Bankruptcy by Keyword:
"Chapter 13 Plan"
Applicable commitment period .
Best interest of creditors test .
Chapter 13 Plan Modification .
Definitions from the USDOJ
- confirmation: Bankruptcy judges's approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.
- plan: A debtor's detailed description of how the debtor proposes to pay creditors' claims over a fixed period of time.
Case Law Topics
A debtor's income determines the lenght of a Chapter 13 plan, also called the "applicable commitment period" that is the result of the Chapter 13 version of the means test. (See section § 132___ . Caselaw centers on timing income measurement in conversions from Chapter 7 (do you restart the clock?), whether a zero-payment plan has to be 5 years, and issues about certain types of income that is excluded from income for this'bright-line" provisio, while still relevant under other parts of the code (e.g. good faith, ability to pay, etc.)
While student loans are nondischargeable, they generally can't be given preferential treatment under the plan, compared to other unsecured creditors. However, there are legal ways to maximize payments on nondischargeable student loans. In court districts that hold that Form 22C determines PDI, any excess "actual" income is considered "discretionary" and can be used any way the debtor wishes.
Various cases of hardship claimed and analyzed by courts. Case by case determination.
Section 1332(b)(2) prevents cramdown of residential mortgages which it describes as claims secured by a primary residence. Here are cases that talk about whether specific fact patterns do or do not fit within the protection of this section.
Uses §707 (b)(2)(A)(ii)(I) (via for Chapter 13 § 1325(b)(1)(B): "applicable commitment period." (i.e. plan length 3 or 5 years). (Same code section that determines Chapter 7 "presumption of abuse" in means test.)
§707 (b)(2)(A)(ii)(I) = "disposable income" (snapshot of "current monthly income" (CMI) at time of filing)
§ 1325(b)(1)((B) = "projected disposable income" (forward-looking, but by what method? consider actual facts or apply mechanical projection of 'snapshot' over next 60 months.)
"Under the law predating BAPCPA, a chapter 13 plan may not be confirmed over the objection of the trustee or an unsecured creditor unless the debtor either pays unsecured creditors in full or devotes all "projected disposable income" to the plan for at least three years. Section 1325(b).
BAPCPA makes several important changes in the calculation of disposable income,
If the debtor's annualized current monthly income is larger than the State's median, allowable expenses are determined as provided by the means test under § 707(b)(2).
Conversely, if the debtor's annualized current monthly income is smaller than the State's median, then allowable expenses are those that are reasonably necessary for the maintenance and support of the debtor and the debtor's dependents without reference to § 707(b)(2)importing for some purposes the provisions of 11 U.S.C. § 707(b)(2) allowances and calculations.
Finally, the BAPCPA introduces a new term in § 1325(b)(1)(B): "applicable commitment period." If the annualized current monthly income of the debtor and the debtor's spouse is above the State median, the debtor must pay all disposable income into the plan for a five-year period. However, if the annualized current monthly income of the debtor and the debtor's spouse is below the State median, the debtor must pay all disposable income into the plan for only three years. "
Because student loan debt is nondischargeable, debtors tend to want to give it more attention than other unsecured debts when it comes to their Chapter 13 plan. These cases explore various attempts to do that inside of "outside" the plan.
"because Congress has simultaneously directed that ERISA contributions and loan repayments be deductible from CMI in Chapter 13 cases, on the facts presented, such a conversion would yield no distribution to unsecured creditors ... the difference in treatment causes an absurdity that is directly contrary to the congressional intent, that while debtors with an ability to repay creditors should file under Chapter 13, debtors lacking that ability are to be permitted Chapter 7 relief."
-In re Siler, 426 BR 167, (Banrk.W.D.N.C. 2010)
While student loans are nondischargeable, and can only be discharged with a showing of undue hardship, occasionally a Chapter 13 plan will be approved that discharges a student loan, and if there is no objection, what happens when then plan is completed?