In re Lisa C. Davis, 08-16025
Issued December 16, 2010
By Judge Eugene Wedoff
The Issue: 11 USC 1325(b), introduced by BAPCPA in connection with the notorious hanging paragraph at 1325(a) – states that a plan of reorganization in Chapter 13 must commit all the debtor‘s discretionary income each month or pay creditors in full; or face dismissal. The issue in this case was whether 1325(b) requires the debtor to commit all discretionary income or pay all creditors in full when seeking to modify their confirmed Chapter 13 Plan.
The Upshot: No. 11 USC 1325(b) does not require the debtor’s full commitment of discretionary income or full payment of creditors when a confirmed plan is under consideration. When a debtor sought to modify her plan due to a change in circumstances that would have permitted her to pay less at the outset of the plan and shorten the plan’s commitment period if it had occurred before the initial plan was drawn up, the Court allowed her to use those lower numbers going forward regardless of whether the use of those figures satisfied 1325(b).
Ed. Note: Booyah! Chapter 13 debtors win.