In re McKnight, Bankruptcy No. 89-60467.
Decision Date | 14 February 1992 |
Docket Number | Bankruptcy No. 89-60467. |
Citation | 136 BR 891 |
Parties | In re Gwendolyn B.J. McKNIGHT, Debtor. AMERICAN GENERAL FINANCE, INC., Movant, v. Gwendolyn B.J. McKNIGHT a/k/a Gwendolyn Johnson, Debtor, and Levon Johnson, Codebtor. |
Court | U.S. Bankruptcy Court — Southern District of Georgia |
Murl E. Geary, Rincon, Ga., for debtor.
Stephen M. McCusker, Wisenbaker & McCusker, Savannah, Ga., for movant.
The proposed plan was confirmed by order dated April 24, 1990. The order of confirmation provided in part relevant to this motion "notwithstanding any contrary provision in the plan, property of the estate revests in the debtor upon confirmation pursuant to 11 U.S.C. section 1327."
American General was not a prepetition creditor of the debtor. Post petition the debtor entered into a credit transaction with American General and subsequently defaulted. American General brought a complaint against the debtor in the appropriate State court, obtained a judgment and commenced a continuing garnishment proceeding against the debtor and her employer, the State of Georgia, Department of Corrections, to collect the judgment from her wages. See, Official Code of Georgia Annotated §§ 18-4-60 et seq. and 18-4-110 et seq. Referencing this court's order to the employer directing the deductions from debtor's future wages to fund the Chapter 13 plan, the employer, the State of Georgia, declined to honor the garnishment. This was American General's first notice of this bankruptcy proceeding. American General seeks alternatively an order from this court determining that the stay of § 362(a) does not apply, or providing relief from the stay pursuant to § 362(d)(1) to allow the garnishment action to proceed.
In re: Petruccelli, 113 B.R. at 6 (citations omitted) quoting In re: Johnson, 51 B.R. 439, 442 (Bankr.E.D.Pa.1985). Since the lawsuit and judgment obtained by American General was based on a post petition debt and brought against the debtor, § 362(a) did not apply and, therefore, there was no stay violation by American General in bringing its complaint against the debtor and obtaining a judgment on the post petition debt.
The issue outstanding is whether the stay of § 362(a) applies against the state court garnishment proceeding. If the debtor's post petition earnings remain property of the estate under § 1306(a)(2) the stay applies. If pursuant to the order of confirmation and § 1327(b) all property of the estate, which includes post petition earnings identified in § 1306(a)(2), revested in the debtor upon confirmation and are no longer property of the estate, the stay does not apply.
In re: Petruccelli, supra, at 15 quoting Laughlin v. U.S.I.R.S., 98 B.R. 494, 496 (D.Neb.1989), aff'd, 912 F.2d 197 (8th Cir. 1990).
The term "vest," under § 1327(b), therefore, must mean more than simple possession. "Vest" as a legal term means to obtain the character or given the rights of absolute ownership. Black's Law Dictionary 1401 (5th ed. 1979). Section 1306 defines "property of the estate" for purposes of Chapter 13. This property includes the post petition earnings of the debtor. In this case, the post petition earnings of the debtor were submitted pursuant to the proposed plan to the supervision and control of the trustee and the debtor was required under the plan to pay to the trustee the sum of Sixty-Five and No/100 ($65.00) Dollars biweekly. The plan further provided that from the payments so received, the trustee was to make disbursements in accordance with the terms of the plan. The order of confirmation of April 24, 1990 required that "disbursements shall commence and be made by the Trustee on a monthly basis following this confirmation." The confirmed plan devoted a portion of the debtor's post petition earnings to claim payments. According to § 1327(b) and the order of confirmation, the property of the estate vested in the debtor. The bankruptcy estate did not disappear upon confirmation. To the contrary, the bankruptcy estate continues and consists of the post petition earnings of the debtor devoted to plan payments. In re: Root, 61 B.R. 984 (Bankr.D.Col.1986); In re: Clark, 71 B.R. 747 (Bankr.E.D.Pa.1987). However, under the terms of the debtor's plan and order of confirmation, only post petition earnings devoted to plan payments constitute post confirmation property of the estate and are protected under the stay of § 362(a). Under the terms of this plan, all other property of the estate vested in the debtor and became property of the debtor upon confirmation, which includes post petition earnings not devoted to plan payments.
This interpretation not only provides consistency between § 1306(a)(2) and § 1327(b) but also provides consistency with §§ 345(a), 347(a), 349(b)(3), 1302(b)(1) and 704(9).4 The bankruptcy estate continues, but, under the facts of this case, consists solely of the post petition earnings of the debtor devoted to plan payments.
Having determined that the post petition earnings of the debtor not devoted to plan payments vested in the debtor at...
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