§ 157.3 — Completion of Payments after BAPCPA
Revised: December 20, 2009
This section is currently under revision — please see the update cases.
Kessler v. Wilson (In re Kessler), No. 15-11252, 2016 WL 3667575, at *2 (5th Cir. July 8, 2016) (unpublished) (Clement, Owen, Higginson) (Failure to make all direct mortgage payments means that payments “under the plan” are not completed and debtor is not entitled to a discharge. Confirmed plan provided for monthly payments to the trustee to cure prepetition mortgage arrearage and direct payments of the ongoing mortgage installments. Debtor made all required payments due to the trustee but did not make the direct mortgage payments. Citing Foster v. Heitkamp (In re Foster), 670 F.2d 478 (5th Cir. Mar. 1, 1982) (Garza, Randall), “[b]ecause the Kesslers failed to complete post-petition mortgage payments that fall under the plan, they do not qualify for discharge under the plain terms of § 1328(a), which instructs a court to grant discharge only after completion of all payments under the plan.”), aff'g, No. 09-60247-RLJ-13, 2015 WL 4726794, at *2-*3 (Bankr. N.D. Tex. June 9, 2015) (Jones) (Debtors not entitled to discharge when confirmed plan cured arrearages with payments by trustee and maintained payments directly by the debtors, but debtors failed to make direct payments; payments "under the plan" are not complete when debtors fail to make direct payments to mortgagee under § 1322(b)(5). Citing Foster v. Heitkamp (In re Foster), 670 F.2d 478 (5th Cir. Mar. 1, 1982) (Garza, Randall), "post-petition payments of a mortgage debt, as a long-term debt, whether paid direct or through the trustee, are treated as paid under the plan when the plan also provides for the curing of pre-petition arrears on the debt. . . . The Kesslers' reference to payments 'outside the plan'—meaning, for them, payments on debt that is provided for in the plan but is paid directly to the secured creditor (and thus not through the trustee)—conjures up the use of such phrase in an earlier context that no longer applies. . . . Though the payments were to go directly from the Kesslers to BoA, the debt was still provided for by the terms of the Plan. . . . [A] debtor has the option to make his mortgage payments under the plan or outside the plan. But a debtor loses the option to make payments that are truly outside the plan if the plan provides for the curing of a default under the mortgage. . . . [W]hen a plan provides for the curing of arrears on a mortgage and the debtor makes direct payments on the mortgage during the plan, such payments are under the plan.").
Davis v. Holman (In re Holman), 594 B.R. 769, 771–78 (D. Kan. Oct. 31, 2018) (Melgren)
(Bankruptcy court correctly determined that “shall” in § 1328(a) required entry of discharge at completion of payments under plan notwithstanding trustee’s pending motion to dismiss and adequate grounds to dismiss under § 1307(c). “[T]he bankruptcy court found that the evidence demonstrated that Debtors had flouted their duties throughout the case. . . . [T]here was ample cause to dismiss the case under § 1307(c) because of unreasonable delay by Debtors, material default by Debtors, and lack of good faith. . . . Shala misrepresented her employment status for several years . . . . Debtors incurred post-petition debts without the Trustee’s or court’s approval, and the bankruptcy court stated that some of those debts appeared to have been actively concealed. Debtors owed the Internal Revenue Service approximately $75,000 . . . . Debtors also purchased two cars and titled those cars in Shala’s parents’ names . . . . Evidence included repeated inaccurate statements concerning their debts, income and expenses . . . . Debtors also failed to disclose ten bank accounts. . . . Debtors’ actions demonstrated disregard for the bankruptcy process and the court’s orders, and that they abused the provisions, purpose, and spirit of Chapter 13. . . . Debtor’s completion of plan payments was a barrier to dismissal. The court noted that dismissal was discretionary under § 1307(c) because of the word ‘may,’ but that discharge was mandatory under § 1328(a) because of the word ‘shall.’ Because Debtors had completed their payment plan while the Trustee’s motion to dismiss was pending, the court found that Debtors were entitled to a mandatory discharge pursuant to § 1328(a). . . . Because the bankruptcy court found that Debtors completed all payments under the plan, § 1328(a) entitles Debtors to a discharge. . . . Here, it is an unsatisfying result as it appears that Debtors gamed the system to their advantage. . . . Nevertheless, the bankruptcy court found that § 1328(c) mandated discharge because Debtors had completed all payments under the plan. This Court joins in the bankruptcy court’s determination.”), aff'g 567 B.R. 599, 608–14 (Bankr. D. Kan. May 9, 2017) (Nugent) (Notwithstanding ample cause for dismissal
Shovlin v. Klaas, 555 B.R. 500, 511 (W.D. Pa. July 29, 2016) (Schwab) (That debtors completed 60 monthly payments and then quickly made up small shortfall in funding did not bar discharge under § 1328(a). “Section 1328(a) says nothing of when payment finally funding the plan is made, whether made within the anticipated 60 months or after the planned 60 months where, as here, there is an unanticipated shortfall and the shortfall is rather quickly made up with additional remittance by the Debtors. . . . There is no doubt that Debtors completed all payments under the Plan—the 60 required monthly payments being made within the five year time period and the additional amount to fully fund it being made shortly thereafter on notice of the unanticipated shortage. . . . Shovlin conflates the requirements of Section 1322 regarding contents of a plan and Section 1325 regarding plan confirmation with the language of Section 1328(a) which mandates the Court grant a discharge on completion by a debtor of all payments under the plan.”), aff'g 548 B.R. 414, 420-25 (Bankr. W.D. Pa. Mar. 1, 2016 (Taddonio) (Applying law of the case, in adversary proceeding objecting to discharge, debtors cured defaults under confirmed plan within a reasonable time and obtained financial management course in a timely fashion and are entitled to discharge. Debtors made plan payments totaling $174,104 during first 60 months of case. The balance of $2,665 necessary to complete payments under the plan was tendered immediately after it appeared that there was a shortfall caused by changes in the percentage trustee compensation during the years since confirmation. A disgruntled creditor pressed an effort to bar the debtors' discharge. "Congress provided no provision in section 1328 for a general denial of a chapter 13 debtor's discharge . . . . [T]he denial of a discharge is an extreme penalty that should not be taken lightly. . . . [T]he default was cured within a reasonable period and did not adversely affect any creditor. As to delinquency in filing the educational course certificates, . . . the certificate was filed in timely fashion consistent with section 1328 . . . . The plain meaning of sections 1322 and 1325 is that the 60-month duration relates to the requirements for plan confirmation, not to any prohibition against the receipt of payments made after the plan term expires. . . . [M]ore than half of the . . . shortfall was attributable to an unforeseeable increase in the [trustee's] administrative fee. . . . [U]nder the law of the case and Bankruptcy Rule 1007(c), the Debtors completed their personal financial management course and submitted their completion certificates in a timely manner."), aff'd, 858 F.3d 820 (3d Cir. June 1, 2017) (Fisher, Vanaskie, Krause).).
In re Rivera, 599 B.R. 335, 339–47 (Bankr. D. Ariz. Mar. 29, 2019) (Wanslee) (Because direct payment of mortgage installments was not payment “under the plan” for purposes of § 1328(a), plan is complete and debtors are entitled to discharge notwithstanding default in direct payments to mortgagee; trustee’s motion to dismiss under § 1307(c)(6) is denied. Confirmed plan paid $15,571.89 of mortgage arrearages through the trustee and provided that debtor would pay postpetition installments directly to mortgage holder. Trustee filed notice of final cure payment to which the mortgage creditor responded that the prepetition default was cured but postpetition payments were delinquent. “The majority position is that ‘payments under the plan’ refers to any payment made pursuant to a Chapter 13 plan, regardless of whether a debtor makes such payment directly to the creditor or through the trustee. . . . The minority position is found in In re Gibson, 582 B.R. 15 [(Bankr. C.D. Ill. Mar. 5, 2018) (Perkins)] . . . this Court agrees with Gibson. . . ’provided for by the plan’ and ‘payments under the plan’ should mean two different things. . . . ’The most logical line of demarcation is between payments made by the trustee from funds received from the debtor versus payments made by the debtor direct to a creditor.’ . . . [T]he payments ‘under such plan’ are the debtor’s payments to the trustee. . . . The Court finds that that part of the creditor response concerning ‘cur[ing] the default’ refers to payments made ‘under the plan’ and the second part concerning being ‘otherwise current’ applies to payments made outside the plan and direct by the debtors. . . . There is no Bankruptcy Code provision or Rule that requires a debtor to report a default on direct payments. . . . It would be incongruous to dismiss a case without discharge after the Plan’s otherwise successful completion when Rule 3002.1 was designed to be a rule of creditor disclosure, not a procedure for denial of discharge. . . . If Congress believed it important for a debtor to certify that all post-petition mortgage payments be current, it would have so stated. Nothing in the Code or Rules, however, suggests that Section 1328(a) should be construed in a way that would automatically transform an outside-the-plan payment default into grounds for dismissal under Section 1307(c)(6) without discharge, especially when all payments to the trustee have been completed. . . . A secured creditor, once the plan has been confirmed, can still file a motion for relief from the automatic stay . . . . denying Debtors’ discharge would be non-sensical here given that Arizona is an anti-deficiency state, meaning that the creditor of Debtors’ primary residence only ever had in rem, not in personam, rights and remedies. . . . Trustee Brown is authorized to file Notices of Completed Plan allowing Chapter 13 discharges to be entered when all payments to his office have been paid even though post-petition mortgage payments may be delinquent.”).
In re Hernandez, No. 13-35389-hdh13, 2019 WL 642841, at *3–*4 (Bankr. N.D. Tex. Feb. 14, 2019) (Hale) (In joint case when husband becomes liable for a DSO after the petition and is not current on postpetition payments but wife is not liable on DSO and plan payments to trustee are current, wife is entitled to discharge at completion of plan payments though husband is not. Even if payment of DSO is a payment “under the plan” “debtor” in § 1328 should be applied to each spouse separately so that payment default by husband with respect to postpetiton DSO is not a default by wife in payments under her plan. “[S]ection 1328(a)’s reference to ‘such debtor’ should refer only to the individual debtor who is required by a judicial or administrative order, or by statute to pay a DSO. . . . Mrs. Hernandez is not ‘such debtor,’ as she is not liable on a pre-petition DSO as provided by the Debtors confirmed Plan, nor is she liable on a post-petition DSO. . . . [J]oint administration of a Chapter 13 case does not suddenly create new liability on a debt for one spouse that did not exist as to that spouse pre-petition.” ).
In re Wyatt, No. 13-06272-JW, 2018 WL 6984448, at *2–*4 (Bankr. D.S.C. Nov. 6, 2018) (Waites) (After notice of final cure, response from mortgagee under Rule 3002.1 and motion for discharge filed by debtor, further hearing is necessary to determine whether note and deed of trust required debtor to pay force-placed insurance or delinquent taxes. Plan that required debtor to pay ongoing mortgage payments directly to the creditor “provided for” mortgage for purposes of discharge and debtor’s entitlement to discharge will turn on whether failure to pay force-placed insurance or taxes is default. “Debtor does not dispute that he has not paid the post-petition fees and expenses to U.S. Bank. Debtor’s counsel argues that the payments of post-petition fees and expenses on a mortgage claim treated under 11 U.S.C. § 1322(b)(5) are not ‘payments under the plan’ as defined in 11 U.S.C. § 1328(a), and therefore, Debtor should be entitled to a discharge regardless of whether he has paid those post-petition fees and expenses. . . . In In re Dowey, 580 B.R. 168 (Bankr. D.S.C. [Feb. 9, 2017) (Waites)], this Court . . . held that a debtor’s ongoing maintenance payments provided for under § 1322(b)(5) that are paid directly by the debtor to the creditor are ‘payments under the plan’ for purposes of a discharge under § 1328(a). . . . Debtor intended, through the Chapter 13 Plan, to maintain all post-petition payments under the Note and Mortgage, including both monthly ongoing payments and fees and expenses that become due post-petition. . . . [I]t does not appear that either the Note or Mortgage provides that Debtor must maintain insurance on the Principal Residence or that U.S. Bank has the authority to recover the fees for force placed insurance from Debtor.”).
In re Gibson, 582 B.R. 15, 18–24 (Bankr. C.D. Ill. Mar. 5, 2018) (Perkins) (Rejecting In re Heinzle, 511 B.R. 69 (Bankr. W.D. Tex. May 30, 2014) (Gargotta), default in direct payment of second mortgage is not ground for dismissal without discharge when debtor has completed all payments to the trustee. Direct payments by the debtor are not payments “under the plan” but they are payments “provided for by the plan.” Debtor completed payments under the plan and is entitled to full-payment discharge notwithstanding default in direct payments to second mortgage holder. “While the statutory term ‘all payments under the plan’ has been in place in section 1328(a) since the Bankruptcy Code became effective in 1978, [sic] it had not previously been construed as a basis for dismissal without discharge where direct payments were in arrears. . . . Some courts following Heinzle regard the interpretation of the phrase ‘payments under the plan’ to be plain and unambiguous, as encompassing all payments referred to in the confirmed plan. . . . This Court disagrees. Chapter 13 debtors are permitted to bypass the trustee and pay certain creditors direct. . . . [W]hether direct payments are payments “under the plan” for purposes of section 1328(a) is not discernible from the statutory text. Either interpretation is plausible, meaning the statute is ambiguous. A general policy is recognized favoring resolution of ambiguities in the Bankruptcy Code in favor of debtors and even more so where the provision at issue affects a debtor’s right to a discharge. . . . It is apparent that what triggered this recently identified theory of dismissal without discharge was the adoption of Rule 3002.1, added by the 2011 amendments to the Federal Rules of Bankruptcy Procedure. . . . It is safe to say that from 1978 until very recently, countless Chapter 13 debtors received a discharge despite an uncured default in payments to a creditor made direct by the debtor, either because the trustee was unaware of the default or because a default on direct plan payments was not viewed as a basis to seek dismissal without discharge. . . . Rule 3002.1 was not intended to serve as the impetus for dismissal without discharge. . . . [T]he recent trend favoring dismissal without discharge as a punitive remedy for a debtor’s failure to pay all direct payments is occurring not as a consequence of a statutory amendment reflecting a change in legislative policy, but merely by the happenstance of the introduction of Rule 3002.1, a Rule adopted for an entirely different and debtor-friendly purpose. . . . In section 1328(a), ‘all payments under the plan’ is used to define when completion of payments occurs . . . while the similar but different alternative phrase ‘provided for by the plan’ is used to describe the scope of the discharge. . . . In this Court’s view, the alternative phrase ‘under the plan’ was intended to have a narrower effect, allowing for the possibility that not all creditors holding debts provided for by the plan are receiving payments under the plan. There may be some payments made to creditors who are provided for by the plan that are not payments under the plan. The most logical line of demarcation is between payments made by the trustee from funds received from the debtor versus payments made by the debtor direct to a creditor. It follows that the resolution of the difference in phraseology is to construe the requirement under section 1328(a) of ‘completion by the debtor of all payments under the plan,’ to mean the payments that the debtor is required to make to the trustee. . . . Nothing in the Bankruptcy Code imposes an affirmative duty on the trustee to confirm that all direct payments are being made to creditors during the term of the plan. . . . Secured creditors who receive direct payments from the debtor are expected to protect themselves. . . . Here, there was no fraud or other misconduct, the absence of which makes it difficult to see why dismissal without discharge is the appropriate remedy for an innocent mistake that caused no harm to unsecured creditors. . . . The punishment does not fit the crime. . . . This Court holds that a Chapter 13 debtor’s direct payments on a nonmodifiable, nondischargeable residential mortgage loan, provided for under section 1322(b)(5), are not ‘payments under the plan’ for purposes of section 1328(a). A debtor’s failure to complete all such direct payments is not grounds to dismiss the case without a discharge. . . . The payments that the Debtors were required to make to the Trustee, i.e., ‘all payments under the plan,’ have been completed. . . . [T]he Debtors are entitled to a full compliance discharge under section 1328(a).”).
In re Humes, 579 B.R. 557, 559–67 (Bankr. D. Colo. Jan. 23, 2018) (Brown) (Rejecting In re Klaas, 858 F.3d 820 (3d Cir. June 1, 2017) (Fisher, Vanaskie, Krause), bankruptcy court refuses stipulation between debtor and trustee that would have allowed debtor to complete payments under confirmed plan seven months after 60-month initial period expired. Court defines 60-month duration to begin from first payment due under the plan or 30 days from the petition, whichever is earlier. “Pursuant to § 1326, a debtor must commence making payments under the plan ‘not later than 30 days after the date of the filing of the plan or the order for relief, whichever is earlier.’ . . . The start of plan payments does not coincide with the plan confirmation process. . . . Some courts hold that the beginning of the plan’s term is the first date a plan payment comes due after confirmation. . . . Other courts hold that the five-year period runs from the date specified in the plan for the first plan payment. . . . Debtors should not have to make more than sixty payments because the confirmation process does not dovetail with the payment requirements. . . . Section 1326(a)(1) specifies that this date must be no later than thirty days after the order for relief or filing of a plan, whichever is earlier. It is not tied to the confirmation date in any[ ]way. . . . The date specified by the plan is controlling as long as that date meets the requirements of § 1326(a)(1)(A). . . . [D]ebtors must continue to make ongoing payments due on their secured debts on a postpetition basis . . . . [I]f the Postpetition Payments on the debtor’s secured debts are due on a different day of the month, then there may be an additional secured debt payment that falls due before the end of the five-year period. . . . [T]he Debtors confirmed a plan that specified an initial payment date of January 28, 2012. This date is thirty-one days after the petition date, rather than the thirty days specified by § 1326(a)(1). This means that, despite what is listed in the plan, the Debtors actually had to start their plan payments no later than January 27, 2012 and, therefore, their five-year plan ended on January 26, 2017. All required plan payments, toward both their prepetition and postpetition debts, had to be completed no later than January 26, 2017. The Stipulation that the Trustee and the Debtors have asked this Court to approve allowed the Debtors to make four monthly payments of $500, beginning ‘April 2017’ and a final payment of $15,000 ‘in August 2017.’ . . . [T]he Stipulation allowed the Debtors to make their final plan payments more than seven months after the end of the five-year period. . . . [D]oes the bankruptcy court have discretion to grant the debtor a reasonable grace period to cure an arrearage in plan payments beyond the five years? . . . In a recent case, In re Klaas, . . . the Third Circuit concluded that a bankruptcy court has the necessary discretion. . . . Other courts have refused to allow a debtor to make payments past the end of the five-year plan term, deeming the end of the term to be a ‘drop dead date.’ . . . [T]he Court does not find the overall reasoning of the Klaas decision persuasive. . . . § 1329 reinforces the five-year limitation by forbidding a debtor from doing through modification what it could not do at plan confirmation. The Third Circuit in Klaas attempts to sidestep this language by characterizing a cure payment as a debtor just catching up on existing plan payments rather than modifying the plan’s term. . . . [T]his Court respectfully disagrees. The plain terms of § 1329 state that one of ways a plan may be modified is to ‘extend or reduce the time for . . . payments . . . .’ . . . Thus, extending the time for making payments is explicitly defined by the Code to be a plan modification controlled by § 1329. . . . There is nothing in Rule 3002.1 that authorizes a debtor to make a cure payment after the plan term has ended. . . . [T]his Court holds that it does not have the discretion to allow a debtor to make plan payments beyond five years. . . . [E]ven if this Court were to follow the Klaas decision, it would not reach a different result in this case. . . . Debtors have already made the proposed cure payments. However, the length of time they needed to make the payments was not a brief period of time, such as the sixteen days in Klaas. Here it took the Debtors an additional seven months. On the other hand, no creditor has objected to the Stipulation and the $17,000 payment would obviously benefit unsecured creditors. . . . [T]he Debtors have not substantially complied with their Modified Plan because they failed for three years to modify it, as promised, to account for a significant increase in income. . . . Debtors have another remedy available to them in the form of conversion to chapter 7, which will permit them to achieve a discharge.”).
In re Chancellor, No. 11-45924-13, 2017 WL 6371364, at *2–*3 (Bankr. W.D. Mo. Dec. 12, 2017) (Dow) (Rule 60 relief is granted to vacate discharge order when neither trustee nor court was aware that debtor was in default of direct payments to mortgagee. Mortgagee failed to respond to trustee’s notice of final cure under Bankruptcy Rule 3002.1, but debtor contributed to mistaken entry of discharge order by filing motion for entry of discharge without revealing substantial default in direct payments to mortgagee. “[W]hen a debtor’s plan provides for ongoing payments directly to the creditor, and the debtor defaulted in such payments, the debtor is not entitled to a discharge under § 1328(a). . . . Creditor did not file a response to Debtor’s motion for entry of discharge nor to Trustee’s notice of final cure. While the Court agrees that Creditor was derelict in its duties to respond to either motion or notice, that does not change the fact that Debtor was not eligible for a discharge under § 1328(a) and that the Court granted such discharge on a mistake of fact that Debtor had in fact made all payments due under the plan. Debtor knew that she had not made all of the required post-petition payments but still filed a motion for entry of discharge and asserted that she was eligible for a discharge under all applicable Bankruptcy laws and rules when this was not true . . . . [F]undamental fairness requires that relief should be granted from the discharge order under Rule 60(b)(1).”).
In re Bethe, No. 11-25388-GMH, 2017 WL 3994813, at *2
In re Hanley, 575 B.R. 207, 219 (Bankr. E.D.N.Y. Aug. 11, 2017) (Grossman) (Plan payments were not complete and debtors not entitled to discharge when debtors defaulted in direct payment of home mortgage, debtors attempted but failed to complete loan modification before 60th month and plan cannot be modified to cure postconfirmation defaults over objection of mortgagee because of 60-month limit in § 1329(c). “[T]he Debtors failed to make post-petition mortgage payments directly to the Bank and therefore, they were in default of their Plan. Because the Debtors failed to (a) modify their plan before the 60th month to catch up on these missed payments, or (b) obtain approval of a consensual loan modification prior to the expiration of the 60th month, the Court cannot grant the Debtors a discharge pursuant to § 1328.”).
In re Thornton, 572 B.R. 738, 740-42 (Bankr. W.D. Mo. June 28, 2017) (Federman) (Direct payment of mortgage by debtor is payment under the plan and default in direct payments precludes discharge. Mortgagee’s objection to 3002.1 notice of final cure is sustained and debtor’s motion for entry of discharge is denied when debtor was substantially in default of direct payments of mortgage notwithstanding completion of payments to other creditors consistent with confirmed plan. Debtor was current on mortgage payments at the petition. Local rules in the district allowed the debtor to make payments directly to the holder of a mortgage. Trustee filed notice of completion under Bankruptcy Rule 3002.1 and Select Portfolio filed a response indicating a postpetition arrearage of $35,742.74. “[C]ourts are uniform in concluding that, when a plan contains a cure and maintain provision, the mortgage is ‘provided for by the plan’ and the postpetition mortgage payments are made ‘under the plan,’ even if the debtor makes the postpetition payments directly to the mortgageholder. . . . [S]ince the Debtor’s plan provides for payment of the ongoing mortgage directly to the mortgagee, and the Debtor defaulted in such payments, the Debtor is not entitled to a discharge under § 1328(a).”).
In re Coughlin, 568 B.R. 461, 468
In re Gonzales, 570 B.R. 788, 795-97 (Bankr. S.D. Tex. May 17, 2017) (Rodriguez) (Citing Kessler v. Wilson (In re Kessler), 655 F. App’x 242 (5th Cir. July 8, 2016) (unpublished) (Clement, Owen, Higginson), and Foster v. Heitkamp (In re Foster), 670 F.2d 478 (5th Cir. Mar. 1, 1982) (Garza, Randall), payment of mortgage directly by debtor was payment “under the plan” that must be current before debtor is entitled to discharge after completion of payments to the trustee. Debtors completed payments directly to mortgagee after trustee filed notice of completion of payments required to be made to the trustee. “Kessler expressly stands for the proposition that post-petition mortgage payments paid directly to a mortgagee must be completed, in addition to the payments to a trustee, in order for debtors to be eligible for a chapter 13 discharge. . . . There is no statutory requirement for Trustee to file a notice of plan completion in order for debtors to be eligible for a discharge under § 1328(a). . . . Debtors’ Plan called for direct payments to CitiFinancial in addition to payments to the Trustee and therefore, Debtors’ Plan was not complete when Trustee filed her Notice. . . . [T]he tendering of the check to CitiFinancial . . . ended the Debtors’ Plan. . . . Debtors completed all payments under the Plan and are entitled to a discharge pursuant to § 1328(a).”).
In re Freyta, No. 10-39595, 2016 WL 5390115 (Bankr. D. Colo. May 5, 2016) (Tallman) (Payments are not complete, debtor is not eligible for discharge and the trustee has not completed administration of the case when, in response to trustee’s Bankruptcy Rule 3002.1(f) Notice of Final Cure Payment, mortgagee states that its arrearage has not been fully paid and debtor failed to maintain postpetition payments under § 1322(b)(5).).
In re Abila, No. 10-18358, 2016 WL 5389266 (Bankr. D. Colo. Apr. 20, 2016) (Tallman) (Debtor not entitled to discharge because Response to Trustee’s 3002.1 Notice of Final Cure indicates that debtor failed to make all monthly mortgage payments directly to lienholder.).
In re Hoyt-Kieckhaben, 546 B.R. 868, 869-74 (Bankr. D. Colo. Feb. 23, 2016) (Brown) (Because direct payment of mortgage is payment "under the plan," default in direct payments means payments under the plan are not complete and debtor is not entitled to discharge notwithstanding that debtor made all payments to the trustee that were required by the confirmed plan. "In the past year, . . . this Court and others within this district have seen a new and disturbing trend emerge in chapter 13 cases. At the conclusion of the three- or five-year plan, the lender objects on the basis that it has not received the Direct Payments from the debtor, often over a substantial portion of the plan's term. . . . [L]enders could seek relief from the automatic stay or file a motion to dismiss. Instead they do nothing until they respond to the Rule 3002.1 notice near the conclusion of the plan. . . . [R]egardless of who disburses the payment, it is remains [sic] a payment 'under the plan' whenever the plan contains a provision effecting the treatment of that secured creditor's claim. . . . [W]hen the court 'orders otherwise' to allow the debtor to act as the disbursing agent of the Direct Payments, the plan is nevertheless providing for this secured claim. All payments, regardless of who disburses them, are payments 'under the plan.' . . . Both the cure payments and regular payments while the case is pending are equal and necessary parts of a plan's treatment of a secured claim under § 1322(b)(5). . . . [T]he Direct Payments were payments under the Debtor's plan that she did not complete. She is, therefore, not entitled to a discharge under § 1328(a).").
In re Evans, 543 B.R. 213, 221-35 (Bankr. E.D. Va. Jan. 5, 2016) (St. John) (Debtor not eligible for discharge because direct payments to mortgagee are payments "under the plan" and default in direct payments means plan payments are not complete for § 1328(a) purposes. Conversion or dismissal is only remedy when debtor has failed to make direct payments but all other payments have been made to the trustee—Code does not authorize closing Chapter 13 case without discharge. "[A]ll payments contemplated to be made in the confirmed plan must be completed to obtain a Chapter 13 discharge . . . . [B]ecause a debtor is only able to receive a Chapter 13 discharge under § 1328(a) after completing all of the payments under the plan, and the Debtor here failed to make her Direct Payments to the Lender, the Court finds that the Debtor is not eligible to receive her Chapter 13 discharge. . . . [P]ostpetition payments on a mortgage debt made through direct payments by the debtor to the creditor must be treated as 'payments under the plan' when the plan also provides for the curing of prepetition arrears. . . . Under the Bankruptcy Code, there are three ways to conclude a Chapter 13 case: 'discharge pursuant to § 1328, conversion to a Chapter 7 case pursuant to § 1307(c) or dismissal of a Chapter 13 case "for cause" under § 1307(c).' . . . [T]here is no sufficient statutory authorization to simply close the case as proposed by the Trustee, when, as here, a discharge has not been entered because the Debtor failed to comply with the provisions of and complete all of the payments required under the confirmed Plan.").
In re Ramos, No. 10-33561-SGJ-13, 2015 WL 7180663, at *1 (Bankr. N.D. Tex. Nov. 13, 2015) (Jernigan) (Debtors who failed to make direct payments to mortgagee have not completed payments under plan and are not entitled to discharge. "[F]or purposes of entitlement to a discharge, there has not been 'completion of the debtor of all payments under the plan,' pursuant to section 1328(a) of the Bankruptcy Code, if—in connection with a 'cure and maintain' plan—a debtor has not made her direct postpetition mortgage payments to the mortgage lender during her case. In other words, direct ongoing payments to a mortgage lender postpetition constitute 'payments under the plan.'").
In re Obregon, No. 07-17465-BKC-AJC, 2015 WL 359250 (Bankr. S.D. Fla. Jan. 27, 2015) (Cristol) (When best-interests-of-creditors test required confirmed plan to pay unsecured creditors in full, debtor was bound by the confirmed plan to remit enough money to the trustee to pay all creditors in full and debtor is not entitled to a discharge until the trustee has received sufficient funds to pay all allowed unsecured creditors in full. Debtor must tender additional money to complete the payment of unsecured creditors else the case will be dismissed.).
In re Young, No. DG 06-06385, 2012 WL 1592214 (Bankr. W.D. Mich. Apr. 29, 2012) (Dales) (Debtors failed to prove entitlement to discharge when they had missed three payments—notwithstanding that required 5% dividend was available for unsecured creditors. Debtors did not prove that they had paid all disposable income to trustee during applicable commitment period. Entitlement to discharge required more than just proof that minimum dividend was available.).
In re Runfola, No. 06-11140-BFK, 2011 WL 6752179 (Bankr. E.D. Va. Dec. 22, 2011) (Kenney) (When debtors completed plan payments before being killed in motorcycle accident, discharge was entered notwithstanding absence of compliance with §§ 522(p), (q) and certification of payment of domestic support obligations.).
In re Filion, 452 B.R. 329, 330-35 (Bankr. D. Mass. May 3, 2011) (Hillman) (Completion of payments for purposes of §§ 1328(a) and 1329(a) includes the applicable commitment period required by § 1325(b)(4); because applicable commitment period for debtors with CMI greater than applicable median family income is 60 months, debtors are not entitled to discharge when they tender full payment of amount required by confirmed plan in 58th month. Debtors must seek modification of plan under § 1329(a) to reduce plan duration. "What constitutes 'completion of payments' is not otherwise defined under the Code and courts disagree about its meaning. . . . [T]he United States [Bankruptcy] Appellate Panel for the Ninth Circuit held that 'the statutory concept of "completion" of payments includes completion of the requisite period of time' prescribed by 11 U.S.C. § 1325(b). [Fridley v. Forsythe (In re Fridley), 380 B.R. 538 (B.A.P. 9th Cir. Dec. 18, 2007) (Klein, Montali, Jury)] . . . The overwhelming majority of courts . . . have adopted a 'temporal' view, holding that the statute imposes a durational requirement. . . . I join these courts in adopting the temporal view. . . . 'A debtor desiring to prepay a Chapter 13 plan and obtain an early discharge without paying allowed unsecured claims in full must follow the § 1329 modification procedure prescribed by Rule 3015(g).' . . . If the Debtors' argument was accurate, an above-median debtor could use exempt assets to satisfy the monetary requirement of their plan and receive a grant of discharge immediately following confirmation of the plan, rendering 11 U.S.C. § 1325(b)(4)(A) and (B) meaningless and depriving creditors of the opportunity to receive the maximum possible repayment under the plan.").
In re McCarthy, No. 06-40127-DML-13, 2008 WL 2415078, at *3, *4 n.10 (Bankr. N.D. Tex. June 11, 2008) (Houser, Jones, Lynn, Hale, Nelms, Jernigan) (Debtor completed payments under confirmed plan and was entitled to discharge 21 months after confirmation when combination of sale proceeds and monthly payments to trustee totaled "pool" amount anticipated at confirmation. Plan confirmed in April of 2006 called for 60% dividend and pool for unsecured creditors of $41,857. In July of 2006, court allowed debtor to sell real property, and proceeds were paid to trustee. Coupled with regular monthly payments, in July of 2007, debtor completed payment of pool amount, and trustee filed notice of Chapter 13 plan completion. Debtor then filed motion for entry of discharge. Trustee objected on ground that debtor had not completed 60 months of payments. Without addressing applicable commitment period arguments by the parties, en banc Bankruptcy Court for the Northern District of Texas concluded that debtor had completed payments under the plan and was entitled to discharge. "[T]here is no dispute—indeed, the Trustee is in agreement—that Debtor has completed all the payments called for by the Plan. Hence, in accordance with the unambiguous language of section 1328(a), the Motion must be granted. . . . If a debtor's assertion of completion of payments is contested by the Trustee or a creditor, it will be the court that determines that factual issue. It follows that, if the Trustee determines payment by a debtor should be challenged, the Trustee would be entitled to raise and be heard on those issues he considers germain [sic] to whether the payment entitles the debtor to a discharge under section 1328(a). The surreptitious, unexplained and unexpected delivery to the Trustee by a debtor of sufficient funds to pay all remaining plan obligations, standing alone, might well be found by a court not to constitute completion of payments under a plan within the meaning of section 1328(a) (and section 1329(a)). Were such conduct motivated by such a debtor's desire to keep from the Trustee and the court an anticipated windfall or other change of circumstance, the occurrence of which could lead to the Trustee's or a creditor's proposal of a modification under section 1329, that debtor's conduct would, in fact, probably be fraudulent and his or her discharge would be subject to attack under section 1330.").