Debtors Cannot Modify 60 Month Plan to a 43 Month Plan

Minnesota Bankruptcy Case: Debtors Cannot Modify 60 Month Plan to a 43 Month Plan Unless They Have a Good Reason

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

In re Savage, 426 B.R. 320 (Bankr. D. Minn. 3/25/10) (Kishel, J.).

Case Summary:

Debtors Cannot Modify 60 Month Plan to a 43 Month Plan Unless They Have a Good Reason

The debtors filed a voluntary chapter 13 petition and confirmed a 60-month plan. They faulted, and the trustee filed a motion to dismiss for failure to make plan payments. In response, the debtors filed a motion for post-confirmation modification. They stated that the modification was due to changes in income and expenses, including a reduction the amount of child support to be received by the debtor-wife. The trustee objected to the modification. The court found that the debtors had not shown that they had modified the plan in good faith. The plan proposed to reduce the term from 60 months to 43 months and reduced the payment amounts. The bankruptcy court determined the ultimate issue to be whether a chapter 13 debtor could reduce the duration of a plan below the applicable commitment period (11 U.S.C. § 1325(b)(1)(B)) by invoking § 1329(a)(2) to propose a modification. However, the court did not answer that issue, because it found that the threshold issue was whether the debtors had demonstrated cause for modification. The court found that they had not, because they had not explained why they would lose their ability to pay after month 43. The court denied approval of the modified plan on the basis that they had not proposed the modifications in good faith.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.