies as being substantial.” Court denies confirmation of modified plan on good-faith grounds where proposal to reclassify secured claim holder based on uninsured accident would shift consequences of debtor’s misconduct to the secured claim holder.). Accord In re Moore, 188 B.R. 671, 674 (Bankr. D. Idaho 1995) (“The destruction of Mrs. Moore’s sole means of transportation is a significant change in circumstances which justifies a modification to the plan.” However, debtor’s proposal to buy a replacement car was not feasible.).

 

38  In re Solis, 172 B.R. 530, 532–33 (Bankr. S.D.N.Y. 1994) (“A substantial change in circumstances can be increased income . . . or receipt of a large sum of money. . . . Debtor’s sale of his medical practice was not anticipated by either the creditors or the Trustee at the time the plan was confirmed, nor was it reasonably foreseeable by them. . . . While it appears that it was [the debtor’s] goal to confirm his plan, sell his medical practice and accept employment in Florida, [the debtor] neglected to inform either the Trustee or his creditors. The receipt of $40,000 is a substantial change in circumstances. . . . After finding unanticipated, substantial changed circumstances, I must balance the equities in deciding whether or not to permit amendment of the plan. . . . [The debtor] is attempting to use the bankruptcy system . . . as a sword to cut away legitimate encumbrances of his creditors so that he can move to Florida with a windfall profit. That could not have been Congress’ intention when it enacted chapter 13.”).

 

39  In re McCray, 172 B.R. 154 (Bankr. S.D. Ga. 1994). Accord In re Flennory, 280 B.R. 896 (Bankr. S.D. Ala. 2001) (Motion to require debtor to pay tax refund into the plan is denied on finding that tax refund of $3,447 was not a substantial change in circumstances for a debtor with a monthly income of $1,200, monthly expenses of $892 and a confirmed plan that paid 1% to unsecured creditors.).

 

40  Collier v. Valley Fed. Sav. Bank (In re Collier), 198 B.R. 816, 817 (Bankr. N.D. Ala. 1996) (On its own motion, court applies disposable income test to modify plan to pay creditors excess insurance proceeds from destruction of rental property. Confirmed plan paid mortgage on rental property directly by the debtor and 55% dividend to unsecured creditors. After confirmation, rental property was destroyed by fire, and insurance company tendered $25,600 more than the balance due on the mortgage. “[T]he insurance proceeds constitute an unexpected and extraordinary change in the debtors’ financial circumstances necessitating the modification of the debtors’ confirmed Chapter 13 plan to conform with the debtors’ increased disposable income. ‘The confirmation order is res judicata on the disposable income test, except in extraordinary circumstances.’ . . . However, where ‘substantial unanticipated changes’ occur, post-confirmation modification of plan payments is appropriate. . . . [T]he Court hereby modifies the debtors’ Chapter 13 plan to increase the dividend to the unsecured claim holders to reflect the debtors’ increased disposable income. The Court believes that this option is . . . in keeping with the best interest test under 11 U.S.C. § 1325(a)(4).”).

 

41  See § 91.2  Projected (Disposable) IncomeFor discussion of projected disposable income after BAPCPA see § 92.1  In General§ 93.1  Section 1325(b)(2)(A) and (B): “Amounts Reasonably Necessary to Be Expended—” When CMI Is Less Than Median Family Income§ 94.1  Big Picture: Too Many Issues§ 95.1  In General§ 96.1  Average Monthly Payments on Account of Secured Debts§ 97.1  Total Priority Debts and Divide by 60§ 98.1  Additional Expenses or Adjustments to CMI and § 99.1  In General.

 

42  In re Flennory, 280 B.R. 896, 898 (Bankr. S.D. Ala. 2001).

 

43  The question whether the disposable income test in § 1325(b) applies at confirmation of a modified plan is discussed in § 126.3  Does Disposable Income Test Apply? and § 126.6  Modification after Confirmation after BAPCPA.

 

44  See § 265.1 [ To Decrease Payments to Creditors ] § 127.8  To Decrease Payments to Creditors.

 

45  In re Gronski, 86 B.R. 428 (Bankr. E.D. Pa. 1988). But see In re Wilson, 157 B.R. 389 (Bankr. S.D. Ohio 1993) (That the debtor was relieved of a debt in a postconfirmation domestic relations proceeding with the net effect of an increase of $267 per month in the debtor’s disposable income was neither unanticipated nor substantial for purposes of postconfirmation modification under § 1329. The debtor was involved in a divorce proceeding at the time of the § 341 meeting, and the $267-per-month change in disposable income was “a modest improvement in financial condition,” not a “substantial” change in circumstances.).

 

46  In re Szostek, 93 B.R. 399 (Bankr. E.D. Pa. 1988), aff’d, 886 F.2d 1405 (3d Cir. 1989).

 

47  508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993).

 

48  See § 118.1 [ Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman ] § 79.1  Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman.

 

49  Harper v. Virginia Dep’t of Taxation, 509 U.S. 86, 113 S. Ct. 2510, 125 L. Ed. 2d 74, 86 (1993) (“When this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule.”).

 

50  Independence One Mortgage Corp. v. Wicks (In re Wicks), 5 F.3d 1372 (10th Cir. 1993).

 

51  See § 253.1 [ Standing, Timing and Procedure ] § 126.1  Standing, Timing and Procedure.

 

52  In re Klus, 173 B.R. 51 (Bankr. D. Conn. 1994) (Court denied § 1329(a) motion by mortgage holder to modify a confirmed plan that bifurcated and stripped down mortgage to the value of the collateral. Confirmation order became final 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). Mortgage holder sought to use postconfirmation modification under § 1329 to undo the pre-Nobelman claim splitting that it suffered. Principles of res judicata and the binding effect of confirmation under § 1327(a) prohibit the use of § 1329 to overcome the effect of a final order of confirmation.).

 

53  See In re Klus, 173 B.R. 51, 59 (Bankr. D. Conn. 1994) (“[W]hile I agree with the [In re Perkins, 111 B.R. 671 (Bankr. M.D. Tenn. 1990),] line of cases that a substantial, unanticipated change of circumstances is not a threshold requirement for modification under § 1329(a), the absence of such a change should be a factor in the exercise of the court’s discretion. . . . In the final analysis, I conclude that the court should only allow modification if the change of circumstances is unanticipated and substantial.”); In re Powers, 140 B.R. 476 (Bankr. N.D. Ill. 1992) (There is no changed-circumstances requirement in § 1329. “By its terms, § 1329 does not require the movant to demonstrate a substantial, unanticipated change in the debtor’s financial circumstances. . . . [T]here is nothing in § 1329 express or implied . . . suggesting the application of a change of circumstances test as a prerequisite to a trustee plan amendment under § 1329.” Trustee can move to modify plan after confirmation to increase dividend to unsecured claim holders to reflect income to the debtor from liquidation of real property.); In re Perkins, 111 B.R. 671 (Bankr. M.D. Tenn. 1990) (Section 1329(b)(1) fully circumscribes the standards for confirmation of a plan modification offered by an allowed unsecured claim holder or by the trustee. “Changed circumstances or unanticipated events after confirmation of the original plan may be evidence relative to one or more of the listed standards. Changed circumstances, unanticipated or otherwise, is not imposed by the Code as a threshold barrier to access to modification under § 1329.”). See also In re Jourdan, 108 B.R. 1020 (Bankr. N.D. Iowa 1989) (The requirement that a debtor demonstrate “changed circumstances” to justify modification of a plan after confirmation comes from the legislative history, not from the statute. There is no statutory requirement that the debtor show cause for modification after confirmation.).

 

54  See, e.g., In re Algee, 142 B.R. 576 (Bankr. D.D.C. 1992) (“Without the doctrine of res judicata as a brake on § 1329, 11 U.S.C. § 1327(a) would be rendered meaningless, with any confirmation issue subject to being revisited at whim.”).

 

55  See Fed. R. Bankr. P. 9011.