Bankruptcy Judge Ronald B. King of San Antonio properly exercised his equitable powers in making doubly sure that a couple in chapter 13 will pay unsecured creditors in full.
That was the holding by District Judge Harry Lee Hudspeth on Dec. 10 when he upheld confirmation of a plan that Judge King had forced the debtors to modify.
Originally, the plan called for paying all unsecured creditors in full over five years, without interest. The chapter 13 trustee objected, contending that the monthly payments were “significantly less than their monthly disposable income.”
At the trustee’s behest, Judge King confirmed, but he required the debtors to modify the plan by providing that any later amendments must pay creditors in full. The modification required by Judge King also provided that there would be no discharge if the claims were not fully paid.
The debtors appealed, arguing that Judge King had a “non-discretionary, ministerial duty to confirm” the plan as submitted. Judge Hudspeth disagreed.
Judge Hudspeth said that Judge King did not abuse or exceed his discretion, based on the bankruptcy court’s equitable powers under Section 105(a).