March 28, 2014 4th Circuit published opinion

Pliler v Stearns

Pliler filed for Chapter 13 bankruptcy and submitted a plan which would terminate less than five years after payments started. Stearns, the trustee, objected arguing that under 11 USC 1325, above average income debtors like Pliler must have a five year plan even though Pliler had a negative monthly income after expenses. The bankruptcy court ruled the five year requirement applied and approved a five year plan as to Pliler. The panel affirmed and remanded. It joined all other circuits which have decided the issue and held the plain meaning of the phrase “applicable commitment period” in 1325 to be a freestanding requirement that the plan be for the length of time required by chapter 13 based on the applicant’s characterization of below average, average or above average disposable income. Here that is five years. The panel rejected Pliler’s argument that negative monthly income changes the result as the five year period allows for creditor’s to capture some of any inheritances or other windfalls Pliler receives during the five year period and the modification section, 1329, acts independently of debtor income. The panel finally rejected a claim that the bankruptcy court improperly looked beyond the applicable forms to schedules containing excluded items of income given the court’s ultimate adoption of the payment amount proposed by Pliler in the plan. However, as it appeared there was no opportunity to present evidence on the bankruptcy court’s ordered plan, the case was remanded for a hearing on feasibility and any other relevant issues.

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