On an issue where there is little authority and the lower courts are split, Bankruptcy Judge Beth E. Hanan of Milwaukee decided that a debtor who had amended a plan to increase the duration beyond 60 months under now-expired Section 1329(d) cannot amend the plan a second time after the expiration of Section 1329(d) without reverting to a 60-month plan.
Two debtors both confirmed 60-month plans before the pandemic hit in early 2020. The debtors faced financial difficulties, fell behind on payments and faced motions to dismiss. The debtors proposed and confirmed amended plans, one with a duration of 84 months and the other for 76 months.
The debtors could not have extended their amended plans beyond the five years permitted by Section 1329(c) had Congress not adopted Section 1329(d) in March 2020. Originally intended to have a one-year lifespan, the section allowed an extension of the duration of a plan as long as it was not “more than 7 years after the time that the first payment under the original confirmed plan was due.”
When the virus did not abate, Congress extended the life of Section 1329(d) for another year, with a final sunset on March 27, 2022.
The debtors encountered financial problems a second time, and both proposed to modify the payment amounts under their plans. Although Section 1329(d) had expired by that time, they vowed to retain the 84-month and 76-month durations of their first-amended plans.
The debtors contended that forcing them to revert to five-year plans would amount to retroactive denials of the prior amendments that the court had approved. The debtors pointed to a decision by a bankruptcy judge in Colorado who believed that “any plan extension beyond five years that this Court approved before the sunset date should remain in effect despite a subsequent modification to the plan after the sunset date.” In re Mercer, 640 B.R. 577, 581 (Bankr. D. Colo. 2022).
In her October 11 opinion, Judge Hanan refused to approve the second-amended plans unless the debtors reverted to 60-month plans.
Judge Hanan approached the question as a matter of statutory interpretation. The debtors believed the statute was ambiguous, but the judge disagreed, because only Section 1329(c) remained effective.
Even if the statute was ambiguous, Judge Hanan saw no salvation for the debtors in legislative history, which repeatedly said that the extension was temporary.
Furthermore, Judge Hanan said that Congress had acted “to remedy new or remaining problems that later came to light” but did not address the ability to confirm a plan after Section 1329(d) expired. After the demise of Section 1329(d), she said that “the only Code provision addressing length of payment periods for modified plans is § 1329(c).”
Judge Hanan did “not find the language of section 1329(c) ambiguous . . . . Because the statutory text is plain,” she said, “the Court is bound to enforce it as written.”
On an issue where there is little authority and the lower courts are split, Bankruptcy Judge Beth E. Hanan of Milwaukee decided that a debtor who had amended a plan to increase the duration beyond 60 months under now-expired Section 1329(d) cannot amend the plan a second time after the expiration of Section 1329(d) without reverting to a 60-month plan.
Two debtors both confirmed 60-month plans before the pandemic hit in early 2020. The debtors faced financial difficulties, fell behind on payments and faced motions to dismiss. The debtors proposed and confirmed amended plans, one with a duration of 84 months and the other for 76 months.