Opinion ID: 2653399
Heading Depth: 2
Heading Rank: 2

Heading: Chapter 13 Reorganization Generally

Text: As the bankruptcy court aptly noted, Chapter 13 of the Bankruptcy Code “is designed to facilitate adjustments of the debts of individuals with regular income through extension and composition plans funded out of future income, under the protection of the court.” Id. at 887 (internal quotation marks omitted). Under Chapter 13, “any individual with regular income” may file for Chapter 13 reorganization and make “payments to a trustee under bankruptcy court protection, with the trustee fairly distributing the funds deposited to creditors until all debts 14 Case: 13-10260 Date Filed: 02/14/2014 Page: 15 of 23 have been paid.” United States v. Devall, 704 F.2d 1513, 1515–16 (11th Cir. 1983) (quotation marks omitted). Chapter 13, therefore, differs from a liquidation proceeding under Chapter 7. See 11 U.S.C. § 701 et seq. In a Chapter 7 case, a trustee gathers up a debtor’s non-exempt property, sells that property, and uses the cash proceeds to repay the debtor’s creditors. See id. § 704(a)(1). Afterwards, the Chapter 7 debtor is entitled to a discharge of all outstanding debts. See id. § 727(a). Chapter 7 requires a debtor to give up his non-exempt assets but allows him immediate debt relief. See id. Here, it is undisputed that Brown had no non-exempt assets. Therefore, Brown was not attempting to preserve any assets by pursuing a Chapter 13 petition. In short, Chapter 7 would have given Brown immediate relief. On the other hand, Chapter 13 enables a debtor to retain his non-exempt assets and use his regular income (instead of those assets) to repay his debts. Chapter 13 requires a debtor to file a debt repayment plan. Id. § 1321. That plan must, inter alia, “provide for the submission of all or such portion of future earnings or other future income of the debtor to the supervision and control of the trustee as is necessary for the execution of the plan.” Id. § 1322(a)(1). A Chapter 13 debtor does not receive a discharge until the end of his plan. As discussed, Brown’s plan here required him to make monthly payments of $150 for three years to receive his discharge. 15 Case: 13-10260 Date Filed: 02/14/2014 Page: 16 of 23 After a debtor files a Chapter 13 plan, the bankruptcy court must “hold a hearing on confirmation of the plan” during or before which “[a] party in interest may object to confirmation.” Id. § 1324(a). The bankruptcy court may confirm the plan if, inter alia: (1) “the plan has been proposed in good faith and not by any means forbidden by law”; and (2) “the action of the debtor in filing the petition was in good faith.” Id. § 1325(a)(3), (a)(7). At any point before discharge, a debtor: (1) may convert a case under Chapter 13 to a case under Chapter 7; or (2) may request that the bankruptcy court dismiss a Chapter 13 case. Id. § 1307(a)– (b).