In re Duckett, Bankruptcy No. 91-60073.

• Decision Date: 25 March 1992
• Docket Number: Bankruptcy No. 91-60073.
• Citation: 139 BR 6
• Parties: In re Terry L. DUCKETT, Stanley M. Duckett, Debtors.
• Court: U.S. Bankruptcy Court — Eastern District of Texas

139 B.R. 6 (1992)

In re Terry L. DUCKETT, Stanley M. Duckett, Debtors.

Bankruptcy No. 91-60073.

United States Bankruptcy Court, E.D. Texas, Tyler Division.

March 25, 1992.

Charles E. Carruth, MaBank, Tex., for debtors.

David E. Long, Staff Atty., Tyler, Tex., for trustee.

Michael Gross, Tyler, Tex., Chapter 13 Trustee.

OPINION

DONALD R. SHARP, Bankruptcy Judge.

This matter came on for hearing on the confirmation of the Fifth Amended Chapter 13 Plan of Debtors, Terry L. Duckett and Stanley M. Duckett, pursuant to a regular setting. This opinion constitutes findings of fact and conclusions of law in accordance with Federal Rule of Bankruptcy Procedure 7052 and disposes of all the issues presented to the Court.

Terry Duckett and Stanley Duckett, hereinafter ("Debtors"), filed for relief under Chapter 13 of the Bankruptcy Code on January 11, 1991. However, Debtors were unable to timely file a plan and in accordance with Federal Rule of Bankruptcy Procedure 3015 the Court extended Debtors' deadline for filing a Chapter 13 Plan to February 8, 1991.¹ While the Debtors failed to meet this deadline, a Chapter 13 Plan was ultimately filed on March 7, 1991.

Debtors experienced great difficulty in proposing a confirmable plan of reorganization. Due to disputes with creditors, Debtors were required to amend their plan on numerous occasions. On two occasions, confirmation was denied.

In the instant case, Debtors' proposed plan represents their fifth amended plan. At the regularly scheduled hearing, no objections to confirmation were pursued by creditors and the Chapter 13 Trustee recommended confirmation. Debtors' plan proposes to pay $326.42 per month for 60 months to the Chapter 13 Trustee beginning retroactively on November 7, 1991.

The Court expressed its concern that Debtors' plan was in violation of the prohibition against plans lasting in excess of 60 months. This concern was based on the Court's belief that the appropriate point at which to begin calculating the duration of a 60 month plan should be from the date the debtor first became obligated to make monthly payments to the Chapter 13 Trustee. In Debtors' case, even though Debtors filed for relief on January 11, 1991, their Chapter 13 Plan was not due until February 8, 1991. Pursuant to the Code, a debtor is obligated to begin making payments to the Chapter 13 Trustee within 30 days following the filing of a plan.² Therefore, by statute, Debtors were obligated to make their first payment to the Chapter 13 Trustee no later than March 8, 1991. It is from this point that the Court opined that the Debtors should begin calculating the absolute 60 month limitation to their Chapter 13 Plan.³

The Debtors and the Chapter 13 Trustee disputed the Court's interpretation of § 1322(c). They took the position that the appropriate starting point for the purpose of calculating the duration of a Chapter 13 Plan should be the date at which the first payment became due under the plan. (emphasis added). Since in this case, Debtors' plan called for the first payment to be made retroactively to November 7, 1991, the Debtors maintain that the five year period should run from that date to November 1996.

A debtor proposing to reorganize debts pursuant to Chapter 13 of the Bankruptcy Code is obligated to file a proposed plan of reorganization. 11 U.S.C.A. § 1321 (West 1979 and Supp.1991). Except upon leave of court, a debtor is required to file such a plan within 15 days following the initiation of a petition for relief. Fed. R.Bankr.P. 3015(b). Additionally, a debtor is obligated to initiate payments under the plan as proposed within 30 days following the filing of the plan. Section 1326(a)(1). Finally, the plan, as proposed, can not provide for a term of payments in excess of three years unless the court, for cause shown, extends the period. Under no circumstance may the court approve plans lasting more than five years. Section 1322(c).

The legislative history pertaining to § 1322(c) makes it abundantly clear that the rationale behind the requirement that plans not last longer than five years is to prevent the potential for unduly burdensome and lengthy repayment plans being imposed on debtors:

". . . in certain areas of the country, inadequate supervision of debtors attempting to perform under wage earner plans have (sic) made them a way of life for certain debtors. Extensions of plans, new cases and newly incurred debts put some debtors under court supervisory payment plans for seven to ten years. This has become the closest thing there is to involuntary servitude . . . "

H.R.Rep. No. 595, 95th Cong., 1st Sess. 117 (1977), U.S.Code Cong. & Admin.News, 1978, pp. 5787, 6078, quoted in 5 Collier on Bankruptcy, para. 1322.15 at 1322-37 (15th ed. 1991); In re Eves, 67 B.R. 964, 966 (Bankr.N.D.Ohio 1986).

Against this backdrop of legislative history, the Court is convinced that the appropriate time from which to begin calculating the length of a Chapter 13 Plan is the date at which the debtor is first obligated to begin making payments to the Chapter 13 Trustee. Although Debtors filed for relief on January 11, 1991, due to the extension granted by the Court, the Debtors were not required to file a plan until February 8, 1991. Since § 1326(a)(1) requires payments to the Chapter 13 Trustee to begin within 30 days after this date, the first date that Debtors were obligated to begin making payments to the Chapter 13 Trustee is March 8, 1991. In this case, Debtors failed to comply with the Court's deadlines and filed a plan on March 7, 1991. While it is true that strict compliance with the statute would not obligate Debtors to begin making payments until April 7, 1991, this Court will not reward the Debtors for their lack of diligence in timely filing a plan. Accordingly, for the reasons stated, the starting point for payments under Debtors' Chapter 13 Plan is March 8, 1991. In re Cobb, 122 B.R. 22, 26 (Bankr. E.D.Penn.1990); In re Woodall, 81 B.R. 17, 18 (Bankr.E.D.Ark.1987).

The Court is aware of at least two other cases that hold that a debtor, in the context of a post-confirmation plan modification, may provide for as many as 60 payments being made under a Chapter 13 Plan beginning from the date the first payment is made after confirmation of the Chapter 13 Plan.⁴ These two courts have used language in 11 U.S.C.A. § 1329(c) (West 1979)⁵ to justify modified plans providing for as many as 60 payments following the date of confirmation. While one might argue that § 1329(c) provides for the 60 month period to begin the date the first payment is made after the original plan is confirmed, this Court does not have to address that question.

After filing a plan but prior to confirmation, the debtor is granted a respite from attempts by creditors to foreclose their legal rights by virtue of the automatic stay. During this period of time, even though the debtor is making payments to the Chapter 13 Trustee, no...