On an issue where lower courts are divided, Bankruptcy Judge Thomas J. Tucker of Detroit ruled that a motion to modify a chapter 13 plan is timely if it is filed before the completion of plan payments, even if the hearing to approve the modification occurs after the last payment has been made.
A few months before the debtor’s last payment on her plan, a creditor filed a motion to modify the debtor’s plan. By the time the motion came on for hearing, the debtor had made her last payment. She therefore argued that the motion was untimely under Section 1329(b)(2), which permits plan modifications “at any time . . . before the completion of payments under such plan.”
In his June 15 opinion, Judge Tucker relied in large part on Germeraad v. Powers, 826 F.3d 692 (7th Cir. June 23, 2016), where the Seventh Circuit interpreted the section to mean that the bankruptcy court may approve a modification outside the five-year plan period so long as the motion to modify was made within the period. To read ABI’s discussion of Germeraad, click here.
Judge Tucker acknowledged that some bankruptcy courts have held to the contrary. However, he “respectfully” disagreed with them, holding that the “critical date for purposes of timeliness is when the proposed plan modification is filed.”