7th Circuit Holds Section 1329 Permits Post-Confirmation Plan Modification

Randall Woolley

Askounis & Darcy, PC

Chicago, Illinois

Section 1329 of the Bankruptcy Code permits modification of a confirmed plan to increase or reduce the amount of plan payments.  However, trustees and creditors are seemingly reluctant to disturb a confirmed plan, in part because Section 1329 does not specifically set forth when modification is appropriate.  The Seventh Circuit recently held in Germeraad v. Powers, No. 15-3237 (7th Cir. June 23, 2016) that an increase in the debtor’s income after plan confirmation may serve as a basis for modifying the Chapter 13 plan in order to increase the amount paid to unsecured creditors.    

Crawford's Claim Defeated By . . . the Statute of Limitations

Stephen W. Sather

Barron & Newburger, P.C.

Austin, TX

When the Eleventh Circuit found that a creditor could be sued for violating the FDCPA for filing a proof of claim on a time-barred debt, it caused quite a stir.    Crawford v. LVNV Funding, LLC, 758 F.3d 1254 (11^th Cir. 2014), cert den., 135 S.Ct. 1844 (2015).   However, when the case was remanded, it turned out that the suit, like the claim it sought to challenge, was beyond the statute of limitations.   Crawford v. LVNV Funding, LLC, 2016 U.S. Dist. LEXIS 104472 (M.D. Ala. 8/9/16).

Eleventh Circuit Doubles Down on Crawford

Beau Hays

Hays, Potter & Martin, LLP

Peachtree Corners, GA

Following up on the recent post by Steve Sather reporting on the Eighth Circuit’s dismissive rejection of the Eleventh Circuit’s Crawford ruling that filing a time-barred claim in a bankruptcy case violates the FDCPA, we can report that the Eleventh Circuit recently doubled down on its position.  Johnson v Midland Funding, LLC, No. 15-11240, 2016 WL 2996372 (11^th Cir. 5/24/2016)(the Nelson case, reported on by Steve, mentions this case)

What Happened

In March 2014, Aledia Johnson filed a Chapter 13 case in the Southern District of Alabama.  Midland Funding filed a claim for $1,879.71, to which Johnson objected.  On July 11, 2014, the Bankruptcy Court entered its Order granting the objection.  Coincidentally, on July 10, the Eleventh Circuit had handed down the decision in Crawford.  Entirely not coincidentally, on July 14, 2016, Johnson filed a putative class action asserting that Midland Funding had violated the FDCPA in the Southern District of Alabama, Johnson v Midland Funding, LLC, No.. 14-322-WS-C (N.D. Ala.).  Midland Funding, faced with the immovable object that is the Crawford precedent in the Eleventh Circuit moved to dismiss utilizing a new argument - that the FDCPA as applied by Crawford is in irreconcilable conflict with the Bankruptcy Code.

The trial court, in a fairly thorough opinion, agreed.  The Eleventh Circuit, however, reversed the trial court and held that there is no irreconcilable conflict that would lead to preemption of the FDCPA by the Bankruptcy Code.

Analysis

Midland Funding's argument is based upon a rule of statutory construction which holds that when two statutes are in irreconcilable conflict, the newer statute is presumed to have been enacted with knowledge of the conflict and so constitutes an "implied repeal" of the earlier statute.  Since the FDCPA was enacted in 1977 and the current Bankruptcy Code dates from 1978, the Code will preempt the FDCPA in the case of a conflict.