Court Opinion

ID: 9701073
Source: CourtListenerOpinion
Date Created: 2023-08-25 22:03:33.095342+00
Date Added: 2024-06-11T15:00:22.172361
License: Public Domain

HUGHES, Bankruptcy Judge,
concurring:
I concur in vacating the orders of confirmation. If the plans are amended on remand to provide expressly that the debtors themselves maintain current payments, I take it that any order of confirmation would not be “contrary to the opinion herein."
I
The consolidated appeals turn on the meaning of this part of 11 U.S.C. § 1322(b): the plan may—
(5) ... provide for the curing of any default within a reasonable time and maintenance of payments while the case is pending ...
Each of the plans before us expressly provides for the trustee to make specified monthly payments to the secured creditor on the arrearages. Glasper’s plan “exclude^]” her “regular monthly house payment” from the plan and states that it is “not provided for by the plan.” Williams’ plant makes no reference to maintenance of regular monthly payments.
Section 1322(b)(5) is not mandatory (“the plan may”) but it would appear that if the plan provides for curing a default it must also provide for the maintenance of regular monthly payments. This was one of the precise holdings of the only court of appeals decision on the issue. In re Foster, 670 F.2d 478, 488 (5th Cir.1982). The plans before us provide only for the former payments and are therefore deficient. It is for this limited reason that I vote to vacate the orders of confirmation.
That deficiency may be remedied readily by amending the plans to provide for maintenance of regular payments, whether by the trustee or by the debtors directly to the secured creditors.
II
Appellants and the intervening trustee in bankruptcy do not attack the order of confirmation on so narrow and technical a basis, however. They would read into section 1322(b)(5) an additional requirement that all payments, whether arrearages or regular, be made by the trustee rather than by the debtor. Thus, appellants argue that such payments “must be included inside the plans,” and that the “debtor does not have the option under the Code to make payments directly to the creditor outside the plan.”
In other words, appellants’ concern is not whether regular payments are provided for in the plans but whether the debtors can bypass the trustee in making them. Their contentions that such payments may only be made by and through the trustee should be rejected.
A
As the majority notes, a Chapter 13 debt- or’s plan may provide that “payments to creditors under the plan” be made other than by the trustee. 11 U.S.C. § 1326(b) [“Except as otherwise provided in the plan or in the order confirming plan, the trustee shall make payments to creditors under the plan”]. This includes the debtor himself. In re Foster, supra 670 F.2d at 486.
*9Accordingly, a plan that provides for maintenance of regular payments satisfies section 1322(b)(5) and a plan that directs that payments so provided for be made by the debtor as disbursing agent satisfies section 1326(b).
B
Appellants in effect contend, however, that the words provide for in section 1322(b)(5) are words of art and are not to be given their plain and ordinary meaning. Specifically, they argue, only payments inside the plan are provided for by the plan and that payments by a debtor directly to a creditor are outside the plan.
The Fifth Circuit opinion in Foster laid this contention to rest by holding that payments are not outside the plan merely because they are made by the debtor rather than the trustee. Recognizing that inside-outside the plan is ambiguous, 670 F.2d at 486, the opinion demonstrated that its usual meaning is whether a plan provides for a debt in the sense of modifying or affecting it. 670 F.2d at 489. Thus a plan providing that a debt (or payments on a debt) is to be paid under a plan is inside the plan. Conversely, a fully secured claim that is not provided for by a plan is outside the plan. The Foster opinion itself uses outside the plan to mean not provided for by the plan and, as stated above, it concluded that the maintenance of regular payments must be provided for by the plan (i.e., inside the plan).
The Foster opinion rejects the alternative use of inside the plan to mean that the trustee must make payments. To the contrary:
If the bankruptcy court concludes that the debtor’s acting as disbursing agent with respect to the current mortgage payments will not impair the debtor’s ability to make all payments under, and to comply with, the plan, then the court is obligated to confirm the plan.
670 F.2d at 487 (Emphasis supplied).
I conclude, with the Fifth Circuit, that a plan provides for payments even when it designates the debtor to serve as disbursing agent.
III
Glasper and Williams intended that they would disburse current payments to the secured creditors, which the trial court was free to approve consistent with the Foster standards. However, their plans failed to satisfy the requirement of 11 U.S.C. § 1322(b)(5) in that they did not provide for maintenance of payments under the plans. (To the contrary, Glasper’s plan states that such payments are “not provided for by the plan.”) For this reason, the plans could not be confirmed and the orders of confirmation must be vacated.
Once the debtors have amended their plans to provide for maintenance of payments by them directly to the secured creditors no legal impediment to confirmation will remain.