§ 51.2 — Debtor Must File a Plan
Revised: May 24, 2004
The Code requires the Chapter 13 debtor to file a plan.1 The plan must be filed with the petition or within 15 days thereafter.2 There is no official form for the plan.3 Within each district, there is often a suggested, preferred or, sometimes, required form for the Chapter 13 plan. A call to the Chapter 13 trustee’s office for a copy of the best local plan form will save a lot of later trouble. Across districts, there is little uniformity among the plans in use. A two-page Revised Model Chapter 13 Plan is in Appendix SSS. Produced under the sponsorship of the National Association of Chapter 13 Trustees, the Revised Model Plan is in use in some districts and under consideration in many others.4
Perhaps because of the absence of an official form, debtors too often file all the rest of the documents necessary for a Chapter 13 case but omit to file anything that resembles a plan. The courts have consistently held that § 1321 is not discretionary and that the debtor must eventually file something that constitutes a plan.5
Only the Chapter 13 debtor can file a plan.6 There is no authority for the trustee or a creditor to file a Chapter 13 plan. Unsecured creditors with allowed claims and the trustee can seek modification of a plan after confirmation,7 but only the debtor can file a plan in the first instance, and only the debtor can modify a plan before confirmation.8 Though a fine line sometimes, a creditor can object to confirmation on the ground that the plan fails to contain mandatory provisions or contains provisions that are prohibited by the Bankruptcy Code, without becoming the architect of the plan itself.9
The precise elements of a plan for purposes of § 1321 are subject to some controversy.10 It has been held that a document that fails to address the three mandatory elements of 11 U.S.C. § 1322(a) does not constitute a Chapter 13 plan.11 It has also been held that a Chapter 13 plan is sufficient when the amount to be paid, the duration of payments and a list of creditors is provided.12 One case suggests that the debtor must propose some payments to creditors to satisfy the statutory requirement to file a plan.13 The requirement in § 1322(a)(1) that the plan “provide for the submission of all or such portion of future earnings or other future income of the debtor . . . as is necessary for the execution of the plan” has been interpreted to require that the plan specify that some amount will be paid to the trustee for distribution to creditors.14 A form that only makes an oblique provision for payment of a percentage of debt is not sufficient.15
Most of the commercially available Chapter 13 forms include a form for the plan that requires more information than the minimum required by any of the reported § 1321 cases. Debtor’s counsel is generally safe to follow the available forms or any form for the plan required by local practice or suggested by the Chapter 13 trustee.16
Failure to timely file a plan is one of the statutory grounds for conversion or dismissal of a Chapter 13 case.17 Several courts have dismissed Chapter 13 cases when the debtor failed to file a plan within 15 days of the petition, especially when the debtor failed to seek an extension of the 15-day time period or otherwise offered no excuse for missing the deadline.18 A few reported decisions have deflected motions for conversion or dismissal for failure to file a plan when the plan is filed late but soon after the 15 days allowed in Bankruptcy Rule 3015 or when the delay is not prejudicial to creditors.19
Because the content of the plan must be noticed to all creditors, it is not in the debtor’s best interest to delay filing the plan.20 Chapter 13 trustees are generally aggressive to move for dismissal when the plan is missing. Some courts have local rules that automatically dismiss Chapter 13 cases on notice from the trustee that no plan was timely filed. Administration of the case is impossible without a plan. Failure to timely file an adequate plan is one of the earmarks of bad faith often cited by the courts in decisions denying confirmation21 or dismissing Chapter 13 cases.22
1 11 U.S.C. § 1321: “The debtor shall file a plan.”
2 Fed. R. Bankr. P. 3015. See § 38.2 [ Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents ] § 37.4 Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents.
4 A Discussion Paper collecting arguments in favor of the Revised Model Plan is also in Appendix SSS.
5 See In re Nowak, 143 B.R. 154 (Bankr. N.D. Ill. 1992); Aycock v. Heritage Bank, 15 B.R. 728 (Bankr. E.D.N.C. 1981); In re Clements, 11 B.R. 38 (Bankr. N.D. Ga. 1981); In re Perskin, 9 B.R. 626 (Bankr. N.D. Tex. 1981).
6 In re Higgins, 43 B.R. 391 (Bankr. N.D. Ala. 1984); In re Fluharty, 23 B.R. 426 (Bankr. N.D. Ohio 1982); In re Waldrep, 20 B.R. 248 (Bankr. W.D. Tex. 1982); In re Scher, 12 B.R. 258 (Bankr. S.D.N.Y. 1981); GMAC v. Anderson, 6 B.R. 601 (Bankr. S.D. Ohio 1980).
7 11 U.S.C. § 1329. See § 253.1 [ Standing, Timing and Procedure ] § 126.1 Standing, Timing and Procedure.
8 11 U.S.C. § 1323(a). See § 209.1 [ Timing, Procedure and Form ] § 114.1 Timing, Procedure and Form.
9 See, e.g., In re Sheldon, 196 B.R. 551, 552, 553 (Bankr. W.D. Wash. 1996) (Although only a Chapter 13 debtor can propose a plan, sustains mortgage holder’s objection to confirmation on the ground that plan does not include “anti-Peters” language. In Peters v. Mason-McDuffie Mortgage Corp. (In re Peters), 184 B.R. 799 (B.A.P. 9th Cir. 1995) [later rev’d, 101 F.3d 618 (9th Cir. 1996)], BAP held that postconfirmation continuance of a nonjudicial foreclosure sale violated the automatic stay because prepetition defaults were cured at confirmation. This conclusion “provoked numerous objections to confirmation” from mortgage holders that would find their foreclosure rights altered by confirmation of Chapter 13 plans that propose to cure defaults. “Under §§ 1321 and 1323 of the Code, only the debtors may file or propose modifications to a Chapter 13 plan preconfirmation. . . . BancBoston cannot succeed on its objection to the plan’s text, but it can object to confirmation, and thus the substance of its position is properly before the court.”).
11 In re Maloney, 25 B.R. 334 (B.A.P. 1st Cir. 1982). Accord Fernandez v. GE Capital Mortgage Servs., Inc. (In re Fernandez), 227 B.R. 174, 178 (B.A.P. 9th Cir. 1998) (Dismissal was appropriate because debtor failed to comply with orders to file required documents including a Chapter 13 plan. “Fernandez’s ‘plan’ . . . is deficient under § 1322: it provides neither for the submission of debtor’s income to the trustee nor for the payment of priority claims under § 507, and it is doubtful that its debt-by-debt classification scheme would survive an objection to confirmation. This failing alone was sufficient basis for the bankruptcy court’s refusal to vacate the clerk’s dismissal, and is sufficient for us to affirm.”). The three mandatory elements of § 1322(a) are that the plan must provide for the submission of some or all of the debtor’s future earnings to fund the plan; the plan must provide for the full payment of priority claims; and, if the plan classifies claims, it must provide the same treatment for each claim within a class. See §§ 98.1 [ Plan Must Provide Full Payment ] § 73.1 Plan Must Provide Full Payment, 149.1 [ Power to Classify Unsecured Claims: Tests for Unfair Discrimination ] § 87.1 Power to Classify Unsecured Claims: Tests for Unfair Discrimination and 203.3 [ Submission of Future Income ] § 113.5 Submission of Future Income.
12 In re Eury, 11 B.R. 397 (Bankr. N.D. Ga. 1981). See In re Colston, 11 B.R. 251 (Bankr. N.D. Ga. 1981); In re Scales, 10 B.R. 981 (Bankr. N.D. Ga. 1981).
13 In re Cook, 3 B.R. 480 (Bankr. S.D. W. Va. 1980).
14 In re Nowak, 143 B.R. 154, 159 (Bankr. N.D. Ill. 1992) (Plan is facially defective because it fails to comply with §§ 1322(a)(1) and 1326(a)(1). The provision for plan payments stated that the debtors would make payments in the sum of $500 each month “if alleged creditor IRS can prove its claim without bribery, blackmail or extortion.” This “conditional offer” to pay the trustee is not the submission of future earnings as required by § 1322(a)(1) and does not commence payments within 30 days after as required by § 1326(a)(1).). See In re Ennis, 178 B.R. 189 (Bankr. W.D. Mo. 1995) (The mandatory requirement in § 1322(a)(1) that the debtor submit sufficient income to fund a plan is not satisfied where plan would be funded by an inheritance, but the debtor’s former spouse has a lien on the inheritance and has been granted relief from the stay to foreclose that lien.).
15 In re Bachmann, 113 B.R. 769 (Bankr. S.D. Fla. 1990) (Typing service was engaged in unauthorized practice of law and failed to state a plan on behalf of the debtor where the forms prepared by the typing service only called for payment of 20% of debt in no more than 12 payments without interest.). Accord In re Pedersen, 229 B.R. 445 (Bankr. E.D. Cal. 1999) (Debtor used form plan and inserted a monthly payment but plan is deficient because debtor failed to state a length for the plan and failed to insert a percentage of payment for unsecured creditors.).
16 See In re Pedersen, 229 B.R. 445, 451–52 (Bankr. E.D. Cal. 1999) (“To promote uniformity and administrative convenience, the general order requires use of a form chapter 13 plan. . . . This form plan requires the debtor or the debtor’s attorney to fill in information such as the plan’s term, the monthly plan payment, and the dividend to be paid to holders of general unsecured claims. . . . In this case, the debtor used the form plan. He inserted ‘$100.00’ as the monthly plan payment but failed to insert a plan term. Further, he did not insert a percentage . . . in the blank specifying the dividend payable to general unsecured creditors. . . . In the absence of basic plan provisions, such as the length of the plan and the amount to be paid on account of general unsecured claim, confirmation is impossible.”); In re Walat, 87 B.R. 408 (Bankr. E.D. Va. 1988) (en banc) (Local bankruptcy rule requiring Chapter 13 plans to conform to an approved form is within the local rule-making authority of the bankruptcy court, and clerk of the court can appropriately refuse for filing a plan that fails to conform to the local rule.).
17 11 U.S.C. § 1307(c)(3).
18 See §§ 333.1 [ Cause for Dismissal—In General ] § 152.2 Cause for Dismissal—In General and 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4 Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings. See, e.g., Simmons v. Cosby (In re Simmons), 256 B.R. 578 (D. Md. 2001) (Pro se debtor’s failure to timely file a plan is a reason for dismissal under § 1307(c)(3).); In re Funk, 146 B.R. 118 (D.N.J. 1992) (Failure to file a plan with the petition or within 15 days of the petition, and failure to seek an extension of time or even to file the plan during the year that the Chapter 13 case has been pending justifies denial of debtors’ motion to convert to Chapter 11 and entry of an order of dismissal of the Chapter 13 case.); In re Slaughter, 191 B.R. 135, 140 (Bankr. W.D. Wis. 1995) (“Schedules and a plan must be filed within 15 days after the filing of a chapter 13 case unless a later time is approved by the court. Failure to timely file schedules and a plan are each grounds for dismissal.” Objection to trustee’s motion to dismiss—filed by debtor’s attorney in violation of Bankruptcy Rule 9011—is not properly construed as a request for an extension of time in which to file a plan.); In re Maurice, 167 B.R. 114 (Bankr. N.D. Ill. 1994) (Failure to timely file a plan within the 15 days allowed by Bankruptcy Rule 3015(b) is, alone, sufficient to justify dismissal of second Chapter 13 case filed to stop collection of a judgment declared nondischargeable in the debtor’s prior bankruptcy case.); In re Spurgeon, 166 B.R. 150 (Bankr. D. Neb. 1993) (Debtor’s motion for extension of time within which to file a plan was denied and the Chapter 13 case was dismissed where the debtor failed to file tax returns for nearly a decade, and the Chapter 13 case was pending for more than a year without a meaningful proposed plan. Debtor’s motion for extension of time was a delaying tactic intended to avoid paying taxes.); In re Nowak, 143 B.R. 154 (Bankr. N.D. Ill. 1992) (The failure to file a plan within 15 days of the petition is a ground for dismissal under § 1307(c)(3).); In re Greene, 127 B.R. 805, 807 (Bankr. N.D. Ohio 1991) (It was cause for dismissal sua sponte, though without prejudice, when debtor missed mandatory 15-day time limits in Bankruptcy Rules 3015 and 1007(c) by nine days. Counsel offered no excuse for missing the deadlines and no assurances that counsel or the debtors would meet future deadlines. “The failure to meet a mandatory deadline cannot be cured by the simple expedient of filing the required papers before the Court’s show cause hearing.”).
19 See In re McConnell, 60 B.R. 310 (Bankr. W.D. Va. 1986) (Late-filed plan is not cause for dismissal in the absence of prejudice to creditors.); In re Neary, 54 B.R. 94 (Bankr. E.D. Pa. 1985) (When debtor is eligible to simply refile a Chapter 13 case and the plan was in the mail on the 15th day but not received until the 17th day after the filing, there is no cause for dismissal.).
20 See § 38.2 [ Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents ] § 37.4 Time for Filing Schedules, Statement of Financial Affairs, Plan and Other Documents.
21 See § 179.2 [ Accuracy of Petition, Schedules, Statement and Testimony ] § 104.3 Accuracy of Petition, Schedules, Statement and Testimony.
22 See §§ 331.1 [ Strategic Considerations: Consequences of Voluntary Dismissal ] § 151.3 Strategic Considerations: Consequences of Voluntary Dismissal and 334.1 [ Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings ] § 152.4 Cause for Dismissal, Including Bad-Faith, Multiple and Abusive Filings.