Does the applicable commitment period and 1325(b) still apply when you modify a plan?
For a no, see In re Mattson, No. 11-1478 (B.A.P. 9th Cir. April 5, 2012) which followed the holding in In re: Sunahara on this issue. The Mattson court suggested that possible justifications for a shortened plan period might be retirement, leaving the employment market, changing jobs, or anticipated health issues justifying a shorter plan.
Aki Koyama
Staff Attorney for Kathy Dockery, Chapter 13 Trustee
Congratulations to our Staff Attorney Angela Gill who has passed the bankruptcy specialist exam with the California State Bar.
Aki Koyama
Judge Mark Houle in Riverside has written a very nice tentative on the addendum and specifically whether it has been preempted by new Bankruptcy Rule 3002.1. You can get the tentative ruling here. Addendum-TENTATIVE- Houle His position is that the addendum remains alive and well.
In re Taylor — Case No. EDCV 11-1879-GHK
Appeal from Bankruptcy Court’s (Judge Johnson, Riverside) dismissal of Chapter 13 case at the confirmation hearing “for failure to make payments and….timely file a secured debt payment history declaration” even though Debtors had filed their Notice of Conversion from Chapter 13 to Chapter 7 the day before the confirmation hearing.
The District Court reversed holding that “a Chapter 13 debtor’s right to convert to Chapter 7 is absolute…the Bankruptcy Court erred in failing to give effect to Appellants’ Notice of Conversion and subsequently dismissing Appellants’ Chapter 13 case.” Case was remanded to the Bankruptcy Court.
Read the decision, written by Hon. George H. King, here. I sat next to Judge King at Federal Bar Association program a couple of months ago (Dean Chemerinsky’s annual Supreme Court Review)!
There will be new median income figures beginning May 1, 2012. The median income for the debtor’s household size determines whether he has to even do the means test in a chapter 7 and determines whether the chapter 13 plan has to be 3 years or 5 years. Starting May 1, the median income in California is 49,188 for a one person household; 63,481 for two; 68,135 for three; 77,167 for four; and $7,500 for each person after that. You can find the amounts for all states here. Also, the new IRS tables are effective May 1, 2012. They can be found here.
In re Frazier, 2012 Westlaw 812387 (E.D. Cal. March 2012), the District Court has affirmed the bankruptcy court’s ruling allowing a residential lien strip notwithstanding no discharge in the chapter 13. The court says, “Instead of discharge, the Court agrees with the underlying Bankruptcy Court and finds plan completion is the appropriate end to Appellees’ Chapter 20 case. The lien strip will become permanent not upon a discharge, as would happen in a typical Chapter 13 case, but upon completion of all payments as required by the plan. See In re Blenheim, 2011 WL 6779709 (Bankr.W.D.Wash. Dec.27, 2011).”
I had a very pleasant chapter 13 confirmation hearing this morning with Judge Ahart. I got to court an hour and a half before the hearing. The trustee’s attorney told me everything was okay and the plan would be confirmed and I could leave. I commented that I was surprised that it wasn’t more crowded, even an hour and a half early. She said Judge Ahart’s calendar is very efficient and sometimes he is on second call by 11:00am. If you are not there by then, you risk the case being dismissed.
United States Bankruptcy Court Central District of California
San Fernando Valley
Tuesday, March 27, 2012 Hearing Room 302
9:00 am
1:11-15373 David Darzian Chapter 13
Second Amended Motion to avoid junior lien on Principal Residence ***
Docket #: 27
On October 2, 2009, David Darzian (“Debtor”) filed a voluntary chapter 7 petition. Debtor received a discharge in that case on February 10, 2010. Subsequently on May 1, 2011, Debtor filed a voluntary chapter 13 petition. This in turn resulted in what is colloquially known as a chapter 20 case. Now, Debtor has filed a Motion to Avoid (“Motion to Avoid”) the junior lien on his principal residence held by J.P. Morgan Chase Bank, N.A. (“JP Morgan”). An opposition has not been filed. At the January 24, 2012 continued hearing, Debtor was instructed to file additional briefing by February 22, 2012 addressing this Court’s previous ruling in In re Winitzky, 2009 Bankr. Lexis 2430 (Bankr. C.D. Cal. 2009). There, this Court held that chapter 20 debtors are not entitled to avoid junior liens because of their inability to obtain a discharge. Debtor was asked to address why this Court should permit this chapter 20 debtor to avoid the junior lien of JP Morgan. The Court noted that subsequent to its ruling in In re Winitzky, several cases have come down and conflicting rulings have been reached. On February 22, 2012, Debtor filed his Brief. Based on an analysis of subsequent cases, the Court will re-consider its position with respect to avoiding junior liens in chapter 20 cases.
Based on an analysis of further discussions of this subject, the court is inclined to agree that the controlling event, then, is not discharge but rather completion of plan payments. Discharge in chapter 13 and an individual chapter 11 is only granted once the plan payments have been completed. It is also dispositive that a discharge does not, in and of itself, strip a lien; instead, discharge simply operates as a statutory injunction against the “commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor.” In re Oksosisi, 451 B.R. 90, (Bankr. D. Ne 2011), In re Frazier, 448 B.R. 803, 809, and 11 U.S.C. § 524(a)(2). Other courts, as discussed below, identify the completion of plan payments as the controlling event governing permanence of lien avoidance and modification of rights.
United States First Circuit, 03/21/2012
In re Sullivan, No. 11-1830 Award of attorney’s fees in a Chapter 13 affirmed, where: 1) the bankruptcy court stated that the attorney’s hourly rates were reasonable but that, given the banal nature of the case, the hours claimed were excessive; and 2) it adequately explained why it had come to that conclusion.
United States First Circuit, 03/22/2012
In re Puffer, No. 11-1831 no blanket rule that “fee-only” Chapter 13 plans are per se submitted in bad faith, but rather there may be relatively rare special circumstances in which a “fee only” filing is justified, so the case is remanded for the bankruptcy court to consider the totality of the circumstances when measuring whether the Chapter 13 plan was presented in good faith.
