Germeraad v. Powers

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In 2011, the bankruptcy court confirmed a Chapter 13 plan, under which the debtors were to pay $660 per month to the trustee for seven months, and then, for 53 months, $758 per month, later reduced to $670 per month. From these payments, the trustee would pay the claims of secured creditors and distribute approximately $22,000 to general unsecured creditors. In 2013, the trustee received the debtors’ 2012 income tax return, showing that their income had increased by $50,000. The trustee moved to modify the plan under 11 U.S.C. 1329, to increase the monthly payments to $1,416 per month for the 23 remaining months. The bankruptcy court denied the motion, stating that the Code did not allow modification of a Chapter 13 plan for the cited reasons, and that, even if the court had the power to modify the plan, the facts did not support the request. The district court upheld the bankruptcy court’s determination that it lacked authority to grant the motion. The Seventh Circuit vacated. While section 1329 does not explicitly identify the circumstances under which modification is appropriate and no Code provision expressly permits modification when a change in financial circumstances makes an increase affordable, it does not follow that modification in this circumstance is forbidden. View "Germeraad v. Powers" on Justia Law