§ 127.2     To Cure Postconfirmation Default
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 127.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Modification under § 1329 is often the debtor’s only hope to stay in a Chapter 13 plan that has fallen into default after confirmation. In an ideal world, debtors would always tell their lawyers in advance of a problem to permit the filing of a motion to suspend payments before the default occurs.1 In the real world, debtors sometimes default in their payments, and the problem comes to counsel’s attention when a creditor or trustee moves for conversion or dismissal or for relief from the stay.

[2]

Section 1329(a) does not list curing postconfirmation default among the permitted modifications. However, § 1329(a)(1) and (2) authorize modification to increase or reduce payments on claims provided for by the plan and to extend or reduce the time for payments.2 Default in payments after confirmation is an obvious reason why a debtor would modify the confirmed plan to change payments to creditors. It is implicit in § 1329(a)(1) and (2) that debtors can use modification to increase or decrease payments and extend the time for payments when financial difficulty after confirmation disables the debtor to perform the original plan.

[3]

The case law is not altogether encouraging of use of § 1329 to cure postconfirmation default. One recurrent fact pattern has particularly fractured the reported decisions: Can a Chapter 13 debtor use modification to cure postconfirmation default on a debt that is being paid by the debtor directly to the creditor? Several courts have held that § 1329 does not permit modification to cure postconfirmation default with respect to direct payments, on the theory that § 1329 permits modification only for claims that are “provided for” in the original plan.3 Other courts have more carefully reasoned that a plan allowing payment directly by the debtor to a creditor does provide for the claim and thus § 1329 can be used to modify the plan to cure a default in direct payments.4

[4]

The view that direct payment provides for a claim finds substantial support in the Supreme Court’s decision in Rake v. Wade.5 In Rake, the Supreme Court observed, “[T]he phrase ‘provided for by the plan’ . . . is commonly understood to mean that a plan ‘makes a provision’ for, ‘deals with,’ or even ‘refers to’ a claim.”6 A plan that requires the debtor to make direct payments to the holder of a claim satisfies the definition of provided for in Rake. It follows that § 1329(a)(1) and (2) authorize postconfirmation modification to change the treatment of that claim.

[5]

The U.S. Court of Appeals for the Eleventh Circuit addressed the question whether a Chapter 13 plan can be modified after confirmation to cure postpetition and postconfirmation default in payments to the trustee. In Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle),7 the confirmed plans cured defaults and maintained payments under § 1322(b)(5) with respect to debts secured by mobile homes. After confirmation, the debtors defaulted in payments to the trustee, and the secured claim holders moved for relief from the stay.

[6]

The debtors responded with motions under § 1329 to modify the plans to cure the defaults. The Eleventh Circuit held that a Chapter 13 debtor can modify the plan to cure postconfirmation defaults because § 1322(b)(5) is applicable to modification under § 1329, and § 1322(b)(5) permits the curing of “any default”:

[Section] 1322(b)(5) expressly authorizes plans to provide for the timely curing of any default and maintenance of payments during the life of the plan. Section 1322(b)(5) clearly states that a plan may provide for the curing of any default. . . . The plain meaning of § 1322(b)(5) permits cure of any default whether occurring prior to the filing of the petition or subsequent to confirmation of the plan. Thus, § 1322(b)(5) would permit cure of postconfirmation defaults. . . . [T]his result is consistent with legislative intent[:] . . . to permit homeowners to utilize [Chapter 13’s] flexible provisions for debt relief without sacrificing their homes. . . . Congress designed § 1329 to permit modification of a plan due to changed circumstances of the debtor unforeseen at the time of confirmation. . . . [D]efaults, either preconfirmation or postconfirmation, may be cured under appropriate circumstances.8
[7]

Hoggle did not consider whether a plan that calls for direct payment to a secured claim holder provides for that creditor within the meaning of § 1329(a). Hoggle does broadly authorize debtors to use § 1329(a) to cure postconfirmation defaults. It is reasonably inferable that a default in direct payments to a secured claim holder would be an “appropriate circumstance” for the use of § 1329(a). The Supreme Court’s broad reading of “provided for” in Rake supports this outcome.

[8]

Modification to cure postconfirmation default is of course subject to all of the usual limitations on modification of plans. For example, when the confirmed plan required the debtor to make a balloon payment on a home mortgage, the debtor could not use § 1329 to modify the plan to deal with the debtor’s default in payment of the balloon.9 The balloon payment provision of the debtor’s mortgage was protected from modification by § 1322(b)(2) and thus could not be modified by either the original plan or by postconfirmation modification.10 In In re Binder,11 the bankruptcy court acknowledged that a Chapter 13 debtor can modify a plan to cure postconfirmation mortgage defaults, but because the proposed 52-month cure was “an extraordinarily long period of time to cure an arrearage of mortgage payments” and the debtor’s financial condition was at best “precarious,” the court found the proposed modification was not feasible. Several reported decisions—even some imposing a changed-circumstances precondition to modification12—permit modification to cure a postpetition mortgage arrearage when the debtor adequately explains the default.13

[9]

Does modification eliminate the consequences of default after confirmation? Section 1329(b)(2) states that a modified plan “becomes the plan” unless after notice and a hearing the court disapproves the modification. It might be argued from this language that if the debtor made $90-per-month payments toward a plan that called for $100 per month, absent disapproval of a modification that changes the plan to a $90-per-month plan, the default disappears, and the debtor can complete the plan as if it were a $90-per-month plan all along. Under this construction of § 1329, postconfirmation modification retrospectively remakes the debtor’s obligations to creditors.

[10]

Aggressive retroactive remaking of a Chapter 13 plan was rejected by the Bankruptcy Appellate Panel for the Tenth Circuit in Christensen v. Black (In re Black).14 The proposed modification offered a “lump sum contribution” of all payments due during the 28 months since confirmation. The modification then offered an additional 54 monthly payments to complete the plan. The Tenth Circuit BAP concluded this modification violated the five-year duration rule in § 1329(c)15 because the debtor could not simply declare the “lump sum contribution” to be the first payment under the original plan. Put another way, the BAP held that the lump sum contribution could not erase the first 28 months of required plan payments for purposes of counting the five-year limitation in § 1329(c).

[11]

In contrast to Black, on compelling facts the bankruptcy court in Aubain v. LaSalle National Bank (In re Aubain)16 permitted a Chapter 13 debtor to cure postconfirmation defaults through a modified plan and avoid the five-year limitation in § 1329(c). In Aubain, the Chapter 13 case was dismissed when the debtor missed the last three payments under a 60-month plan. The debtor moved to reinstate the case and to pay the last three months in a lump sum. The bankruptcy court found that the debtor’s motion sought “merely to cure a default on already scheduled payments”17 and thus did not violate § 1329(c). In essence, the bankruptcy court in Aubain permitted the debtor to declare the plan completed within the five years allowed by § 1329(c) by retroactively curing a postconfirmation default.

[12]

In the context of preconfirmation modification under § 1323, one court has held that modification does not retroactively alter the debtor’s obligation to make payments under the plan. In In re Walters,18 on February 23, 1998, the debtor filed a plan calling for weekly payments of $135. On May 22, 1998, the debtor filed an amended plan reducing the weekly payment to $52. In the interim, the debtor accumulated a $790 delinquency and the amended plan did not propose to cure that delinquency. The bankruptcy court held that the amended plan did not retroactively become the plan, and thus, the debtor could not eliminate the default by modifying the plan. The court denied confirmation of the amended plan because it failed to cure the delinquency in payments under the original plan.

[13]

There is some potential for mischief inherent in “modifying away” defaults. But the limitation on preconfirmation modification in Walters could conflict with the statutory powers in § 1329 in the context of modification after confirmation. Walters would preclude preconfirmation modification with respect to “obligations which have already accrued.”19 Section 1329 authorizes modification of a plan after confirmation to “reduce the amount of payments on claims of a particular class provided for by the plan.”20 Applying the Walters logic, when does a debtor’s obligation to pay the amount provided for in the confirmed plan “accrue” for purposes of postconfirmation amendment under § 1329?

[14]

Consider, for example, the outcome in In re Howell.21 The confirmed plan in Howell called for 70 percent payment of unsecured claims over 53 months. The debtor defaulted several times after confirmation and then proposed a modified plan that paid unsecured claims 15 percent over 36 months. Looking to § 1325(a) and § 1325(b),22 the court found that the modified plan met all the statutory tests. The modification reduced the debtor’s commitment to “time served,” spirited away the defaults under the original plan, and declared the plan consummated—presumably with the results that the debtor received a full-payment discharge under § 1328(a).23

[15]

Howell is not exactly inconsistent with Walters—they deal with different Code sections and very different facts—but these cases illustrate that there is room for further development of the limits on modification as a tool for curing postpetition defaults. The Howell approach to § 1329 could lead to an avalanche of postconfirmation modifications. Every debtor who has toiled for at least 36 months might technically satisfy the tests for modification to reduce payments to whatever has been paid to unsecured claim holders and to call a halt to the then fully consummated plan. Modifying a confirmed plan to declare the plan completed avoids the conditions and limitations on a hardship discharge in advance of completion of payments.24 Driven in part by fear of abuse, several reported decisions have rejected efforts by debtors to declare Chapter 13 plans completed by modifying to eliminate postconfirmation defaults.25

[16]

Modification after confirmation to cure default in payments must be policed by creditors and the trustee, else the process easily degenerates.26 When modification to cure default completes the plan in fewer months than originally intended, or at a lower payment to unsecured claim holders, the debtor’s good faith is appropriately at issue. The debtor should be required to show changed circumstances that justify the default and require a shorter plan or lower payments—not because of any changed-circumstances predicate for modification under § 1329,27 but because the debtor’s good faith is required to modify the plan.28


 

1  See § 258.1 [ To Suspend Payments ] § 127.1  To Suspend Payments. See also § 250.2 [ Changing Employers or Source of Income ] § 125.4  Changing Employers or Source of Income.

 

2  11 U.S.C. § 1329(a)(1), (2). See §§ 265.1 [ To Decrease Payments to Creditors ] § 127.8  To Decrease Payments to Creditors, 266.1 [ To Increase Payments to Creditors ] § 127.9  To Increase Payments to Creditors and 268.1 [ To Extend or Reduce the Time for Payments ] § 127.11  To Extend or Reduce the Time for Payments.

 

3  Southtrust Mobile Servs., Inc. v. Englebert, 137 B.R. 975 (N.D. Ala. 1992) (Reaffirming Southeast Bank v. Hollis (In re Hollis), 105 B.R. 1003 (N.D. Ala. 1989), and rejecting contrary decision of another judge in the same district, Bowest Corp. v. Stafford (In re Stafford), 123 B.R. 415 (N.D. Ala. 1991), Chapter 13 debtor cannot modify plan after confirmation to cure postpetition defaults on payments by the debtor directly to a secured claim holder.); Southeast Bank v. Hollis (In re Hollis), 105 B.R. 1003 (N.D. Ala. 1989) (Debtor cannot use postconfirmation modification to cure postconfirmation arrearages or to modify the plan to make payments to a mortgagee through the trustee when the original plan called for direct payments by debtor.); In re Ramirez-Arellano, 113 B.R. 796 (Bankr. S.D. Fla. 1990) (Section 1329 does not permit modification to provide for payments to a claim holder when the confirmed plan made no provision for payment. Debtor was not permitted to cram down the purchase price option at the end of an automobile lease when debtor was making payments directly to the lessor and the lessor refused to finance the purchase price at the end of the lease term.); In re Sensabaugh, 88 B.R. 95 (Bankr. E.D. Va. 1988) (Section 1329 does not authorize modification to allow for payment of postconfirmation arrearages on payments by debtor directly to a mortgage holder.); In re Rush, 6 Bankr. Ct. Dec. (CRR) 139 (Bankr. S.D. Fla. 1980) (Section 1329 permits modification only with respect to claims provided for in the plan; debtor may not modify payments with respect to a claim being paid directly by debtor.). Note: Southtrust Mobile Servs., Inc. v. Engelbert, 137 B.R. 975 (N.D. Ala. 1992), In re Ramirez-Arellano, 113 B.R. 796 (Bankr. S.D. Fla. 1990), Southeast Bank v. Hollis (In re Hollis), 105 B.R. 1003 (N.D. Ala. 1989), and In re Rush, 6 Bankr. Ct. Dec. (CRR) 139 (Bankr. S.D. Fla. 1980), may have been reversed by Green Tree Acceptance Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994). Hoggle, discussed below in this section, holds that § 1322(b)(5) authorizes a Chapter 13 plan to cure postpetition defaults with respect to a long-term secured claim paid through the trustee. Although Hoggle did not deal with direct payments by debtors, it is reasonably inferable that postpetition defaults in direct payments would fall within its holding.

 

4  Bowest Corp. v. Stafford (In re Stafford), 123 B.R. 415, 421 (N.D. Ala. 1991) (Refusing to follow Southeast Bank v. Hollis (In re Hollis), 105 B.R. 1003 (N.D. Ala. 1989), “the better reasoned cases have held . . . that a Chapter 13 debtor may cure ‘any default within a reasonable time’ including those occurring after the petition was filed and after confirmation of the original Chapter 13 plan.” Court reads §§ 1323 and 1329 together to permit Chapter 13 debtor to cure postpetition mortgage defaults that occurred both pre- and postconfirmation. Original plan called for payment of ongoing mortgage payment “outside” the plan and curing of prepetition arrearages through the plan. Postconfirmation modification proposed to bring the regular monthly payments and payment on both pre- and postpetition arrearages into the plan.); United States v. Evans, 77 B.R. 457 (E.D. Pa. 1987) (Debtor is permitted to modify plan notwithstanding that original plan called for IRS “to be paid outside plan.”); In re Binder, 224 B.R. 483, 488–89 (Bankr. D. Colo. 1998) (Citing Mendoza v. Temple-Inland Mortgage Corp. (In re Mendoza), 111 F.3d 1264 (5th Cir. 1997), and Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), debtor can modify a plan after confirmation to cure postpetition mortgage defaults; however, modified plan must satisfy §§ 1322 and 1325 and debtor is without financial ability to cure the postpetition default within a reasonable time and the modified plan is not feasible. Debtor filed Chapter 13 case three months after borrowing $154,000 from Chase Manhattan to purchase a residence. Debtor was a single mother with three dependents, and confirmed Chapter 13 plan provided for payments to Chase Manhattan “outside of the plan.” Debtor failed to make eight postpetition payments to Chase Manhattan totaling $9,000, and Chase moved for postconfirmation relief from the stay. Debtor responded with a motion to modify to cure the postpetition arrearage to Chase over 52 months through the Chapter 13 trustee. “Hoggle, Mendoza and subsequent opinions persuade me that although modification of a Chapter 13 plan to cure a post-confirmation default is not specifically authorized by the Code, it is not precluded. . . . [I]t must comport with the other applicable provisions of the Code. . . . [Fifty-two] months is an extraordinarily long period of time to cure an arrearage of mortgage payments. . . . This lengthy cure period is necessitated by the Debtor’s precarious financial condition . . . . The Debtor’s budget . . . was noticeably tight. . . . [S]he projected unusually low expenses for a family of four. Her budget had no cushion. . . . Debtor’s only vehicle is a Jeep Cherokee with 98,000 miles . . . . [Three hundred dollars] per year for clothing for herself and three growing children . . . . The Debtor’s financial resources are simply too limited and unpredictable to make the proposed modification feasible or to justify cure of the existing arrearage over the next 52 months.”); In re Mathews, 208 B.R. 506, 512 (Bankr. N.D. Ala. 1997) (Applying Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), debtor with stable job and unblemished 19-year payment history to mortgage holder can modify plan after confirmation to make up two direct payments missed when the debtor’s wife changed jobs. If Hoggle requires “changed circumstances” to justify a postconfirmation modification to cure defaults, “this debtor meets that test without question. . . . [H]is wife did not work. . . . [E]xpenses increased because of his wife’s automobile debt payments and repair costs. . . . If this debtor’s post-petition mortgage default is not one that qualifies for inclusion in a confirmed Chapter 13 plan pursuant to In re Hoggle, there are none that do. . . . This debtor’s case does not exhibit any of the indicia of a failing Chapter 13 case. . . . The debtor is able to effect, ‘a cure . . . within a reasonable time . . .’ . . . . The mortgagee’s financial interest in the debtor’s property is adequately protected. There is approximately $8,000.00 of equity in the house. The debtor has a responsible job with a stable salary. The debtor’s financial circumstances changed during the last months of 1996 but are now secure.”); In re Bellinger, 179 B.R. 220, 223–26 (Bankr. D. Idaho 1995) (Citing Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), and the (inapplicable) 1994 amendments to § 1322(c), debtor can modify plan after confirmation to cure postpetition and postconfirmation defaults in payments directly to a mortgage holder. “[S]ection 1322(b)(5) can be used to cure both pre-petition and post-petition arrearages. . . . [T]he new section [§ 1322(c)(1)] is illustrative of Congress’s intention to provide homeowners with continuing rights to cure defaults. . . . [A] chapter 13 plan may be modified to include post-confirmation arrearage if the time for the curing is not unreasonable and the modification is otherwise made in good faith.” Mortgage company’s contention that the debtor cannot amend a plan to include mortgage payments because original confirmed plan called for payment of mortgage directly by the debtor is rejected: “[A]lthough payments are to be made outside the plan, the post-petition mortgage payments are provided for by the plan, i.e., the plan provides they will be made outside the plan.”); Central Bank v. Thomas (In re Thomas), 121 B.R. 94 (Bankr. N.D. Ala. 1990) (Distinguishing Southeast Bank v. Hollis (In re Hollis), 105 B.R. 1003 (N.D. Ala. 1989), and decided before Bowest Corp. v. Stafford (In re Stafford), 123 B.R. 415 (N.D. Ala. 1991), was reported, case stated, “[W]hen circumstances are appropriate, bankruptcy courts may use their 11 U.S.C. § 105(a) powers to allow debtors to modify Chapter 13 plans via 11 U.S.C. § 1329(a)(1) and (2) to cure postpetition mortgage defaults under 11 U.S.C. § 1322(b)(5).”); In re Gadlen, 110 B.R. 341 (Bankr. W.D. Tenn. 1990) (Confirmed plan calling for payment of home mortgage directly by debtor did provide for mortgage company’s claim; therefore, plan could be modified after confirmation to cure postpetition and postconfirmation defaults in payments and to provide for payment of the ongoing mortgage through the Chapter 13 trustee.); In re Davis, 110 B.R. 834 (Bankr. W.D. Tenn. 1989). See In re Baldwin, 97 B.R. 965 (Bankr. N.D. Ind. 1989) (Debtor is permitted to modify after confirmation to change the disbursing agent for home mortgage from the trustee to a direct wage deduction from debtor’s employer to the mortgage holder.).

 

5  508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993).

 

6  508 U.S. at 474.

 

7  12 F.3d 1008 (11th Cir. 1994).

 

8  12 F.3d at 1010–11. Accord Mendoza v. Temple-Inland Mortgage Corp. (In re Mendoza), 111 F.3d 1264, 1268 (5th Cir. 1997) (Chapter 13 debtor can modify a confirmed plan to provide for postpetition arrearages due a home mortgage holder. “[W]e find the analysis of the Eleventh Circuit’s decision in Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994) to be better reasoned and persuasive in holding that a Chapter 13 Plan may be modified to cure postpetition defaults through a plan of reorganization. . . .  [P]ursuant to § 1322(b)(5), bankruptcy courts are empowered to modify a debtor’s plan to include postpetition arrearages arising from a secured loan, such as a mortgage.”); In re Binder, 224 B.R. 483 (Bankr. D. Colo. 1998) (Citing Mendoza v. Temple-Inland Mortgage Corp. (In re Mendoza), 111 F.3d 1264 (5th Cir. 1997), and Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), debtor can modify a plan after confirmation to cure postpetition mortgage defaults; however, modified plan must satisfy §§ 1322 and 1325 and debtor is without financial ability to cure the postpetition default within a reasonable time and the modified plan is not feasible.); In re Mathews, 208 B.R. 506 (Bankr. N.D. Ala. 1997) (Applying Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), debtor with stable job and unblemished 19-year payment history to mortgage holder can modify plan after confirmation to make up two direct payments missed when the debtor’s wife changed jobs.); In re Bellinger, 179 B.R. 220, 223–26 (Bankr. D. Idaho 1995) (Citing Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), and the (inapplicable) 1994 amendments to § 1322(c), debtor can modify plan after confirmation to cure postpetition and postconfirmation defaults in payments directly to a mortgage holder. “[S]ection 1322(b)(5) can be used to cure both pre-petition and post-petition arrearages. . . . [T]he new section [§ 1322(c)(1)] is illustrative of Congress’s intention to provide homeowners with continuing rights to cure defaults. . . . [A] chapter 13 plan may be modified to include post-confirmation arrearage if the time for the curing is not unreasonable and the modification is otherwise made in good faith.” Mortgage company’s contention that the debtor cannot amend a plan to include mortgage payments because original confirmed plan called for payment of mortgage directly by the debtor is rejected: “[A]lthough payments are to be made outside the plan, the post-petition mortgage payments are provided for by the plan, i.e., the plan provides they will be made outside the plan.”). See also In re Steele, 182 B.R. 284 (Bankr. W.D. Okla. 1995) (In the context of a postconfirmation motion for relief from the stay, Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), correctly concludes that debtor can modify a plan after confirmation to cure arrearages or defaults that accumulate after the petition with respect to a mortgage provided for under § 1322(b)(5). Mortgage holder is bound by the confirmed plan and cannot contest by motion for relief from the stay that the plan will generate mortgage defaults because of administrative expenses during the early months after confirmation. That the debtor could modify a plan after confirmation consistent with Hoggle to provide for postpetition arrearages or defaults supports the view that the original plan can contemplate and satisfy some postpetition arrearages.).

 

9  In re Cooper, 98 B.R. 294 (Bankr. W.D. Mich. 1989).

 

10  See discussion of 11 U.S.C. § 1322(b)(2) in § 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.

 

11  224 B.R. 483, 488 (Bankr. D. Colo. 1998).

 

12  See § 126.5  Changed-Circumstances Requirement? and § 126.6  Modification after Confirmation after BAPCPA.

 

13  See Metmor Fin., Inc. v. Bailey (In re Bailey), 111 B.R. 151 (W.D. Tenn. 1988); In re Mathews, 208 B.R. 506, 512 (Bankr. N.D. Ala. 1997) (If Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994), requires “changed circumstances” to justify a postconfirmation modification to cure defaults, “this debtor meets that test without question. . . . [H]is wife did not work. . . . [E]xpenses increased because of his wife’s automobile debt payments and repair costs. . . . If this debtor’s post-petition mortgage default is not one that qualifies for inclusion in a confirmed Chapter 13 plan pursuant to In re Hoggle, there are none that do. . . . This debtor’s case does not exhibit any of the indicia of a failing Chapter 13 case. . . . The debtor is able to effect, ‘a cure . . . within a reasonable time . . .’ . . . . The mortgagee’s financial interest in the debtor’s property is adequately protected. There is approximately $8,000.00 of equity in the house. The debtor has a responsible job with a stable salary. The debtor’s financial circumstances changed during the last months of 1996 but are now secure.”); In re Bereolos, 126 B.R. 313 (Bankr. N.D. Ind. 1990) (Debtor can use § 1329 to modify confirmed Chapter 13 plan to cure postpetition and postconfirmation arrearages to the holder of a home mortgage. “In appropriate circumstances a postconfirmation modification of a plan may be appropriate wherein a postconfirmation mortgage arrearage is proposed to be cured, where the 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. That is, 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.”); In re McCollum, 76 B.R. 797 (Bankr. D. Or. 1987); In re Mannings, 47 B.R. 318 (Bankr. N.D. Ill. 1985).

 

14  292 B.R. 693 (B.A.P. 10th Cir. 2003).

 

15  See § 256.1 [ Duration of Modified Plan ] § 126.4  Duration of Modified Plan for discussion of the duration of a modified plan.

 

16  296 B.R. 624 (Bankr. E.D.N.Y. 2003).

 

17  296 B.R. at 634.

 

18  223 B.R. 710 (Bankr. W.D. Mo. 1998).

 

19  223 B.R. at 713.

 

20  11 U.S.C. § 1329(a)(1). See § 265.1 [ To Decrease Payments to Creditors ] § 127.8  To Decrease Payments to Creditors.

 

21  76 B.R. 793 (Bankr. D. Or. 1987). See also §§ 265.1 [ To Decrease Payments to Creditors ] § 127.8  To Decrease Payments to Creditors and 268.1 [ To Extend or Reduce the Time for Payments ] § 127.11  To Extend or Reduce the Time for Payments.

 

22  Application of § 1325(b) to postconfirmation modification under § 1329 is not without problems. See § 126.3  Does Disposable Income Test Apply? and § 126.6  Modification after Confirmation after BAPCPA.

 

23  See discussion of full payment discharge beginning at § 157.1  Broadest Discharge Available§ 158.1  Alimony, Maintenance or Support and § 159.1  Taxes.

 

24  See 11 U.S.C. § 1328(b), discussed in §§ 352.1 [ In General ] § 160.1  In General354.1 [ Exceptions to Hardship Discharge ] § 160.6  Exceptions to Hardship Discharge before BAPCPA.

 

25  See In re Debing, 202 B.R. 291, 292–93 (Bankr. D. Minn. 1996) (Debtors failed to prove extraordinary circumstances to justify modification in the 60th month to reduce dividend to unsecured claim holders to the amount actually paid. Chapter 13 trustee moved for dismissal five times in five years. Confirmed plan required full payment of all allowed claims. At the end of 60 months, the debtor had managed to pay approximately 80% of allowed unsecured claims. “Under the proposal, the amount the Debtors have actually paid to the Trustee to date, which has been distributed to creditors already, would be all that those creditors are to receive from the estate. The Debtors would be deemed current in payment, and entitled to receive a discharge immediately. The effect of the modification would be to retroactively conform the plan’s binding provisions to the Debtors’ actual, but incomplete, performance under the original plan. . . . Where a motion for modification is brought at the very end of a plan and has the sole goal of forgiving a debtor’s repeated or protracted default so as to pave the way for an immediate grant of discharge, this inquiry is particularly pointed; the debtor would have to make an extremely strong showing of an adverse change in circumstances, and should probably be relegated to the more limited remedy of ‘hardship discharge’ under 11 U.S.C. § 1328(b).” Only explanation offered by debtors was automobile repair that would not explain repeated defaults.); In re Richardson, 192 B.R. 224, 226, 228 (Bankr. S.D. Cal. 1996) (Denies debtor’s motion to reduce payments to unsecured claim holders from 100% to 46%. Debtor added creditors after confirmation and defaulted on payments several years before motion to modify. “[I]nability to complete performance of a confirmed plan within the sixty months allowed by 11 U.S.C. § 1322(d) is not, by itself, a sufficient ground to support modification of a confirmed plan.”); In re Guernsey, 189 B.R. 477, 482–83 (Bankr. D. Minn. 1995) (Denies modification two months before completion of payments to reduce dividend from 14% to 7%. Plan payments fell short of 14% required because the trustee “allocated the payments to a secured debt in excess of the amount stated.” “11 U.S.C. § 1329 should not be allowed to be used by debtors to ‘melt down’ confirmed plans . . . . Here, the Debtors have not shown that they experienced any change in their circumstances. Nor have the Debtors shown that the increased payment to the secured creditor was the Trustee’s error, rather than the result of their own miscalculation. Accordingly, they have not shown an unforeseeable change in allowed claims. . . . A debtor should not be allowed to modify a plan under 11 U.S.C. § 1329 to the amount already paid, in circumstances where the ‘hardship discharge’ afforded by 11 U.S.C. § 1328(b) is otherwise applicable; and, where the use of 11 U.S.C. § 1329 would result in a greater discharge than would be available under 11 U.S.C. § 1328(b). That is the situation here. Debtor Patrick Guernsy has student loan debt that would not be discharged under 11 U.S.C. § 1328(b), but would be discharged under a regular discharge afforded by 11 U.S.C. § 1328(a).”).

 

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

 

27  See § 126.5  Changed-Circumstances Requirement? and § 126.6  Modification after Confirmation after BAPCPA.

 

28  See § 126.2  Application of Tests for Confirmation and § 126.6  Modification after Confirmation after BAPCPA.