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.    

Massachusetts Bankruptcy Court Allows "Vesting" of Property to Secured Creditor Under Chapter 13 Plan

By Louis Robin

Law Office of Louis Robin

Longmeadow, MA

In In re Sagendorph, II, No. 14-4675, 2015 Bankr. LEXIS 2055 (Bankr. D. Mass. 6/22/15), Bankruptcy Judge Hoffman, in a well reasoned and workmanlike opinion, has mechanically and, in my opinion and that of most debtor practitioners, properly applied the provisions of Chapter 13 to allow "vesting" of property to a secured creditor; the opinion may even provide secured creditors an opportunity to save significant foreclosure costs.  In this decision, Judge Hoffman permitted a debtor to surrender a property, and take the additional step of vesting the property to the secured creditor.  Section 1325(a)(5)(C) permits “surrendering” of assets as one of the alternatives for treatment of a secured claim as a precondition to confirmation.  “Vesting” is permitted as an element of plan under Section 1322(b)(9).  Despite Wells Fargo's objection that “vesting” was “subservient”, Judge Hoffman found no such direction in the Code – Section 1325 only set forth the confirmation requirements, while Section 1322 set forth terms that are permissible.

The Massachusetts state law prohibition of involuntary transfers of real estate did not restrict the Bankruptcy Code provisions because bankruptcy law, as a federal law, preempts state law.