In re Black

Facts: A debtor files a petition for protection under Chapter 13 bankruptcy. Under the confirmed Chapter 13 plan, the debtor is to make payments to creditors over a course of three years, but not to exceed 59 months. A lump sum payoff amount is set when the debtor refinances or sells their property. The plan as confirmed vested ownership of the debtor’s property. The debtor sells the property prior to the last of the plan’s 59-month payment period, receiving net proceeds which exceed the payoff amount due to creditors under the plan. The bankruptcy trustee petitions to modify the Chapter 13 plan to provide for the entire amount of the sale proceeds to be paid to the creditors.

Claims: The bankruptcy trustee claims the plan may be modified to increase the amount to be paid to creditors since a Chapter 13 plan is open to modification prior to the last of the plan’s 59-month payment period.

Counterclaim: The debtor seeks to retain the excess proceeds, claiming they do not owe any part of the excess net sales proceeds to the creditors since the plan sets what the creditors are paid.

Holding: The bankruptcy appellate court holds the debtor is to pay only the amounts originally confirmed by the Chapter 13 plan since the property became vested in the debtor as the owner subject to the Chapter 13 plan on confirmation of the plan. [In re Black (2021) 142 BA 625]

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