§ 159.8 — Boating or Flying while Intoxicated: § 523(a)(9)

Revised: March 29, 2006

[1]

The cross-reference in § 1328(a)(2) to § 523(a)(9) captures as an exception to discharge at the completion of payments in a Chapter 13 case any debt “for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance.”1 BAPCPA added the words “vessel or aircraft” to this exception to discharge. After BAPCPA, any debt for death or personal injury that was caused by the operation of a vessel or aircraft that was unlawful because the debtor was intoxicated is nondischargeable.

[2]

BAPCPA also added a new subparagraph (10) to the list of claims entitled to priority under § 507(a) for: “allowed claims for death or personal injury resulting from the operation of a motor vehicle or vessel if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug or another substance.”2 It is the logic of BAPCPA that claims for death or personal injury caused by flying an airplane while intoxicated are nondischargeable at the completion of payments under a Chapter 13 plan but are not entitled to priority or full payment through the plan; cause death or personal injury operating a car or a boat while intoxicated, and the debt is both nondischargeable and entitled to priority and full payment through a Chapter 13 plan—that is, if “caused by” and “resulting from” mean the same thing in this context.

[3]

The new 10th priority in § 507(a)(10) will provide a basis in § 1322(a)(2) for the separate classification and more favorable treatment of DWI debts.3 The irony is that by creating a new priority in § 507(a)(10) for claims for death or personal injury resulting from the operation of a motor vehicle or vessel while the debtor was intoxicated, when the debtor can confirm a plan that pays the DWI claim in full, that claim will be paid with dollars that would otherwise be distributed to the general unsecured creditors under the plan. Because of the new priority, the debtor will be able to separately classify the DWI claim for more favorable treatment to satisfy the mandatory confirmation requirement in § 1322(a)(2). The general unsecured creditors will contribute their share of distributions to pay the priority DWI claim in full. This is the mathematics of a Chapter 13 case after BAPCPA. This outcome is possible only because the nondischargeable DWI debt has now become a priority claim under the BAPCPA amendments to § 507(a)(10).

[4]

The downside is obvious: if the debtor is not financially able to pay a priority DWI debt in full through the plan, no plan can be confirmed without the consent of the DWI claim holder.4 There may be good reasons for the claim holder to consent to less than full payment through the plan—including that structured payments through a Chapter 13 plan are better than chasing the debtor through state courts. The nondischargeability of the debt puts the claim holder in a strong bargaining position.


 

1  11 U.S.C. § 523(a)(9) (incorporated into 11 U.S.C. § 1328(a)(2)), (emphasis added).

 

2  11 U.S.C. § 507(a)(10) (emphasis added), discussed in § 522.1 [ The New DWI Priority ] § 136.22  The Driving or Boating while Intoxicated Priority after BAPCPA.

 

3  See 11 U.S.C. § 507(a)(10), discussed in § 460.1 [ New Priority Claims ] § 87.5  Priority Claims after BAPCPA.

 

4  Under 11 U.S.C. § 1322(a)(2), a priority claim holder can agree to a different treatment than full payment. See § 98.1 [ Plan Must Provide Full Payment ] § 73.1  Plan Must Provide Full Payment.