In re Buren, Bankruptcy No. 379-01863.
| Decision Date | 28 March 1980 |
| Docket Number | Bankruptcy No. 379-01863. |
| Citation | 4 BR 109 |
| Parties | In re Danny Ray BUREN, Debtor. |
| Court | U.S. Bankruptcy Court — Middle District of Tennessee |
C. Kinian Cosner, Jr., Nashville, Tenn., for Debtor.
Keith M. Lundin, Waddey & Lundin Nashville, Tenn., Trustee in Bankruptcy.
Hal D. Hardin, U.S. Atty., Middle District of Tenn., Nashville, Tenn., for Social Security Administration.
This matter is before the Court upon motion of the Social Security Administration for relief from an order of the Court requiring benefits to be paid to the Trustee for the above-named Chapter 13 debtor.
The debtor is a disabled individual receiving certain retirement funds from the U.S. Army and disability benefits under Title II of the Social Security Act. He filed a petition for relief under Chapter 13 of the Bankruptcy Code on October 18, 1979. After confirmation of the debtor's amended plan, the Court entered two amended payroll deduction orders as follows: an order requiring the Commander of U.S. Army Finance and Accounting to pay to the Trustee $153 per month from benefits due the debtor and an order requiring the Social Security Administration to pay to the Trustee $350 per month from benefits due the debtor. Although monthly payments have been received from the U.S. Army, the Social Security Administration has filed a motion for relief from the Court's amended order.
Section 1325(b) of the Code states that after confirmation of a Chapter 13 plan ". . . the Court may order any entity from whom the debtor receives income to pay all or any part of such income to the Trustee." 11 U.S.C. § 1325(b). The concept of "entity" in § 1325(b) is defined in § 101(14) of the Code as follows: ". . . `entity' includes person, estate, trust, governmental unit;." 11 U.S.C. § 101(14). ". . . `Governmental unit" in § 101(14) is further defined in § 101(21) as follows: ". . . `governmental unit' means . . department, agency, or instrumentality of the United States, . . .." 11 U.S.C. § 101(21). The Social Security Administration is a "governmental unit" under § 101(21) and, therefore, is an "entity" under § 101(14).
The definition of "entity" in § 101(14) should be contrasted with the definition of person in § 101(30). Entity includes governmental units, while person does not. The Code carefully uses these terms. For example, note their use in § 109(b) and (c). Congress chose the word in § 1325(b) and intended to include governmental units. Section 1325(b) thus subjects the Social Security Administration to orders of the Bankruptcy Court requiring the payment of a debtor's income to the Trustee in Chapter 13 cases.
The expanded jurisdictional provisions of the new Bankruptcy Code make it clear that the Social Security Administration and other government units are subject to income deduction orders in Chapter 13 cases. If 11 U.S.C. § 1325(b) is not itself sufficient authority to support the income deduction order herein, there can be no doubt that § 105(a) of the Code and §§ 1471(a) and (e) of Title 28 of the United States Code give the Court authority to issue the challenged orders. 11 U.S.C. § 105(a) reads in full as follows:
(a) the bankruptcy court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.
Section 105(a) is an intentionally broad grant of authority to the United States Bankruptcy Courts to facilitate the orderly administration of bankruptcy cases. This section is much broader than its predecessor, § 2a(15) of the prior Act. Unlike the restriction under prior law that an order of a bankruptcy court must be "necessary for the enforcement of the provisions of this title," § 105 authorizes the bankruptcy court to also issue orders "appropriate to carry out the provisions of this title." The power contained in § 105 is arguably more extensive than that contained in the All Writs Statute, 28 U.S.C. § 1651.
Section 105 complements the all encompassing grant of jurisdiction now contained in 28 U.S.C. § 1471, which provides in part:
(e) the bankruptcy court in which a case under Title 11 is commenced shall have exclusive jurisdiction of all of the property, wherever located, of the debtor, as of the commencement of such case.
As outlined below, the debtor's right to receive social security benefits is property of the Chapter 13 estate. Such property is unquestionably within the jurisdiction of the United States Bankruptcy Court. Section 105(a) authorizes the Bankruptcy Court to issue orders "necessary and appropriate" to carrying out the provisions of the Chapter 13 plan. The plan herein calls for the payment of social security benefits to the Trustee for distribution to creditors.
The Social Security Administration cannot claim the immunity from income deduction orders which may have been available under prior law. As demonstrated in United States v. Krakover, 377 F.2d 104 (10th Cir. 1967), agencies of the United States government had realized some insulation from income deduction orders in Chapter 13 cases under prior law. In Krakover the 10th Circuit reasoned that § 658(2) of the prior Bankruptcy Act, 11 U.S.C. § 1058(2), limited the enforceability of income deduction orders in Chapter 13 cases to an "employer" other than the United States government. The language of § 1325(b) of the Code and the definitions contained in § 101 clearly overrule the immunity analysis in Krakover.
Moreover, 11 U.S.C. § 106 specifically addresses the immunity issue as follows:
Congress, thus, contemplated a waiver of the principle of sovereign immunity of the United States at least to the extent of subjecting government agencies to income deduction orders as "entities" under § 1325(b).
Congress contemplated that individuals receiving income from social security could be debtors under Chapter 13 of the new Bankruptcy Code. An "individual with regular income" who otherwise meets the rerequirements of § 109(e) of the Code is eligible to be a debtor under Chapter 13. 11 U.S.C. § 109(e). Section 101(24) of the Code defines "individual with regular income" to mean:
". . . an individual whose income is sufficiently stable and regular to enable such individual to make payments under a plan under Chapter 13 of this title . . ." 11 U.S.C. § 101(24).
The legislative history of § 101(24) reveals that Congress presupposed the use of social security benefits as income "sufficiently stable and regular" to provide funding for a Chapter 13 plan. The House Report relating to § 101(24) contains the following observation:
"Thus, individuals on welfare, social security, fixed pension incomes, or who live on investment incomes, will be able to work out repayment plans with their creditors rather than being forced into straight bankruptcy." Emphasis added. H.R.Rep.No.95-595, 95th Cong., 1st Sess. at 312 (1977), U.S.Code Cong. & Admin. News 1978 at pp. 5787, 6269.
See, S.Rep.No.95-989, 95th Cong., 2d Sess. 24, 119, 312 (1978). See also, 2 Collier on Bankruptcy ¶ 101.24 (15th Ed.). As demonstrated above, § 1325(b) authorizes the United States Bankruptcy Court in Chapter 13 cases to order any entity from whom the debtor receives income to pay all or a portion of that income to the Trustee. An order to the Social Security Administration to pay social security benefits to the Trustee in a Chapter 13 case was, thus, explicitly contemplated by Congress in the framing of the new Code.
The debtor's future social security benefits are property of the estate in a Chapter 13 case. The expanded notion of "property of the estate" in Chapter 13 cases is unquestionably broad enough to include the debtor's social security benefits. 11 U.S.C. § 1306 reads in part as follows:
Section 541, 11 U.S.C. § 541, reads in part as follows:
Section 1306 thus expands the definition of property of the estate contained in § 541 to include all legal or equitable interests in property which the debtor acquires after the commencement of the case. Social security benefits to be paid to the debtor in the future would certainly constitute a "legal or equitable" interest in property and would become part of the Chapter 13 estate by operation of § 1306(a)(1).
The government's argument that social security benefits do not become part of the Chapter 13 estate by operation of non-bankruptcy law is refuted by the language of the Code and by the legislative history. In its memorandum, the government argues that the exemption from "execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law" contained in 42 U.S.C. § 407 acts to exempt social security benefits from the definition of property of the estate in Chapter 13 cases. Under § 70(a) of the prior Bankruptcy Act, this argument may well have been correct. Under prior law it was necessary to look to non-bankruptcy law — state and/or federal — to determine whether a debtor's interest in property became part of the bankruptcy estate. See, e.g., Segal v. Rochelle, 382 U.S. 375, 86 S.Ct. 511, 15 L.Ed.2d 428 (1966). Section 541 of the new Code eliminates virtually all of this...
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