Trustee's Motion To Alter Chapter 13 Bankruptcy DeniedIn a recent Chapter 13 bankruptcy case filed by a married couple, the bankruptcy trustee unsuccessfully attempted to alter the repayment plan three years after confirmation.

The details of the bankruptcy case:

The Plan also provided for the Trustee to pay $11,714 plus 9.25% interest to Toyota Motor Credit (“Toyota”) in satisfaction of a secured claim, and for payment of fees due the Trustee and Debtors’ counsel. See Dkt. 2,  B2, C, and E2A. As the only other claimants to be paid under the Plan were unsecured creditors (per the Unsecured Creditors’ Pool), the Plan provided for payments of only approximately $35,000, notwithstanding the Base Amount of $60,000. This discrepancy between the Base Amount and the total payments due under the Plan was apparent from the Plan’s face.

Though there can be no question that the Trustee or any unsecured creditor could have objected to confirmation of the Plan on the basis that a greater share of the Base Amount should go to unsecured creditors, neither the Trustee nor any creditor did so. On November 26, 2007, the court entered the Confirmation Order, which, in accordance with the Plan, stated that “allowed unsecured claims will be paid pro rata from the greater of an unsecured creditor’s [sic] pool of approximately $16,260.00 or non-exempt property of $95.00.” See Dkt. 19.

The bankruptcy plan called for payments over the course of 5 years because the debtors were above-median income earners.  But three years after the confirmation of the bankruptcy plan, the trustee requested that they debtors be forced to pay more money to their unsecured creditors. In response to the bankruptcy trustee’s motion, the debtors requested that the plan be reduced to 36 months since they had already paid their creditors in full.  The bankruptcy court denied the trustee’s request and granted the debtors’ motion because they had already satisfied the payment of creditors and because the trustee and creditors did not object to the plan at confirmation.