In re Tibbs

478 B.R. 458, 2012 WL 3800784
CourtUnited States Bankruptcy Court, S.D. Florida.
DecidedSeptember 4, 2012
DocketNo. 11-18943-EPK
StatusPublished
Cited by5 cases

This text of 478 B.R. 458 (In re Tibbs) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. Florida. primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Tibbs, 478 B.R. 458, 2012 WL 3800784 (Fla. 2012).

Opinion

ORDER GRANTING DEBTORS’ MOTION TO APPROVE EARLY PAYOFF OF CHAPTER 13 PLAN

ERIK P. KIMBALL, Bankruptcy Judge.

THIS MATTER came before the Court for hearings on July 16, 2012 and August 23,1 upon the Motion to Approve Early Pay-off of Chapter 13 Plan [ECF No. 35] (the “Motion”) filed by Michael Gordon Tibbs and Tatiana Belham Tibbs (“Ms. Tibbs” and, with Michael Gordon Tibbs, the “Debtors”). The Debtors seek to modify their confirmed chapter 13 plan to accelerate the remaining scheduled distributions to creditors with a single, lump sum payment. If the modification is approved, the Debtors will obtain the funds necessary to make such payment via a gift from Ms. Tibbs’ parents. The gift is conditioned upon the Court’s approval of the proposed modification.

The chapter 13 trustee (the “Trastee”) objects to the relief sought in the Motion, arguing that the proposed modification does not comply with the applicable provisions of the Bankruptcy Code. The Trustee does not suggest that the Motion is presented other than in good faith. No other party in interest objected to the Motion.

For the reasons stated below, the Court will grant the Motion.

I. FACTS

On April 1, 2011, the Debtors filed a voluntary petition [ECF No. 1] (the “Petition”) for relief under chapter 13 of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq. On Schedule I, the Debtors indicated a household comprising five indi-[460]*460victuals. [ECF No. 1, p. 31]. At the commencement of this case, the Debtors’ combined monthly gross income was $6,292.28. [ECF No. 4]. Ms. Tibbs’ earnings accounted for $1,701.65 of this amount, or about 27% of the Debtors’ total income. It is not disputed that as of the petition date in this case the Debtors’ income exceeded the applicable median income for a family of five determined under § 1325(b)(4)(A)(ii).2

Pursuant to Fed. R. Bankr.P. 3002(c), the deadline for unsecured creditors to file proofs of claim was July 27, 2011. Seven creditors filed eight timely proofs of claim presenting unsecured claims in the aggregate amount of $172,462.27. No creditor filed a priority claim. No party in interest objected to any filed claim. Thus, the aggregate amount of the Debtors’ unsecured debt is $172,462.27. See 11 U.S.C. § 502(a) (“A claim or interest, proof of which is filed under section 501 of this title, is deemed allowed, unless a party in interest ... objects.”).

On April 19, 2011, the Debtors filed their First Amended Chapter 13 Plan [ECF No. 19] (the “Plan”). In the Plan, the Debtors proposed to pay to the Trustee $247.50 each month for sixty months for a total of $14,850.00. Of this amount, $11,726.00 would be paid to the Debtors’ unsecured creditors, a recovery of approximately 6.8%. On July 14, 2011, the Court entered its Order Confirming Chapter 13 Plan [ECF No. 28] (the “Confirmation Order”), finding that the Plan satisfied all applicable provisions of the Bankruptcy Code.

Nearly a year later, on June 5, 2012, the Debtors filed the instant Motion. In the Motion the Debtors state, in pertinent part:

2. The Debtor, Tatiana Tibbs, has lost her job and is currently unemployed. This fact has placed the Debtors in a situation where they are unable to continue making the plan payments under the confirmed plan.
3. Debtors are filing this motion for the purpose of obtaining this courts approval to pay the total amount necessary to complete the Debtors Chapter 13 Plan. The parents of Tatiana Tibbs have agreed to provide a gift to the debtors in the full amount necessary to pay off the plan. They have executed an affidavit of gift to allow plan pay-off which will be filed in this cause upon approval of this motion.
4. THE UNSECURED CREDITORS ARE HEREBY ADVISED THAT THE GRANTING OF THIS MOTION MAY DEPRIVE THEM OF A POTENTIALLY HIGHER DIVIDEND IN THE EVENT THAT THE DEBTORS HAVE AN INCREASE IN DISPOSABLE INCOME OVER THE ORIGINAL SIXTY (60) MONTHS OF THE CONFIRMED PLAN.

[ECF No. 35, p. 1] (emphasis in original).

Without Ms. Tibbs’ income, the Debtors will be unable to continue making payments under the Plan as confirmed. Indeed, without Ms. Tibbs’ income the Debtors are unable to make any monthly payments on account of unsecured debt. Instead, the Debtors seek to modify the Plan to pay off the balance remaining on the Plan in a single payment. To accomplish this, Ms. Tibbs’ parents would make a cash gift to the Debtors that the Debtors would then pay to the Trustee for distribution to creditors holding allowed claims. The cash gift is contingent upon the Court allowing the Debtors to modify [461]*461the Plan in the manner requested in the Motion.

II. ARGUMENTS

The Trustee objects to the Motion, citing Judge Isicoffs unpublished order in the case of In re Rhymaun, Case No. 10-20092-LMI, ECF No. 73 (Bankr.S.D.Fla. August 8, 2011). The Trustee expresses a concern that granting the Motion may encourage other chapter 18 debtors to file similar motions in an attempt to use otherwise exempt assets to pay off their chapter 13 plans early. In response, the Debtors argue that unsecured creditors are protected from inappropriate attempts to modify chapter 13 plans by the good faith requirements imposed under § 1325(a), made applicable to modification requests under § 1329(b)(1). The Debtor also notes that, in spite of clear notice of the impact of the Motion if granted, no creditor objected.

III. ANALYSIS

The question before the Court is whether the Debtors may modify their confirmed Plan to pay all remaining amounts in a single payment, before the applicable commitment period has run, without paying allowed unsecured claims in full, when there is no allegation that the Debtors seek to modify the Plan in other than in good faith. In other words, does § 1329, which addresses modification of a confirmed chapter 13 plan, require that the modified plan remain in place for the “applicable commitment period” determined under § 1325(b)(4) unless the modified plan provides for payment in full of allowed unsecured claims? If a plan modified under § 1329 is subject to the “applicable commitment period” requirements of § 1325(b), then the Debtors’ attempt to modify their Plan to provide for a lump sum payment in full satisfaction of their Plan prior to its original five year term must fail. If a plan modified under § 1329 is not subject to the term requirements of § 1325(b), and the Debtors’ Plan as modified satisfies the other requirements of § 1329, then the proposed modification will be permitted.

As discussed in detail below, § 1329 does not incorporate § 1325(b), and thus a chapter 13 plan may be modified so that it has a term shorter than the applicable commitment period, so long as the plan as modified satisfies the other requirements of § 1329 including the specifically incorporated provisions of §§ 1322(a), 1322(b), and 1323(c) and the requirements of § 1325(a). Because the Debtor’s Plan as modified satisfies all these requirements, the Motion will be granted.

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Cite This Page — Counsel Stack

Bluebook (online)
478 B.R. 458, 2012 WL 3800784, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-tibbs-flsb-2012.