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Utica Judge Rules Above Median Income Ch 13 Plans Must Run 5 Years: Eaton

Utica Bankruptcy Judge Diane Davis has issued a decision disagreeing with a previous decision by Northern District of New York Chief Judge Robert E. Littlefeld Jr., and that debtors with above-median income Chapter 13 cases must file a plan that runs a full five years, unless creditors are paid in full. In re Eaton Ch 13 #08-62201; Bankr. NDNY; decision March 31, 2011.)

In the earlier case, In re Green, 378 BR 30 (Bankr. NDNY 2007), Judge Littlefield concluded that Bankruptcy Code 1325(b)(1)(B), which requires a five year "commitment period" for above-median income debtors in Ch. 13, was not a measurement of time ('temporal') but rather a measurement of the amount that must be paid into the plan (a 'multiplier'). As Judge Littlefield saw it, if a debtor's projected disposable income was $500 per month, the plan was required to pay at least $30,000 to unsecured creditors ($500 time the 60 month commitment period), not that the plan actually had to go a full five years. If a debtor's projected disposable income was negative, as it actually was in the Green
case, then the five year commitment period did not even apply.

Judge Davis, after reviewing extensive caselaw and legal studies ("Following its review of nearly two dozen cases, leading authoritative treatises, and several scholarly articles addressing this question, the Court may fairly state that there is little, if anything, to be added by this Court that has not already been said by other jurists and scholars since BAPCPA became law." - Eaton, page 5), concluded that the correct interpretation is that five years represents the actual length of time the plan must run, no matter what the projected or actual disposable income. This conclusion is based on opinions rendered since
Green was decided, including Supreme Court decisions.

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