Chapter 13 Plan Confirmed Even Though Payments Did Not Include All of Debtors’ Disposable Income

Chapter 13 Plan Confirmed Even Though Payments Did Not Include All of Debtors’ Disposable Income

This matter is before the Court on confirmation of the chapter 13 plan filed by the Debtors and on the objection thereto filed by the Chapter 13 Trustee. The Debtors filed a chapter 13 plan with a proposed duration of five years. Pursuant to the terms of the plan, general unsecured creditors will be paid 100% of their claims. The Trustee objects to confirmation of the plan because the proposed monthly payments do not include all of the Debtors’ disposable income. He argues that as a condition of confirmation, the Debtors must agree to the following: If the plan is modified post confirmation to pay less than 100% to unsecured creditors, the Debtors will provide a minimum pool to those creditors in an amount equal to the difference between their disposable income at confirmation and their actual plan payment, multiplied by the number of months that passed as of the effective date of the modification. The Trustee further asserts that if the Debtors refuse such a pledge, their plan payment must be increased to include the full amount of their disposable income. Finally, the Trustee argues that if the Debtors do not contribute all disposable income to their plan, general unsecured creditors are entitled to interest on their allowed claims.

The Debtors disagree. They contend that the Trustee is attempting to impose an additional requirement for confirmation, i.e., that Debtors guarantee payment of excess disposable income in post confirmation modifications of the plan. The Debtors further contend that because their plan proposes to pay 100% of unsecured claims, they are not obligated to increase their plan payments to include all disposable income in order for the plan to be confirmed. Debtors also dispute that unsecured creditors are entitled to interest on their claims.

         On March 22, 2017, the Debtors filed a chapter 13 petition, along with schedules and statements, Official Forms 122C-1 and 122C-2, and a proposed plan. According to the calculations set forth in Form 122C-1, the Debtors have above-median income. Schedule I reflects a decrease in income going forward based on employment changes for Debtor-wife. Pursuant to a Joint Stipulation of Fact, the parties agree that the Debtors’ projected disposable income is $1,443.71 per month. The Debtors propose a chapter 13 plan that extends over five years with payments of $1,220.00 per month. Under the plan as proposed, general unsecured creditors will be paid 100% of their claims.

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