Source: https://lundinonchapter13.com/Content/Section/127.9
Timestamp: 2019-10-22 03:17:31
Document Index: 77906687

Matched Legal Cases: ['§ 127', '§ 1329', '§ 1325', '§ 1329', '§ 1329', '§ 522', '§ 1329', '§ 1329', '§ 522', '§ 1325', '§ 1325', '§ 1325', '§ 1325', '§ 1329', '§ 1325', '§ 1329', '§ 1329', '§ 1329', '§ 1322', '§ 1329', '§ 1329', '§ 1327', '§ 1329', '§ 1327', '§ 1329', '§ 1325', '§ 1325', '§ 1325', '§ 1325', '§ 1329', '§ 1329', '§ 1325', '§ 1329', '§ 1325', '§ 541', '§ 1325', '§ 1325', '§ 253', '§ 126', '§ 126', '§ 126', '§ 41', '§ 41', '§ 126', '§ 126', '§ 91', '§ 92', '§ 1329', '§ 1329', '§ 1325', '§ 1325', '§ 1325', '§ 1329', '§ 1325', '§ 522', '§ 264', '§ 127', '§ 126', '§ 126', '§ 522', '§ 522', '§ 522', '§ 1325', '§ 522', '§ 1325', '§ 91', '§ 92', '§ 126', '§ 126', '§ 126', '§ 126', '§ 90', '§ 90', '§ 91', '§ 92', '§ 126', '§ 1322', '§ 126', '§ 126', '§ 126', '§ 127', '§ 126', '§ 126', '§ 126', '§ 126', '§ 111', '§ 111', '§ 1327', '§ 1325', '§ 1325', '§ 1325', '§ 1329', '§ 170', '§ 101', '§ 276', '§ 132', '§ 118', '§ 1322', '§ 79', '§ 1322', '§ 268', '§ 127', '§ 104', '§ 74', '§ 1322', '§ 79', '§ 1322', '§ 506', '§ 1329', '§ 1327', '§ 265', '§ 127', '§ 264', '§ 127', '§ 348', '§ 143', '§ 142', '§ 707', '§ 143', '§ 254', '§ 126', '§ 103', '§ 104', '§ 105', '§ 106', '§ 107', '§ 108', '§ 109', '§ 90', '§ 111', '§ 111', '§ 1329', '§ 41', '§ 41', '§ 91', '§ 92', '§ 91', '§ 92', '§ 91', '§ 92', '§ 126', '§ 126', '§ 541', '§ 1329', '§ 1329', '§ 1329', '§ 541', '§ 1329', '§ 1306', '§ 541', '§ 1325', '§ 1329', '§ 407', '§ 1329', '§ 1329', '§ 1325', '§ 1325', '§ 1325', '§ 1329', '§ 1329', '§ 1329', '§ 1325', '§ 1325']

Cite as: Keith M. Lundin, Lundin On Chapter 13, § 127.9, at ¶ ____, LundinOnChapter13.com (last visited __________).
Section 1329(a)(1) authorizes modification after confirmation to “increase . . . the amount of payments on claims of a particular class provided for by the plan.” The use of modification to increase payments was encouraged by the 1984 amendments to § 1329, granting allowed unsecured claim holders standing to seek postconfirmation modification.1
Reported decisions have aggressively allowed trustees and unsecured claim holders to modify plans to increase payments—often over the strong opposition of debtors. It has been held that the Chapter 13 trustee has standing to seek postconfirmation modification to increase payments into the plan based on an increase in the debtor’s disposable income, notwithstanding that the trustee did not raise a disposable income objection to confirmation of the original plan.2 In Arnold v. Weast (In re Arnold),3 on the motion of an allowed unsecured claim holder, the U.S. Court of Appeals for the Fourth Circuit forced a dissenting debtor to increase monthly payments into the plan from $800 to $1,500 and to extend the duration of the plan from 36 months to 60 months when the debtor’s income increased from $80,000 to $200,000 per year after confirmation. The court did not directly address whether the projected disposable income test in § 1325(b) is applicable to a modified plan under § 1329.4 Similarly, in In re Koonce,5 the court granted the trustee’s motion to modify to pay unsecured claim holders 100 percent to reflect that the debtors won $1.3 million in the Massachusetts State Lottery. In re Euerle6 held that a debtor who received a $300,000 inheritance after confirmation was obliged to advise the trustee and to file a supplemental schedule listing the additional asset pursuant to Bankruptcy Rule 1007(h).7 On the trustee’s motion, the court ordered the plan modified to pay 100 percent of unsecured claims. The bankruptcy court in In re Nott8 indicated that a $300,000 inheritance received after confirmation would be captured for unsecured creditors by the best-interests-of-creditors test on a motion to modify the plan to increase payments to creditors under § 1329(a)(1) and (b).
Increases in income that were not “projected” at confirmation are an obvious inspiration for motions to modify to increase payments to creditors. Things get tricky when the change in income arguably could have been foreseen at confirmation of the original plan. Some courts preclude modification to increase payments based on changes in income that are not “substantial and unanticipated.”9 Tax refunds often fall in this gray area. Most courts consider tax refunds to be projected disposable income at confirmation of the original plan.10 An “unexpected” tax refund is either an oxymoron—in which case the refund is always captured for distribution to creditors without modification of the plan. Otherwise, the proponent of modification faces a threshold burden to prove the refund is an unanticipated circumstance.11 Courts are concerned that minor changes in income and expenses of Chapter 13 debtors should not automatically justify motions to increase payments to creditors.
The liquidation of property by sale, by substitution of insurance proceeds or by settlement of litigation produces opportunities for motions to modify to increase payments to creditors. For example, in In re Barbosa,12 the debtors and a mortgage holder stipulated at confirmation that the market value of real property was $64,000. The mortgage was stripped down from $114,000 to $64,000, and the confirmed plan provided a 10 percent dividend to unsecured claim holders. Two years after confirmation, the debtors sold the real property for $137,500. The trustee moved to modify the plan to commit the sale proceeds to increase payments to unsecured creditors. The U.S. Court of Appeals for the First Circuit affirmed the bankruptcy court’s conclusion that appreciation in the value of the property was captured for unsecured claim holders by the best-interests-of-creditors test at modification.13
In In re Studer,14 the debtors waited until after confirmation to inform the trustee about a prepetition personal injury action. Upon postconfirmation settlement, the trustee moved to modify the plan to require the debtors to increase payments based on the settlement proceeds. The trustee’s modification was granted with an allowance to the debtors of the portion of the proceeds “necessary for the debtors’ reasonable maintenance and support.”15 The same bankruptcy court, in In re Florida,16 granted a trustee’s motion to modify a confirmed plan to pay unsecured claims in full from insurance proceeds at the postconfirmation death of the debtor’s husband; the court found that the insurance proceeds were projected disposable income and were not necessary for the maintenance or support of the surviving spouse, and “§ 522(c) does not render income from exempt property immune from treatment as disposable income.”17 Another bankruptcy court held that settlement proceeds from a postconfirmation action for violation of the automatic stay are captured for creditors by a trustee’s motion to increase payments under § 1329(a)(1).18
The court in In re Powers19 granted the trustee’s motion to increase the dividend from 54 percent to 100 percent when the debtor liquidated real property after confirmation and the proceeds would have permitted completion of the original plan in 15 months. The surrender or repossession of property after confirmation can be the predicate for modification to increase payments when surrender or repossession frees up income for distribution to other creditors.20 To avoid a “windfall” to the debtor, the court in In re Solis21 granted the trustee’s motion to modify to pay creditors the $40,000 proceeds from the postconfirmation sale of the debtor’s medical practice. In Collier v. Valley Federal Savings Bank (In re Collier),22 the confirmed plan was modified to pay creditors excess insurance proceeds that resulted when fire destroyed the debtor’s rental property.23
Not every sale or change in the form of an asset will support a motion to modify to increase payments to creditors. There is controversy whether the disposable income test applies at modification after confirmation under § 1329.24 Theoretically, anytime a Chapter 13 debtor sells property or otherwise changes an asset into cash, income is produced that probably was not accounted for at confirmation. On different theories, several reported decisions have refused to allow trustees or unsecured claim holders to capture this new income through modification.
For example, in In re Ferretti,25 the debtor settled a prepetition automobile accident after confirmation, and the trustee moved to modify to require distribution of the settlement proceeds to creditors. The debtor had claimed the auto accident exempt in the statement and schedules, and no one objected. The bankruptcy court found that the exemption defeated the trustee’s argument for modification to increase payments to creditors: “The clear language of 11 U.S.C. § 522(c) protects exempt property, regardless of form, from pre-petition debts. This express limitation cannot be ignored for purposes of defining disposable income under 11 U.S.C. § 1325(b)(2).”26
In In re Richardson,27 the bankruptcy court refused a trustee’s motion to increase payments using insurance proceeds. Ten months after confirmation, the debtors’ adult son died in a car accident and the Richardsons received $400,000 of exempt28 life insurance proceeds. When the debtors tried to pay off the Chapter 13 plan, the trustee objected, arguing that the insurance proceeds were disposable income payable to creditors. The bankruptcy court disagreed:
[T]he postconfirmation receipt of life insurance benefits as a beneficiary is neither earnings nor other property that was devoted to the plan and therefore not accessible to [the trustee] for payment to creditors through the plan. . . . If after obtaining confirmation of a plan, a debtor receives a windfall and proposes to pay the total projected disposable income before the end of the plan term, the trustee should accept the money, distribute it according to the plan, and grant the debtor a discharge. . . . [T]he Code does not say there should then be a denial of discharge because of the debtor’s good fortune.29
In McDonald v. Burgie (In re Burgie),30 the Bankruptcy Appellate Panel for the Ninth Circuit went even further to insulate Chapter 13 debtors from postconfirmation modification to increase payments based on liquidation of an asset. The confirmed plan in Burgie required a 34 percent dividend. Five days after confirmation, the debtor moved for and was granted court approval to sell a residence. After homestead exemption, approximately $20,000 of the sale proceeds remained, and the trustee moved to modify the plan to increase the dividend to unsecured claim holders. The Ninth Circuit BAP assumed without deciding that § 1325(b) applied,31 but held that the change in form of an asset is never by itself a basis for modification after confirmation to increase the dividend to unsecured claim holders:
The proceeds of the sale of a debtor’s real estate in a chapter 13 case never become disposable income . . . . This result applies in a chapter 13 case whether or not the property is exempt from execution. While a debtor may voluntarily use such proceeds to make payments to creditors under a chapter 13 plan, a debtor cannot be compelled to use the proceeds for this purpose. . . . Postpetition disposable income does not include prepetition property or its proceeds. This is the chapter 13 debtor’s bargain. Creditors of a chapter 13 debtor have no claim to any of these assets. . . . The sale of a capital asset does not create “disposable income” pursuant to § 1325. . . . A debtor’s prepetition homestead is a capital asset, not postpetition income.32
The BAP in Burgie goes on to make one further distinction: if the asset in question “is an anticipated stream of payments,” then the payments “must be included in projected income.”33 This distinction could be awkward to apply. The lump-sum settlement of a prepetition cause of action would not be subject to a motion to modify to increase payments to creditors, but a structured settlement that produced periodic payments might. If the debtor sold a piece of property after confirmation for cash, the cash would not be income under the Burgie rule and could not be the basis for a motion to increase payments to creditors. Would the same result apply if the debtor sold property, took a mortgage for some or all of the purchase price and then received the purchase price in monthly installments? In all these situations, the motion to modify to increase payments to creditors would engage the difficult discussion whether and how the disposable income test in § 1325(b) applies at modification after confirmation under § 1329.34
The reported decisions also make a distinction between motions to increase payments filed in response to a debtor’s motion to sell property and a motion to modify to require the debtor to sell or mortgage property to increase payments to creditors.35 For example, in In re Trumbas,36 the same bankruptcy court that decided Barbosa37 denied an unsecured creditor’s motion to require the debtor to sell or refinance a home four years after confirmation to increase payments to creditors. At confirmation, the debtor in Trumbas valued her house at $35,000. Four years after confirmation, the debtor valued the house at $131,000. The bankruptcy court found that the increase in value was “foreseeable when the court confirmed the debtor’s plan” and “nothing in the Bankruptcy Code requires the debtor . . . to incur new debt or to sell her home as a condition precedent to obtaining her discharge.”38 Distinguishing Barbosa, “[a] number of courts . . . have considered post-confirmation sales of property which appreciated post-petition and have concluded that the debtor must make the proceeds available to unsecured creditors. . . . In this case, the fact that the Debtor has not realized proceeds from the appreciation of her home distinguishes her case from others and is outcome determinative.”39
Along these lines, in In re Profit,40 the Bankruptcy Appellate Panel for the Ninth Circuit reversed an order granting a trustee’s motion to increase payments when the debtors experienced a substantial forgiveness of debt during the Chapter 13 case. After confirmation, an appreciative employer forgave a $150,000 debt on the Profits’ home. The debtors sold the home, moved and used some of the proceeds to buy another house. The Chapter 13 trustee found out about all of this when the debtors asked for a payoff amount. The trustee moved to compel the debtors to include the value of the debt forgiveness in their plan. The bankruptcy court granted the trustee’s motion.
On appeal, the Bankruptcy Appellate Panel for the Ninth Circuit didn’t disagree with the bankruptcy court’s analysis that the forgiveness of debt created value in the Chapter 13 estate that was captured for creditors at modification by the best-interests-of-creditors test.41 But the BAP found the trustee’s motion deficient because it did not specify how the debtors would pay the increased value to creditors. Because the debt forgiveness was buried in the debtors’ new home, there was no obvious source of cash for increasing payments to creditors. The BAP concluded that the trustee’s modification was not feasible.42
Profit is instructive that motions to modify Chapter 13 plans to increase payments to creditors must specify how the debtor will carry out the proposed modification. Keep in mind that many such motions come from the trustee or from allowed unsecured claim holders, and the effect of modification is to force the debtor to pay more money to the trustee. When an asset is being sold or insurance or settlement proceeds are being paid to the debtor, there is ready cash that can be grabbed by a motion to increase payments into the plan. When the event that precipitated the motion to modify does not produce cash—such as the forgiveness of debt in Profit—the proponent has an additional burden to demonstrate how the new value in the estate will be converted into something that can be distributed to creditors through the plan.
On unusual facts, one court refused a debtor’s motion to modify a Chapter 13 plan to increase payments to some creditors. In In re Taylor,43 co-signed debts were “deleted” from the original plan, and the holders of the co-signed claims were granted relief from the stay to proceed against the cosigners. After stay relief, the debtors filed a modified plan that provided for 100 percent payment of the co-signed claims. Characterizing the debtor’s proposal as a “reclassification” of the co-signed claims, the court disapproved the modified plan on the ground that modification “would be unfairly prejudicial.”44 The court observed that “the Debtors are attempting to . . . reinstate the automatic stay . . . so the cosigners will not be required to pay. . . . [A] debtor cannot defeat a creditor’s right to pursue the co-debtors by a postconfirmation modification.”45
The failure of creditors to timely file proofs of claim and the litigation of claims allowance after confirmation sometimes inspire trustees and unsecured claim holders to move to modify to increase payments under the plan. One court denied a trustee’s motion to require the debtor to continue making payments when the failure of creditors to file proofs of claim allowed the plan to complete in less than three years and an extension to three years would increase the dividend from 7 percent to 19 percent.46 Another court, on very similar facts, granted the trustee’s motion to modify a confirmed plan to require the debtor to pay 100 percent of allowed unsecured claims, when the debtor successfully objected to a claim and several other creditors did not file proofs of claim.47 When a claim scheduled as priority turned out to be a general unsecured claim and the confirmed plan would complete in 11 months, the bankruptcy court granted the trustee’s motion to modify to increase the dividend from 0 percent to 30 percent.48
Ironically, when creditors file unexpectedly large proofs of claim, the trustee cannot count on modification to correct distribution problems. In In re Wilson,49 the confirmed plan required full payment of secured and priority claims and a “variable” payment to unsecured claims depending on the amount available in the pot50 after payment of secureds and priority debt. After confirmation but before the governmental claims bar date,51 the trustee began distributions to filed claims, including distributions to general unsecured creditors. The trustee relied on the amounts listed in the debtor’s schedules to determine that funds were sufficient to permit early distributions to unsecured creditors. Unfortunately for the trustee, the IRS and the District of Columbia filed timely priority claims larger than scheduled, and suddenly the trustee did not have enough money to pay all creditors as required by the confirmed plan. The trustee moved to modify to require the debtor to increase payments to cover the shortfall. The bankruptcy court denied the trustee relief:
Had the trustee not made distributions on the general unsecured claims prior to the governmental claims bar date, the debtors’ plan could have been successfully administered pursuant to its terms while yielding a smaller than originally expected return on the general unsecured claims. This continued feasibility results from the plan providing for a variable, rather than fixed or percentage, distribution on general unsecured claims. Because the debtors’ plan continues to be feasible and also continues to satisfy the other requirements of § 1325, the court does not deem it appropriate to require the debtors to modify their plan to require the payment of additional monies to allow the secured and priority creditors to be paid in full . . . and to pay a dividend of twenty-three percent on general unsecured claims. . . . [I]t would be appropriate on motion of an affected creditor, to consider requiring the trustee to reimburse the estate unless she recovers . . . all distributions made in error by the trustee.52
Changes in the legal standards applicable to confirmation can prompt creditors to seek modification to increase payments under the plan. For example, imagine an undersecured mortgage holder with a claim that was bifurcated in a jurisdiction that permitted claim splitting prior to the Supreme Court’s decision in Nobelman v. American Savings Bank.53 The mortgagee is the holder of an allowed unsecured claim for purposes of a motion to modify under § 1329(a). Based on Nobelman, the mortgage holder could argue that payments on account of its allowed secured claim should be increased under § 1329(a)(1) or extended under § 1329(a)(2)54 to reflect that its entire claim cannot be modified under § 1322(b)(2).55 Though this proposed modification fits the technical requirements of § 1329, there has been no flood of reported decisions discussing the use of § 1329 to undo a pre-Nobelman mortgage stripdown. Based on res judicata and the binding effect of confirmation under § 1327(a), one court refused an undersecured mortgage holder’s § 1329(a) motion to fix the stripdown of its lien in a plan confirmed before the Supreme Court’s decision in Nobelman.56
There is obvious fairness to requiring debtors to share good fortune with creditors. This is the same fairness that permits Chapter 13 debtors to reduce payments to creditors when circumstances disable the debtor from completing the original plan. The courts have little trouble getting around res judicata and getting around the binding effect of § 1327(a)57 when the moving party is the trustee or the holder of an allowed unsecured claim and the motion to modify increases payments to creditors. These same issues loom insurmountably to some courts when it is the debtor’s motion and the proposed modification reduces payments58 or changes the treatment of a secured claim.59 It is of more than academic interest that were the debtor to convert to Chapter 7 after winning a lottery or realizing new income, the postpetition assets and income belong to the debtor and would not be available for distribution to creditors in the Chapter 7 case.60 Perhaps the sharing of postpetition good fortune is seen by some courts as the cost of the Chapter 13 discharge. The reported cases support the proposition that an allowed unsecured claim holder can force the debtor with improved financial condition to a choice: accept an increase in payments to creditors or get out of Chapter 13.
It should be remembered that an objection to modification to increase payments will be measured against the tests in § 1329(b).61 When the trustee or an allowed unsecured claim holder moves to modify to increase payments, the proponent must satisfy the good-faith test in § 1325(a)(3),62 the best-interests-of-creditors test in § 1325(a)(4)63 and the feasibility test in § 1325(a)(6).64 In In re Perkins,65 the trustee proposed a postconfirmation modification to require the debtor to increase payments to creditors by paying over the cash realized from the sale of an asset. The modification was denied because the trustee made no provision for taxes due upon the sale and thus the proposed modification failed the feasibility test in § 1325(a)(6). In Cornelison v. Wallace (In re Cornelison),66 a motion by the debtor’s attorney to allow additional fees through the plan was interpreted as a motion to modify to increase payments under § 1329; the motion was denied because the payment of additional fees would extend the plan beyond the five-year limitation in § 1329(c).67
The feasibility test in § 1325(a)(6) becomes the debtor’s best friend on a creditor’s motion to increase payments. In In re Bernardes,68 the debtor scheduled real property valued at $114,500. Eight months after confirmation, the debtor moved to sell the property for $202,500. A wholly unsecured third mortgage holder moved to modify the plan to increase payments to creditors. The debtor quickly withdrew the motion to sell the property. This change of direction saved the debtor from the motion to modify:
The modification of a confirmed plan may be disapproved if the plan as modified fails to satisfy the feasibility test . . . . The modified plan expressly assumes that Mr. Bernardes will sell the subject realty for $202,500.00, leaving an estimated $46,250.00 available for distribution among unsecured creditors. . . . Mr. Bernardes withdrew his motion to sell the property. Presently, he has no intention of selling the subject realty. Thus, the condition precedent to Old Republic’s modified plan has failed. Old Republic has made no showing, nor does this court find, that Mr. Bernardes can afford to increase the distribution to unsecured creditors without selling the subject realty. The court must therefore deny Old Republic’s motion to amend the plan under § 1329(a) as the modified plan fails to satisfy the feasibility requirement of § 1325(a)(6).69
It is difficult for creditors to know when a debtor experiences a significant increase in income or assets that would justify a motion to modify to increase payments. No provision of the Code or Rules requires a Chapter 13 debtor to report the receipt of postpetition assets or increases in income, except the narrow class of inheritances within 180 days of the petition described in § 541(a)(5).70 Some courts include in the standard order of confirmation that the debtor must report changes in income on some regular basis.71 Even so, the report will typically be filed with the court or the trustee, and creditors must make a special effort to become informed. The disposable income test in § 1325(b) has been used as the statutory springboard for ongoing postconfirmation monitoring of the debtor’s income;72 but this test is an imperfect basis for postconfirmation modification to increase payments to creditors because § 1325(b) only applies upon the objection of the trustee or of an allowed unsecured claim holder.73 Few creditors can justify the cost of routinely requesting updated income information from Chapter 13 debtors pursuant to Bankruptcy Rule 2004.
1 See § 253.1 [ Standing, Timing and Procedure ] § 126.1 Standing, Timing and Procedure.
2 McDonald v. Louquet (In re Louquet), 125 B.R. 267 (B.A.P. 9th Cir. 1991). See Powers v. Savage (In re Powers), 202 B.R. 618 (B.A.P. 9th Cir. 1996) (That debtor’s income as a casino dealer increased 48% after confirmation justified trustee’s motion to increase payments to unsecured claim holders.).
3 869 F.2d 240 (4th Cir. 1989).
4 See § 126.3 Does Disposable Income Test Apply? and § 126.6 Modification after Confirmation after BAPCPA.
5 54 B.R. 643 (Bankr. D.S.C. 1985).
6 70 B.R. 72 (Bankr. D.N.H. 1987).
7 See also § 41.3 [ Preconfirmation Amendment of Petition, Statements, Schedules and Lists ] § 41.2 Preconfirmation Amendment of Petition, Statements, Schedules and Lists.
8 269 B.R. 250 (Bankr. M.D. Fla. 2000).
9 See § 126.5 Changed-Circumstances Requirement? and § 126.6 Modification after Confirmation after BAPCPA.
10 See § 91.2 Projected (Disposable) Income and § 92.2 Projected Disposable Income: All Debtors.
11 See, e.g., In re Flennory, 280 B.R. 896, 897–98 (Bankr. S.D. Ala. 2001) (On bank’s motion to increase payments based on tax refund after confirmation, “a full analysis of Flennory’s income and expenses resulted in little or no increase at all in disposable income. . . . If fluctuations in income and expenses do not amount to a change substantial enough to give the debtor a significant increase in disposable income, then a creditor should not be permitted to seek to modify the debtor’s plan and vice versa.”).
12 236 B.R. 540 (Bankr. D. Mass. 1999), aff’d on other grounds, 243 B.R. 562 (D. Mass. 2000), aff’d, 235 F.3d 31 (1st Cir. 2000).
13 Accord In re Stinson, 302 B.R. 828, 833 (Bankr. D. Md. 2003) (Trustee’ motion to increase base amount is granted when debtors sold residence two years after confirmation for 21% more than the value used at confirmation. Modification to increase base amount satisfied the substantial and unanticipated circumstances test in Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989), because confirmed plan contemplated retaining the property and paying the arrearages and regular monthly payments from postpetition wages, and 21% increase in value in two years was substantial. Section 1325(a)(4) required the plan base to increase “to provide the unsecured creditors with a fund that is equivalent to the amount that would be available if the estate were liquidated under Chapter 7.”); In re Nott, 269 B.R. 250 (Bankr. M.D. Fla. 2000) (Arguably in dicta, $300,000 inheritance received after confirmation would be captured for unsecured creditors by a motion to modify under § 1329. “[E]ffective date of the plan” is the effective date of the modified plan for purposes of § 1329(b). At modification after confirmation, § 1325(a)(4) is applied to determine the liquidation value of the estate as of the effective date of the modified plan. Property acquired after confirmation is property of the estate. Inheritance received after confirmation must be valued for purposes of the hypothetical liquidation test if a motion to modify the plan to increase payments is filed.); In re Profit, 269 B.R. 51, 59 (Bankr. D. Nev. 2001) (On the trustee’s motion to modify plan to increase payments, postconfirmation forgiveness of indebtedness income resulting from employer’s forgiveness of debt on debtors’ residence is captured for unsecured creditors by the best-interests-of-creditors test in § 1325(a)(4), subject to exemption. The best-interests-of-creditors test in § 1325(a)(4) applies as of the effective date of the modified plan in the manner described in Barbosa v. Soloman, 235 F.3d 31 (1st Cir. 2000). “[T]he forgiveness of debt, as represented by the sales proceeds of the Palm Springs property, is property of the estate and, while not disposable income, must be considered at time of modification pursuant to §§ 1329(b)(1) and (2) and 1325(a)(4). Unless exempt, the Trustee’s Motion to Modify must be granted because the Palm Springs property sales proceeds must be made available for Debtor’s unsecured creditors.”), rev’d on other grounds, 283 B.R. 567 (B.A.P. 9th Cir. 2002).
14 237 B.R. 189 (Bankr. M.D. Fla. 1998).
15 237 B.R. at 193.
16 268 B.R. 875 (Bankr. M.D. Fla. 2001).
17 268 B.R. at 880. See also In re Tolliver, 257 B.R. 98, 100, 101 (Bankr. M.D. Fla. 2000) (On trustee’s motion to modify, proceeds from settlement of workers’ compensation claim are disposable income captured for payment to unsecured creditors. Although § 1325(b) ordinarily would not apply at modification on the motion of the trustee, “because Debtors failed to inform the Trustee of the potential settlement proceeds or of Tolliver’s involvement in a lawsuit prior to entry of the confirmation order, the Court could not previously make an appropriate determination as to whether the proceeds constituted disposable income. . . . Accordingly, the Court now addresses the issue.” Distinguishing Gamble v. Brown (In re Gamble), 168 F.3d 442 (11th Cir. 1999), and In re Ferretti, 203 B.R. 796 (Bankr. S.D. Fla. 1996), “[b]ecause the worker’s compensation proceeds in the instant case have not been exempted pursuant to 11 U.S.C. § 522(c),” the proceeds are disposable income payable to unsecured claim holders.). But see In re Richardson, 283 B.R. 783, 799 (Bankr. D. Kan. 2002) (Trustee cannot modify plan to increase payments using insurance proceeds received by the debtors 10 months after confirmation when the debtors’ adult son died in an automobile accident. The debtors exempted the insurance proceeds without objection, and the proceeds are “neither earnings nor other property that was devoted to the plan.”).
18 In re Furgeson, 263 B.R. 28 (Bankr. N.D.N.Y. 2001).
19 140 B.R. 476 (Bankr. N.D. Ill. 1992).
20 See § 264.1 [ To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim ] § 127.7 To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim for discussion of surrender and repossession of collateral after confirmation. See, e.g., In re Barclay, 276 B.R. 276 (Bankr. N.D. Ala. 2001) (Section 1329(a)(1) authorizes an increase in payments by modification after confirmation when the debtor surrenders a car.).
21 172 B.R. 530 (Bankr. S.D.N.Y. 1994).
22 198 B.R. 816 (Bankr. N.D. Ala. 1996).
23 Accord In re Thomas, 291 B.R. 189, 194–98 (Bankr. M.D. Ala. 2003) (10% plan is modified on trustee’s motion to pay fire insurance proceeds to unsecured creditors. Debtor scheduled residence at $42,000 subject to a $38,000 mortgage and exempted the $4,000 of equity. Less than two years later, residence was destroyed by fire and after payment of balance of mortgage, insurance carrier tendered $25,405.33 to the trustee. “[T]he modification is one of a type contemplated by Section 1329(a)(1). . . . [T]he Section 1329(b) requirements are met. . . . [T]he doctrine of res judicata does not operate to bar amendment of a confirmed plan. . . . [T]he Debtor’s plan is modified in order to pay the surplus insurance proceeds for the benefit of unsecured creditors. . . . [T]he Trustee [shall] remit $4,000 to the Debtor . . . the amount of equity in the residence, as reported in the Debtor’s schedules.”).
24 See § 126.3 Does Disposable Income Test Apply? and § 126.6 Modification after Confirmation after BAPCPA.
25 203 B.R. 796 (Bankr. S.D. Fla. 1996).
26 203 B.R. at 800. Accord In re Graham, 258 B.R. 286, 292–93 (Bankr. M.D. Fla. 2001) (Applying Gamble v. Brown (In re Gamble), 168 F.3d 442 (11th Cir. 1999), on the trustee’s motion to modify a 6% plan to increase payments to creditors using the settlement proceeds from a postpetition automobile accident, the debtors’ $1 exemption claim trumps the disposable income test. “The principles of Gamble control disputes over the application of the ‘disposable income’ test to § 522(l) conclusively exempt property. . . . [I]f a debtor’s claimed exemption is established under § 522(l) through expiration of the Rule 4003(b) period without objection, then § 522(c), [Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280 (1992),] and Gamble operate to prevent a bankruptcy court from treating such exempt property as disposable income under § 1325(b). . . . Debtors properly claimed an exemption in the personal injury claim . . . . The Rule 4003(b) [period] passed without objection. Thus, under § 522(l) and Taylor, the personal injury claim and any proceeds therefrom became conclusively exempt . . . . [T]he exempt personal injury settlement may not be applied to Debtors’ Plan as ‘disposable income,’ but is released completely into the custody, use and enjoyment of Debtors without qualification.” In a footnote, good-faith test in § 1325(a)(3) is an alternative source for disposable-income-test analysis on the motion of the trustee to modify the plan after confirmation.). See § 91.2 Projected (Disposable) Income, § 92.2 Projected Disposable Income: All Debtors, § 126.3 Does Disposable Income Test Apply? and § 126.6 Modification after Confirmation after BAPCPA for further discussion of the difficult interaction between the disposable income test and exemptions.
27 283 B.R. 783 (Bankr. D. Kan. 2002).
28 The debtors exempted the insurance proceeds without objection, thus eliminating consideration of the best-interests-of-creditors test. See § 126.2 Application of Tests for Confirmation and § 126.6 Modification after Confirmation after BAPCPA for discussion of how the best-interests-of-creditors test captures appreciating and newly acquired assets at modification after confirmation. See also § 90.2 Exemption Issues and § 90.3 Exclusions and Exemptions after BAPCPA for discussion of exemptions and the best-interests-of-creditors test.
29 283 B.R. at 799–801.
30 239 B.R. 406 (B.A.P. 9th Cir. 1999).
31 As assumption not warranted when the objection to modification comes from the debtor. See § 91.1 In General, § 92.1 In General and § 126.3 Does Disposable Income Test Apply?.
32 239 B.R. at 409–12. Accord In re Profit, 269 B.R. 51 (Bankr. D. Nev. 2001) (Applying McDonald v. Burgie (In re Burgie), 239 B.R. 406 (B.A.P. 9th Cir. 1999), on trustee’s motion to modify plan to increase payments, postconfirmation forgiveness of indebtedness income resulting from employer’s forgiveness of debt on debtor’s residence is not disposable income and need not be submitted to the trustee for payment to creditors under § 1322(a)(1) because the forgiveness of indebtedness produced a lump sum at sale of the residence, not a stream of payments.), rev’d, on other grounds, 283 B.R. 567 (B.A.P. 9th Cir. 2002); In re Euler, 251 B.R. 740 (Bankr. M.D. Fla. 2000) (When the plan does not provide that appreciation will be captured for the benefit of unsecured claim holders, trustee cannot modify the plan after confirmation to increase payments to unsecured claim holders when the debtor proposes to sell real property and pay off the plan in a lump sum. Bankruptcy court cites McDonald v. Burgie (In re Burgie), 239 B.R. 406 (B.A.P. 9th Cir. 1999), for the proposition that proceeds from sale of real property are not disposable income.).
33 239 B.R. at 412.
34 See § 126.3 Does Disposable Income Test Apply? and § 126.6 Modification after Confirmation after BAPCPA.
35 See also discussion beginning at § 126.1 Standing, Timing and Procedure and § 127.6 To Sell or Refinance Property of the Estate.
36 245 B.R. 764 (Bankr. D. Mass. 2000).
37 See above in this section, and see § 126.2 Application of Tests for Confirmation and § 126.6 Modification after Confirmation after BAPCPA.
38 245 B.R. at 767.
39 245 B.R. at 767 n.6.
40 269 B.R. 51 (Bankr. D. Nev. 2001), rev’d, 283 B.R. 567 (B.A.P. 9th Cir. 2002).
41 See § 126.2 Application of Tests for Confirmation for discussion of this aspect of In re Profit, 269 B.R. 51 (Bankr. D. Nev. 2001), rev’d, 283 B.R. 567 (B.A.P. 9th Cir. 2002). See also § 126.6 Modification after Confirmation after BAPCPA.
42 See § 111.1 Able to Make Payments and Comply with Plan and § 111.2 Feasibility Turned on Its Head after BAPCPA for discussion of feasibility of Chapter 13 plans.
43 99 B.R. 902 (Bankr. C.D. Ill. 1989).
44 99 B.R. at 905.
45 99 B.R. at 903, 905.
46 In re Woodhouse, 119 B.R. 819 (Bankr. M.D. Ala. 1990). Accord In re Torres, 193 B.R. 319, 324 (Bankr. N.D. Cal. 1996) (Rejects creditor’s motion to require payments for nine more months when 35% plan was paid in full in 27 months. Original plan provided for 35% payment of unsecured claims but said nothing about minimum duration of plan. Res judicata and § 1327 prohibit modification to extend payments because § 1325(b) was not triggered by objection to confirmation of the original plan. “This plan, as the form was completed by Debtor and confirmed by the Court, unambiguously announced that payments to the Trustee were going to be made only as long as necessary to permit all allowed claims to be paid at the rate of 35%, and it imparted notice to all that a minimum term of three years was not being proposed. Anyone—Trustee and/or creditors—who disliked the absence of a three year minimum term could have objected to confirmation on that basis to invoke § 1325(b)(1)(B) . . . . Once the plan is confirmed, it is res judicata as to the § 1325(b)(1)(B) issue.”).
47 In re Bostwick, 127 B.R. 419 (Bankr. N.D. Ill. 1991). Accord In re Fields, 269 B.R. 177 (Bankr. S.D. Ohio 2001) (Trustee’s motion to increase payments when a “percentage plan” completes in less than 36 months is permitted by § 1329(a)(1) without regard to whether disposable income test applies at plan modification.); In re McKinney, 191 B.R. 866 (Bankr. D. Or. 1996) (Grants trustee’s motion to require payments for 36 months to increase the dividend to unsecured creditors. Plan as confirmed provided 0% to unsecured claim holders. There were no secured claims, and it was projected that full payment of priority claims would require more than three years. Priority claims as finally allowed were substantially less than anticipated and were paid in 12 months. On trustee’s motion, court required payments to continue for three years.).
48 In re Burns, 216 B.R. 945 (Bankr. S.D. Cal. 1998) (Debtor estimated priority child support at $13,000, and confirmed plan that paid priority claims in full and no dividend to unsecured claim holders. Child support was assigned to County and turned out to be an unsecured, nondischargeable, nonpriority debt of $17,428.52. Upon learning that the plan based on the filed claims would be completed in 11 months, the Chapter 13 trustee moved to modify the confirmed plan to require a 30% dividend to unsecured claim holders. Debtors responded with a motion to modify proposing a separate classification of the unsecured nonpriority child support claim to pay that claim in full with interest and nothing to other unsecured claim holders. Applying AMFAC Distribution Corp. v. Wolff (In re Wolff), 22 B.R. 510 (B.A.P. 9th Cir. 1982), court found that debtors’ proposed separate classification discriminated unfairly against the nonchild support unsecured claim holders, and the court confirmed the trustee’s proposed modified plan.).
49 274 B.R. 4 (Bankr. D.D.C. 2001).
50 See § 170.1 [ Methods of Paying Unsecured Claims ] § 101.3 Methods of Paying Unsecured Claims for discussion of “pot” or “base” plans.
51 See § 276.1 [ Governmental Units ] § 132.3 Governmental Units.
52 274 B.R. at 12.
53 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993). See § 118.1 [ Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman ] § 79.1 Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman.
54 See § 268.1 [ To Extend or Reduce the Time for Payments ] § 127.11 To Extend or Reduce the Time for Payments.
55 See §§ 104.1 [ The Power to Modify ] § 74.11 The Power to Modify and 118.1 [ Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman ] § 79.1 Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman.
56 In re Klus, 173 B.R. 51, 54–56 (Bankr. D. Conn. 1994) (Undersecured mortgage holder with a claim that was bifurcated under § 506(a) and stripped down in a Chapter 13 plan confirmed before the Supreme Court’s decision in Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993), cannot amend the plan after confirmation under § 1329 to eliminate the unsecured portion of its claim and realize the protection from modification declared in Nobelman. “It is well settled that ‘under § 1327, a confirmation order is res judicata as to all issues decided or which could have been decided at the hearing on confirmation.’ . . . Keycorp’s motion is merely an attempt to relitigate the status of its claim after a change in the law occurring after the Confirmation Order. . . . Keycorp is . . . barred by the doctrine of res judicata from receiving the benefits achieved by the Nobelman appellee.”).
58 See § 265.1 [ To Decrease Payments to Creditors ] § 127.8 To Decrease Payments to Creditors.
59 See § 264.1 [ To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim ] § 127.7 To Surrender Collateral, Account for Repossession or Change the Treatment of a Secured Claim.
60 See 11 U.S.C. § 348. See also § 143.2 In Cases Filed after October 22, 1994. But see § 142.3 Application of § 707(b) Abuse Test at Conversion and § 143.5 Bad-Faith Conversion.
61 See § 254.1 [ Application of Tests for Confirmation ] § 126.2 Application of Tests for Confirmation.
62 See discussion of good faith before and after BAPCPA beginning at § 103.1 In General, § 104.1 In General, § 105.1 Prepetition Conduct and Misconduct—In General, § 106.1 In General, § 107.1 Greed, Not Need, § 108.1 Economic Components of Good Faith—In General and § 109.1 Smell Tests.
63 See discussion of best-interests-of-creditors test beginning at § 90.1 In General: Plan Payments vs. Hypothetical Liquidation.
64 See § 111.1 Able to Make Payments and Comply with Plan and § 111.2 Feasibility Turned on Its Head after BAPCPA.
65 111 B.R. 671 (Bankr. M.D. Tenn. 1990).
66 202 B.R. 991 (D. Kan. 1996).
67 See also In re Jacobs, 263 B.R. 39 (Bankr. N.D.N.Y. 2001) (Bankruptcy court denies trustee’s motion to increase payments to unsecured creditors when trustee received $20,000 after 60th monthly payment on account of the settlement of the debtors’ interest in an asset scheduled five years earlier with a value of $1. Debtor had completed payments under the plan. Appreciation in the value of the asset was not a substantial, unanticipated change in circumstances. To allow the trustee’s motion would violate the 60-month maximum duration of a modified plan under § 1329(c).).
68 267 B.R. 690 (Bankr. D.N.J. 2001).
69 267 B.R. at 695.
70 See Fed. R. Bankr. P. 1007(h). See, e.g., In re Euerle, 70 B.R. 72 (Bankr. D.N.H. 1987). See also § 41.3 [ Preconfirmation Amendment of Petition, Statements, Schedules and Lists ] § 41.2 Preconfirmation Amendment of Petition, Statements, Schedules and Lists.
71 See § 91.2 Projected (Disposable) Income and discussion of projected disposable income test after BAPCPA beginning at § 92.1 In General.
72 See discussion of disposable income test before and after BAPCPA beginning at § 91.1 In General and § 92.1 In General.
73 See § 91.1 In General, § 92.1 In General, § 126.3 Does Disposable Income Test Apply? and § 126.6 Modification after Confirmation after BAPCPA.
Shuman v. Allan (In re Allan), No. 10-11991, 2011 WL 1496468 (11th Cir. Apr. 20, 2011) (unpublished) (Wilson, Pryor, Bucklew) (Creditor's motion to modify confirmed plan to increase dividend to 100% was properly denied because unscheduled interest in spendthrift trust was not property of estate under § 541(c)(2). Debtor's failure to disclose beneficial interest in trust was not bad faith. Trust had been established by debtor's father for benefit of debtor, or debtor's descendants, with debtor's brother as trustee, and none of debtor's property had been placed into trust. Debtor would receive no distribution from trust for several years.).
Mattson v. Howe (In re Mattson), 468 B.R. 361 (B.A.P. 9th Cir. Apr. 5, 2012) (Jury, Hollowell, Kirscher) (When debtors' income increased after confirmation, plan can be modified to increase the monthly payment to creditors, but debtors failed to prove good faith with respect to reducing length of plan. Although projected disposable income test does not apply and debtors need not show unanticipated changed circumstances, good faith includes consideration of length of plan and proposal to increase monthly payment is not per se good faith.).
McCarty v. Jenkins (In re Jenkins), 428 B.R. 845, 850 (B.A.P. 8th Cir. Apr. 26, 2010) (Schermer, Mahoney, Saladino) (Postconfirmation modifications that increased payments to cure postpetition mortgage defaults did not automatically increase base amount payable to trustee; debtor was not in material default at end of 60-month period when original base amount was satisfied but not increased base amount that trustee calculated internally each time the plan was modified to raise the monthly payment. "The Debtor's plan was ambiguous and silent regarding the amount of the base. No modification of the Debtor's plan provided a definition for the term 'base' or a specific statement of the base amount. The modifications did not state that the Debtor intended to increase his plan base or explain why the Debtor increased the amount of his monthly plan payment. . . . We urge bankruptcy courts to require every debtor to specify the plan base in his original plan and any modifications to it.").
Germeraad v. Powers (In re Powers), No. 14-03128, 2015 WL 5725701 (C.D. Ill. Sept. 30, 2015) (Myerscough) (Trustee's motion to increase payments based on tax return showing postconfirmation increase in disposable income is denied because disposable income test does not apply at modification after confirmation.).
Goodman v. Gorman, 534 B.R. 656 (E.D. Va. July 21, 2015) (Lee) (Trustee's motion to modify under § 1329 is granted to capture $36,000 inheritance two years after confirmation; debtor's change in expenses is not sufficient to defeat capture of the entire $36,000.).
Washington v. Countryman, 390 B.R. 843 (E.D. Tex. Sept. 28, 2007) (Income tax refunds supported modification to increase payments to unsecured creditors. Debtors were surprised by tax refund. Under Meza v. Truman (In re Meza), 467 F.3d 874 (5th Cir. 2006), modification was appropriate without showing changed circumstances.).
Washington v. Countryman, 390 B.R. 843 (E.D. Tex. Sept. 28, 2007) (Schell) (On trustee's motion, confirmed plan is modified to increase dividend when debtors received tax refund. Neither res judicata nor judicial estoppel is bar to modification. As long as payments under plan have not yet been completed, plain language of § 1329(a)(1) permits modification to increase payments to unsecured class. It is unnecessary for trustee to show change in circumstances.).
Marshall v. Mangum (In re Mangum), Nos. 06 C 3847, 04 B 41017, 06 A 879, 2007 WL 495300, at *3 (N.D. Ill. Feb. 12, 2007) (unpublished) (Upon court-approved sale of debtor's home, early payoff of creditors is not a modification of confirmed plan.).
In re Sledge, No. 15-51114, 2018 WL 4090584 (Bankr. N.D. Ohio Aug. 27, 2018) (Koschik) (On trustee’s motion to modify in 18th month after confirmation, ambiguous plan provision for 25% payment of unsecured creditors is amended to 100% to reflect failure of a large creditor to file a timely claim. Confirmation order required debtor to pay disposable income to trustee for entire 60-month applicable commitment period and trustee is correct that plan can now pay 100% of allowed unsecured claims within the 60 months. Baud v. Carroll, 634 F.3d 327 (6th Cir. Feb. 4, 2011) (Cole, Clay, Katz), requires debtor to pay the trustee for the entire applicable commitment period. Debtor had not completed plan payments at time trustee filed motion to modify because ambiguous provision for 25% payment was properly interpreted as an estimate.).
In re Matusak, 571 B.R. 176 (Bankr. E.D.N.C. May 17, 2017) (Humrickhouse) (Increase in annual income from $90,000 to $165,000 was substantial change in circumstance that justified increasing monthly payment from $2,000 to $6,373 and extending length of applicable commitment period from 36 months to 60 months.).
In re Hazlewood, 570 B.R. 557 (Bankr. N.D. Tex. May 12, 2017) (Mullin) (Lawsuit not provided for otherwise in plan vested in debtor free and clear of the claims of creditors at confirmation, and postconfirmation proceeds from that lawsuit cannot be captured for creditors by trustee’s motion to modify under § 1329.).
In re Alonso, 570 B.R. 622 (Bankr. D. Idaho May 2, 2017) (Pappas) (Trustee’s motion to increase plan payments based on increased income is granted in part. Court reviews pay stubs and recalculates available additional funds.).
In re Burns, 566 B.R. 918, 923 (Bankr. N.D. Ind. Apr. 17, 2017) (Grant) (Modification after confirmation to increase dividend to unsecured creditors is appropriate when a secured creditor fails to timely file a proof of claim and the debtors’ late-filed claim on behalf of the creditor is disallowed. “The failure to file a timely proof of claim can alter the provisions of a confirmed plan . . . . [A]djustments may be required. . . . Section 1329 accommodates this possibility by allowing a confirmed plan to be modified to ‘increase or reduce the amount of payment on claims of a particular class provided for by the plan.’ . . . That is all the trustee wants to do here: increase the payments to the unsecured creditor class to account for the inability to make a distribution to the Credit Union because it does not have an allowed claim.”).
In re Howell, No. 16-10346, 2017 WL 1731785 (Bankr. N.D. Ind. Apr. 17, 2017) (Grant) (Modification after confirmation to increase dividend to unsecured creditors is appropriate when secured creditor fails to timely file a proof of claim and the debtor’s late-filed claim on behalf of the secured creditor is disallowed.).
In re Pinet, No. 14-10192, 2017 WL 1379331, at *3–*4 (Bankr. D. Me. Apr. 14, 2017) (Fagone) (Trustee’s motion to modify confirmed plan to increase payments to unsecured creditors is granted when property interest scheduled at $8,415 is sold for $11,362, 21 months after confirmation. “[T]he trustee has moved to modify the debtors’ confirmed plan to increase the funds to be paid to the holders of unsecured claims. This modification is of the type permitted by section 1329(a)(1). . . . [T]he trustee asserts that a post-confirmation modification is appropriate because the Property sold for a price that was substantially greater than the value listed on the debtors’ schedules, and that sale has made it possible for the debtors to pay more to their unsecured creditors. The debtors have not contended or demonstrated that they require 100% of the net proceeds of the sale to support themselves or their dependents.”).
In re Roehm, Nos. 13-41385, 14-40163, 2016 WL 7984346, at *2 (Bankr. S.D. Ill. Dec. 8, 2016) (Altenberger) (Trustee’s motions to modify to require additional payments are denied when debtors on Social Security used a small tax refund and a small insurance check to prepay a half dozen final payments; debtors acted in good faith, creditors received all to which they were entitled, additional payments requested by trustee were inconsequential and no cause was shown for modification. Separate debtors in 36-month $100-per-month plans each prepaid the last five or six payments from unanticipated sources—a tax refund and the insurance proceeds from a wrecked car. Both debtors lived on Social Security income. Chapter 13 trustee moved to modify the plans in each case to require an additional five or six monthly payments of $100 each, increasing the plan base in each case by $500. “Debtors acted in good faith. Neither Debtor sought to reduce the amount they were to pay to creditors. Rather, they prepaid their plans. . . . The creditors received every cent called for by the confirmed plan . . . . [F]rom the creditors’ perspective, the additional $500.00 sought by the Trustee is of little consequence . . . . The Debtors’ prepayment of their confirmed plans does not justify a finding of cause to further amend their plans.”).
In re Russell, No. 13-30160-DHW, 2016 WL 3564314, at *2–*3 (Bankr. M.D. Ala. June 22, 2016) (Williams) (Increasing the dividend to unsecured creditors is not alone sufficient cause to extend the plan term beyond three years at modification after confirmation; trustee failed to prove cause to extend applicable commitment period beyond three years to capture proceeds of settlement of auto accident received after three-year commitment period had expired. “While it is undisputed that the motor vehicle accident cause-of-action accrued during the debtor’s three-year applicable commitment period, the settlement proceeds were not received by the debtor until after that time had expired. . . . [A]lthough the trustee is correct in stating that settlement proceeds are property of the estate and disposable income, the debtor is not required to pay the proceeds into the plan because the applicable commitment period ended prior to her receipt of those proceeds. . . . [T]he trustee seeks modification in order to capture settlement proceeds for the benefit of unsecured creditors. Doing so would extend the plan beyond this below-median income debtor’s applicable commitment period. Increasing payments to unsecured creditors is not sufficient cause to extend the plan term beyond three years.”).
In re Rankin, 546 B.R. 861 (Bankr. D. Mont. Mar. 14, 2016) (Kirscher) (Plan is modified on trustee's motion to increase payments to unsecured creditors based on postpetition inheritance. Debtor is equitably estopped to shelter postpetition inheritance when debtor did not amend schedules to reveal the inheritance as required by Bankruptcy Rules 1007(h) and 4002(a)(3).).
In re Ormiston, 501 B.R. 303 (Bankr. E.D.N.C. Nov. 7, 2013) (Humrickhouse) (Inheritance more than 180 days postpetition was estate property under §§ 541(a)(5)(A) and 1306(a)(1), and ground for modification to increase payments under confirmed plan. Inheritance was unanticipated and substantial change in financial condition that increased dividend between 800% and 1500%.).
In re Fleck, No. 09-65322, 2013 WL 4462202 (Bankr. N.D. Ohio Aug. 19, 2013) (unpublished) (Kendig) (Trustee's request for $1,000-per-month modification under § 1329(a) granted when debtors' take-home pay increased by $947.00. Debtors failed to account for change in household allowances once they stopped claiming daughter and granddaughter as dependents on their taxes.).
In re Salpietro, 492 B.R. 630, 638 (Bankr. E.D.N.Y. June 10, 2013) (Grossman) (Change in expenses resulting from refinancing of residential mortgage is not adequate basis for modification after confirmation to increase payments to unsecureds. "[I]t was never Congress's intention that increases or decreases in a debtor's monthly expenses, alone, would be grounds to revisit a confirmed chapter 13 plan. The disposable income analysis conducted at the time of the original plan confirmation, although it is an estimate, should be afforded some finality and should not be disturbed solely on the basis of fluctuations in a debtor's expenses.").
In re Gamboa, No. 10-14560-A13, 2013 WL 2460514 (Bankr. S.D. Cal. June 3, 2013) (unpublished) (Adler) (Trustee's motion to increase percentage to unsecured creditors is granted to reflect turnover of tax refunds, but debtors are not required to pay additional amount for trustee's administrative expenses.).
In re DelConte, No. 07-30583, 2012 WL 1739788 (Bankr. E.D. Va. May 15, 2012) (Tice) (Inheritance of one-half interest in property worth $133,000 was substantial and unanticipated change in circumstances that justified trustee's motion to increase payments to unsecured creditors; when debtor failed to reveal the inheritance or subsequent transfer of that inheritance to her sister, trustee's motion to modify is granted with condition that debtor must pay unsecured creditors in full within 30 days to receive a discharge.).
In re Cluff, No. 09-41244-JDP, 2012 WL 909551 (Bankr. D. Idaho Mar. 15, 2012) (Pappas) (Trustee's motion to modify confirmed plan to increase distribution to unsecured creditors is denied when modification would require monthly payments in excess of Schedule I income. Debtor had not experienced increase in net income and, in fact, had insufficient income to make current plan payments.).
In re Kirby, No. BK10-40455-TLS, 2012 WL 733884 (Bankr. D. Neb. Mar. 6, 2012) (Saladino) (Trustee's motion to modify plan was granted to pay allowed unsecured creditors in full from $495,000 settlement of personal injury claim.).
In re Davenport, No. 08-41213, 2011 WL 6098068 (Bankr. D. Kan. Dec. 7, 2011) (Karlin) (On trustee's motion, best-interests-of-creditors test required modification of confirmed plan to pay proceeds of unauthorized postpetition sale of estate property to unsecured creditors. Debtors sold one-sixth interest without court approval and spent most of proceeds. Section 1325(a)(4) applies to postconfirmation modifications to ensure that creditors are not treated worse in Chapter 13 than they would be in Chapter 7 liquidation.).
In re Veal, No. 08 B 35319, 2011 WL 5240291 (Bankr. N.D. Ill. Nov. 1, 2011) (Hollis) (Trustee's motion to modify confirmed plan to increase dividend to unsecured creditors to reflect $5,000 punitive damage award for willful stay violation is granted. Debtor gets partial exemption because trustee did not timely object to wild card exemption, leaving balance of damages available for unsecured creditors.).
In re Zeitchik, No. 09-05821-8-JRL, 2011 WL 5909279 (Bankr. E.D.N.C. Sept. 23, 2011) (Leonard) (After receiving postpetition inheritance, debtor must modify confirmed plan to pay more unsecured debt, either in lump sum or by increase in payment amounts. Property acquired through inheritance more than 180 days after commencement of case was property of estate, because § 1306 extended 180-day period in § 541(a)(5) to include any property acquired between commencement of case and time case is closed, dismissed or converted.).
In re Edgley, No. 06-80163-G3-13, 2010 WL 5376288 (Bankr. S.D. Tex. Dec. 27, 2010) (Paul) (Refund of overpayment of mortgage inures to benefit of unsecured creditors on trustee's motion to modify. $2,809.10 refund received from Wells Fargo from overpayment of regular monthly mortgage payment increases distribution to unsecured creditors.).
In re Stewart, No. 10-91142, 2010 WL 5372782 (Bankr. C.D. Ill. Dec. 22, 2010) (Fines) (Modification to increase distributions to pay 100% of timely filed unsecured claims accounts for postconfirmation inheritance and satisfied hypothetical liquidation test. Trustee's motion to file claims on behalf of other creditors was denied.).
In re Prieto, No. 3:08-bk-3308-PMG, 2010 WL 3959610 (Bankr. M.D. Fla. Sept. 22, 2010) (Glenn) (An increase in income of more than $2,000.00 per month in the year after confirmation warrants modification to increase payments under the plan by $380 per month. Hamilton v. Lanning, 560 U.S. 505, 130 S. Ct. 2464, 177 L. Ed. 2d 23 (June 7, 2010), dealt with confirmation of a debtor's initial plan under § 1325, not with modification of a confirmed plan under § 1329; nevertheless, the decision evidences intent to use actual income and expenses during the life of the Chapter 13 plan to establish plan payments.).
In re Hall, 442 B.R. 754, 761-62 (Bankr. D. Idaho Aug. 31, 2010) (Pappas) (Lump-sum Social Security disability benefit must be committed to increase payments at modification after confirmation, but future monthly disability benefits did not substantially increase monthly income. Debtors had spent much of lump-sum benefits, but amount remaining must be paid over to trustee for distribution to creditors under modified plan. Social Security disability benefits would be protected from creditors in liquidation case, citing 42 U.S.C. § 407, but that protection did not insulate Social Security disability income from payment of current expenditures or for trustee distribution. "[A]llowing Debtors to accrue income, rather than to apply that income to their plan payments, would constitute a windfall, which is . . . inequitable result.").
In re Bell, No. 07-74432-MGD, 2010 WL 3397433, at *1 (Bankr. N.D. Ga. June 17, 2010) (unpublished) (Diehl) (Trustee had standing to seek modification under § 1329(a) to increase dividend to unsecured creditors from 0% to 100% when postconfirmation amendment to Schedule B reflected nonexempt personal property worth more than $120,000. "Trustee would have objected to the plan's zero-percent dividend to unsecured creditors had the Debtor's original Schedule B disclosed that Debtor had over $120,000.00 in non-exempt equity in the previously undervalued household goods.").
In re Ryan, 431 B.R. 1, 4 (Bankr. D. Mass. May 28, 2010) (Hoffman) (When confirmed plan provided for minimum 7% distribution to unsecured creditors and filed claims were too large to fund minimum amount, trustee's motion to dismiss was treated as motion to compel debtor to file modified plan or object to claims so that distribution would not fall below 7%. Debtor's argument that original plan was pure pot plan ignored confirmation order that required minimum 7% distribution to unsecured creditors. When filed claims would push distribution below that floor, debtor must either file modified plan or file objection to claims to maintain minimum 7% distribution. District's form plan "is not a pure pot plan but a hybrid—a pot plan with a floor. Depending on the allowance of claims after confirmation, the dividend to unsecured creditors may stay the same or increase, but it can never fall below a minimum—here 7%.").
In re Pittman, No. 08-08662-8-RDD, 2010 WL 2206919 (Bankr. E.D.N.C. May 27, 2010) (unpublished) (Doub) (On trustee's motion to dismiss, inheritance received by debtor within 180 days of petition was property of estate that must be accounted for by modification of plan; debtors' refusal to modify plan to increase payments to unsecureds is cause for dismissal.).
In re Ezzell, No. 07-34780, 2010 WL 786299, at *2 (Bankr. S.D. Tex. Mar. 9, 2010) (Isgur) (In third year of five-year, zero percent plan, modification to increase payments to unsecured creditors was not available because debtors had paid to trustee $750,000 medical malpractice settlement that created $467,387 overpayment under confirmed plan. There was no evidence of fraud or bad faith by debtors.).
In re Rodger, 423 B.R. 591 (Bankr. D.N.H. Feb. 5, 2010) (Deasy) (Trustee may seek modification of confirmed plan to obtain income tax refunds to increase payments to creditors, but modification would only apply to tax refunds received after filing of motion.).
In re Watson, 417 B.R. 165 (Bankr. D.N.H. Oct. 26, 2009) (Deasy) (Citing Barbosa v. Solomon, 235 F.3d 31 (1st Cir. Dec. 21, 2000) (Torruella, Selya, Casellas), under § 1329, trustee is not precluded from seeking modification to increase payments to unsecured creditors by turnover of postconfirmation tax refunds. Because debtors did not have notice that they would be required to turn over tax refunds, it would be unfair to require turnover of previously received refund.).
In re Self, No. 06-40228, 2009 WL 2969489 (Bankr. D. Kan. Sept. 11, 2009) (Karlin) (Typical reason for trustee or unsecured creditor to seek increase in plan payments is increase in postconfirmation income; debtors with substantial increase in income cannot just increase expenses to defeat additional payments. Debtors ordered to file amended Schedules I and J accurately reflecting current monthly income and expenses, with opportunity for trustee to examine amended schedules and decide whether to pursue modification.).
In re Midgley, No. 05-30162-tmb 13, 2009 WL 960380 (Bankr. D. Or. Jan. 7, 2009) (Brown) (Trustee's motion to modify confirmed plan to increase payments to creditors is justified when debtors have ability to increase distribution to unsecured creditors. Confirmed plan stated that debtors would immediately notify trustee if their income increased by more than 10% and that they would provide tax returns to trustee. On trustee's motion, in a pre-BAPCPA case, In re Sunahara, 326 B.R. 768 (B.A.P. 9th Cir. 2005), does not prevent consideration of debtors' current disposable income as factor bearing on whether to modify plan to increase payments to creditors.).
In re Knighton, No. 07 B 71560, 2008 WL 5644891 (Bankr. N.D. Ill. Nov. 14, 2008) (Barbosa) (On trustee's motion, plan is modified to capture postconfirmation tax refund in excess of $2,000 based on good-faith requirement in § 1325(a)(3).).
In re Stilwell, No. 07-80826, 2008 WL 3835677 (Bankr. E.D. Okla. Aug. 12, 2008) (Cornish) (Modification granted on trustee's motion to increase payments to unsecured creditors when debtor over-withheld taxes for several years; debtor not required to turn over prior tax refunds.).
In re Wetzel, 381 B.R. 247 (Bankr. E.D. Wis. Jan. 29, 2008) (Kelley) (Postconfirmation inheritance may support trustee's motion to increase payments to 100%; further hearing set to determine feasibility and apply best-interests-of-creditors test.).
In re Young, 370 B.R. 799, 803 (Bankr. E.D. Wis. July 2, 2007) (Citing In re Witkowski, 16 F.3d 739, 745 (7th Cir. 1994), one of three circumstances justifying postconfirmation modification is "to increase or reduce payments to a particular class of claims." Modification to retain tax refunds already received is denied, but debtor may modify plan to keep refund due after motion because debtor established need for those funds.).
In re Salter, No. 04-33705-DHW, 2007 WL 1076686 (Bankr. M.D. Ala. Apr. 6, 2007) (Trustee's motion to modify confirmed plan to require payment of postpetition lump-sum Social Security benefit to unsecured creditors is denied on finding that debtor's income declined since confirmation.).
In re Osborne, No. 05-27728, 2007 WL 433373 (Bankr. N.D. Ohio Feb. 5, 2007) (unpublished) (Trustee's motion to modify confirmed plan granted to increase distribution to unsecured creditors from 2% to 100%, without an increase in monthly plan payments or plan term, when unfiled claims permitted higher distribution.).
In re Heck, No. 05-14065-DK, 2006 WL 4711337 (Bankr. D. Md. June 9, 2006) (Trustee's motion to modify confirmed plan to capture as disposable income all of debtors' withdrawal from 401(k) account is rejected because under Maryland law retirement account remains exempt upon withdrawal, and exempt funds do not constitute disposable income.).
In re Brown, 332 B.R. 562, 566, 567 (Bankr. N.D. Ill. July 7, 2005) (Trustee may seek to modify plan to increase payments when debtor filed application to refinance home and disclosed increased income but trustee could not capture funds from refinancing. After confirmation, debtor sought to refinance real property, disclosing an increase in income. Trustee moved to modify plan to increase payments based upon increased income and to capture funds generated by refinancing. Trustee has absolute right to seek modification of plan after confirmation before completion of payments. There is no requirement that plan be modified when disposable income increases. "There is a split of authority on whether the disposable income test of § 1325(b)(1)(B) applies to plan modification . . . . Under the plain language of § 1325, subsection (b) is applicable only when an objection to confirmation is brought by the Trustee or the holder of an allowed unsecured claim. Here, the Trustee is the proponent of the plan modification and no such objection was asserted. Congress did not intend for debtors who experience substantially improved financial conditions after confirmation to avoid repaying their creditors. But even though the disposable income or 'best efforts' test may not be mandatory at the time of modification, the court finds that the good faith test requires consideration of whether there is excess income above the current plan payments that is available for the debtor to pay into the plan." With respect to proceeds from refinancing: "The mere receipt of refinanced proceeds, alone, does not justify a plan modification requiring all those proceeds to be paid into the plan in addition to the original monthly plan payments." Debtor's net worth for purposes of liquidation test did not increase because debtor incurred additional debt equivalent to amount of proceeds. Had real estate been sold, as opposed to refinanced, result could change. Debtor may use proceeds from refinance for early payoff of plan as increased after trustee's modification.).
In re Drew, 325 B.R. 765, 773, 774 (Bankr. N.D. Ill. June 23, 2005) (Plans would be amended upon application of trustee when debtors refinance their homes after confirmation. In consolidated cases, each debtor obtained court approval to refinance real estate for an amount in excess of value of property at confirmation. Chapter 13 trustee sought to amend each plan to increase dividend to unsecured creditors by cash amount of refinancing in excess of mortgages. "The statutory text of § 1329 allows for plan payments to be appropriately increased or decreased for the statutory grounds stated: the rise or fall of equity in property is not one of the limiting factors enumerated in the text. . . . If the debtors are unhappy with the result here, they can always voluntarily dismiss their Chapter 13 cases. . . . The effect of § 1329 is to allow confirmed Chapter 13 plans to be modified either to reduce the total price paid by debtors for the benefits received under Chapter 13, or as here, to increase that price. . . . What the Trustee seeks to do in these matters is to increase the effective dividends for unsecured creditors by the amount of 'equity' in the properties that the debtors seek to take out in cash from their approved refinancing. The Court finds that § 1329 permits this because the Debtors have not paid off their confirmed plans prior to the filing of the motions.").
In re Nevins, No. 02-37055DWS, 2005 WL 984182 (Bankr. E.D. Pa. Apr. 26, 2005) (unpublished) (Courts generally recognize that Chapter 13 trustee can modify confirmed plan to increase payments to unsecured creditors when circumstances change and debtor realizes proceeds from sale of real property in excess of amount scheduled; however, trustee must make a motion to modify and cannot simply argue in opposition to the debtors' motion to sell that the proceeds should be distributed in a manner different from that requested by the debtor. Bankruptcy court grants trustee time to file motion to modify to increase payments to creditors.).
In re Murphy, 327 B.R. 760, 771, 774 (Bankr. E.D. Va. Jan. 12, 2005) (When debtor sells real estate for substantial gain, unanticipated at confirmation, trustee's motion to modify to capture gain for unsecured creditors is granted; when debtor sought to refinance mortgage to "capture the equity," trustee's motion to modify is denied because refinancing is not improvement in financial condition. In one case, debtor sought to sell real estate for $235,000 11 months after scheduling condominium at $155,000. In second case, debtors valued real estate at $223,000 subject to a $192,400 mortgage and 18 months later sought to refinance in an amount sufficient to pay off plan. "In the present case, neither the motion to sell nor the motion to refinance seeks to reduce the amount to be paid the unsecured creditors. Indeed, because there is a time value to money, an early payoff actually increases the economic worth, or present value, of the distribution to the unsecured creditors. . . . Accordingly, the court declines to treat a voluntary early pay-off by the debtors of the confirmed plans in the present cases as a post-confirmation 'modification' that triggers de novo review of previously resolved confirmation issues, such as the liquidation test." "A loan does not represent income, nor does it improve a debtor's financial condition. Rather, the cash received from a loan is balanced by a corresponding debt, with the result that the debtors' net worth remains unaltered."), aff'd, 474 F.3d 143 (4th Cir. 2007) (Trustee's motion to increase dividend to unsecured creditors is sustained when debtor sells condominium 11 months after confirmation at 51.6% increase in value; motion to increase dividend to unsecured creditors is denied when debtor refinances home after confirmation because refinancing does not produce a change in the debtor's financial circumstances for purposes of Arnold v. Weast (In re Arnold), 869 F.2d 240 (4th Cir. 1989).).
In re Carey, No. 02 B 75502, 2004 WL 3623505, at *3, *5 (Bankr. N.D. Ill. Nov. 2, 2004) (unpublished) (Trustee's motion to modify is granted, "to increase plan payments based upon income derived from overtime compensation and income tax refunds if those funds are determined to constitute disposable income." Debtors had increase in income subsequent to confirmation and filed tax returns, with trustee showing that increase. Trustee sought retroactive and prospective modification based on debtors' actual income subsequent to confirmation. Projected disposable income is standard at confirmation, and increase in income subsequent to confirmation may justify prospective modification of plan to increase payments to creditors; however, "allowing such a modification based upon hindsight would alter the requirement of § 1325 that all 'projected' disposable income be devoted to the plan. Just as the Ninth Circuit held in Anderson v. Satterlee (In re Anderson), 21 F.3d 355, 358 (9th Cir. 1994), a requirement to devote actual disposable income at the time of confirmation would impose a more burdensome standard than § 1325 requires. Similarly, allowing a retroactive modification to require debtors to devote all actual disposable income would undo the original confirmed plan and would nullify the requirement to devote projected disposable income. . . . [A]bsent a showing of a debtor's failure to report a significant increase in income or a change of employment, a plan may only be modified prospectively from the date of the hearing on the motion.").
In re Defrehn, No. 02-20290, 2003 WL 25273838, at *4-*5 (Bankr. D. Idaho June 13, 2003) (unpublished) (Trustee's motion to modify captures lump-sum Social Security disability payment received by debtor after confirmation notwithstanding that payment was exempt. "[S]ocial security disability payments, paid out in a lump sum fashion . . . are intended to supplement or replace lost income due to . . . physical or mental impairment . . . . [S]uch payments qualify as income or income substitutes. . . . 'The proper inquiry . . . is whether they are income or income substitutes, not whether the debtor receives them in bulk or in installments.' . . . [S]ocial security disability payments are . . . income . . . received by the Debtors post-petition and . . . not a pre-petition asset . . . . The existence of an exemption is not directly relevant to the analysis.").