Bankr.  E.D.N.C.: In re Matusak- Timeliness of Motion to Modify; Judicial Estoppel and Unanticipated Changes in Circumstances; Extension of Plan LengthBankr.  E.D.N.C.: In re Matusak- Timeliness of Motion to Modify; Judicial Estoppel and Unanticipated Changes in Circumstances; Extension of Plan Length

Summary:

Mr.  Matusak’s plan provided, obviously among things, that he was required to produce  verified updated Schedules of income and expenses during the 36 months Applicable Commitment Period of his plan whenever such were requested by the Chapter 13 Trustee or Ms.  Brown,  his ex-wife and a creditor.  Based on that financial information, Ms.  Brown filed a motion to modify Mr.  Matusak’s plan in November 2016, seeking both an increase in the monthly payment and an extension of the plan from 36 to 60 months.

Prior to the hearing on the Motion to Modify in April 2017, Mr.  Matusak made the 36th payment under the original confirmed plan and argued that, the bankruptcy court no longer had authority to modify his plan as 11 U.S.C. § 1329(a) allows modification  “[a]t any time after confirmation of the plan but before the completion of payments under such plan . . . .”  As the Motion was filed when Mr.  Matusak still had five remaining payments due, the bankruptcy court rejected this argument.

The bankruptcy court then held that the 73% increase in Mr.  Matusak’s income from $90,000 a year at the beginning of the case in 2014 to  $155,371 in 2016 was a “substantial” change as required by In re Murphy, 474 F.3d 143, 150 (4th Cir. 2007).  This increase was not, however, “unanticipated”  as Mr.  Matusak’s income was largely based on commissions that varied substantially.  Ms.  Brown was “acutely familiar with Mr. Matusak’s pay structure and its resulting fluctuation as his former spouse and as an employee in the same field.”  This notwithstanding, the bankruptcy court held that because the plan was only confirmed after Ms.  Brown withdrew her objects following Mr.  Matusak’s representations that the plan could be modified later if finances justified it, the doctrine of judicial estoppel precluded Mr.  Matusak from now asserting the contrary position.

Ms.  Brown’s request that the plan be extended for an additional 24 months was, however, rejected as  “[c]ourts should not use the issue of plan extension to coerce debtors to do something for unsecured creditors that is not required….”  In re Karayan, 82 B.R. 541, 544 (Bankr. C.D. Cal. 1988).

Accordingly, the remaining five payments due at the time of filing of the case were increased with Mr.  Matusak required to pay an additional $8,672.95.

For a copy of the opinion, please see:

Matusak- Timeliness of Motion to Modify; Judicial Estoppel and Unanticipated Changes in Circumstances; Extension of Plan Length

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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