# Vincent James Borca and Pennylane Lovey Borca

> United States Bankruptcy Court, E.D. North Carolina · August 2, 2021

URL: https://www.frixlaw.com/law-library/cases/10459179

## Case

- **Court:** United States Bankruptcy Court, E.D. North Carolina
- **Decided:** August 2, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

SO ORDERED. elle □□□
SIGNED this 2 day of August, 2021. S&S nl □□

DavidM.Warren ss
United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
RALEIGH DIVISION
IN RE: CASE NO. 18-02019-5-DMW
VINCENT JAMES BORCA
PENNYLANE LOVEY BORCA
CHAPTER 13
DEBTORS
ORDER MODIFYING CHAPTER 13 PLAN
This matter comes on to be heard upon the Trustee’s Motion to Modify Chapter 13 Plan
(“Trustee’s Motion to Modify’) filed by John F. Logan, Esq. (“Trustee”), Chapter 13 trustee, on
March 22, 2021 and the Debtors’ Amended Response to Trustee’s Motion to Modify Chapter 13
Plan (“Response”) filed by Vincent James Borca (“Mr. Borca”) and Pennylane Lovey Borca □□□□□□
Borca’”) (collectively, “Debtors”) on May 5, 2021. The court conducted hearings in Raleigh, North
Carolina on May 5, 2021 and June 10, 2021. Michael B. Burnett, Esq. appeared for the Trustee,
and Travis Sasser, Esq. appeared for the Debtors. Based upon the pleadings, the arguments of
counsel and the case record, including a prior hearing on the Debtors’ Motion to Incur Debt and
Make Purchase (“Motion to Incur Debt”) held on February 24, 2021 and at which both Debtors
testified, the court makes the following findings of fact and conclusions of law:

1. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2), and the court
has the authority to hear and determine the matter pursuant to 28 U.S.C. § 157(b)(1). The court
has subject matter jurisdiction pursuant to 28 U.S.C. §§ 157(a) and 1334 and the General Order of
Reference entered on August 3, 1984 by the United States District Court for the Eastern District
of North Carolina.

2. The Debtors filed a voluntary petition for relief under Chapter 13 of the United
States Bankruptcy Code on April 23, 2018 (“Petition Date”). In an Order and Notice to Debtor
entered on April 25, 2018, the court appointed the Trustee to fulfill the duties as provided in 11
U.S.C. § 1302 and ordered as follows:
You must notify your attorney and the trustee of any change of mailing address
or employment. . . . You must also promptly notify your attorney and the trustee
of any substantial changes in your financial circumstances, including substantial
changes in your income, expenses, or property ownership. Examples of changes
that would require you to give notice include, but are not limited to, if you

(a) Get a raise or changes jobs and your income changes substantially . . . .
(emphasis in Order and Notice to Debtor).
3. On Schedule I filed with the court on May 8, 2018, the Debtors stated that Mr.
Borca worked as a Manager at Five Guys1 with gross monthly income of $2,341.76, and Ms. Borca
worked as a Server/Trainer at Bonefish Grill2 with gross monthly income of $2,742.76, although
the Debtors noted on Schedule I that Ms. Borca’s tips varied. Mr. Borca also reported monthly
VA disability income in the amount of $1,255.00. On Schedule J, the Debtors listed a residential
rental expense of $1,405.00 per month, childcare costs of $600.00 per month and monthly child
support costs of $559.00 per month. The Debtors disclosed net income of $783.92 per month.

1 Five Guys is an American fast casual restaurant chain focused on hamburgers, hot dogs, and French fries.
2 Bonefish Grill is an American casual dining restaurant chain specializing in seafood.
4. The Debtors were below-median income debtors on the Petition Date and have an
applicable commitment period under 11 U.S.C. § 1325(b)(4) of thirty-six months. Despite the
Debtors’ ability to propose a thirty-six month plan pursuant to 11 U.S.C. §§ 1322(d)(2) and
1325(b)(4), the Debtors’ Chapter 13 Plan (“Plan”) proposed one payment in the amount of $630.00
followed by fifty-nine payments in the amount of $783.00, for a total repayment period of sixty

months ending in April 2023.
5. The sixty-month repayment period facilitated the Debtors’ retention of two
encumbered vehicles, a 2006 Hummer H3 and a 2011 Toyota Corolla, and repayment of pre-
petition unsecured priority claims totaling approximately $15,413.00, because the Debtors could
pay those claims over an extended period of time without exceeding their monthly net income.
The Plan did not propose a dividend to general unsecured creditors whose claims total $58,914.99.
The court confirmed the Plan on November 1, 2018.
6. On October 14, 2020, the Debtors filed a motion (“Debtors’ Motion to Modify”)
seeking modification of the Plan and asserting as follows:

The Debtors need to modify the Chapter 13 plan because they have experienced
hardships related to the COVID-19 pandemic and the shutdown orders of the state.
Mr. Borca worked for G.58 Cuisine3 before the shutdown orders. He was laid off
in March and began looking for different employment. In June, Mr. Borca began
working for Greenview Landscaping. He earns less income now working in
landscaping at $14.50 per hour[] for 40 hours a week than what he did with tips at
G.58 Cuisine. Additionally, Mrs. Borca works as a restaurant manager, and her
pay has been cut in half due to the impact of the COVID-19 pandemic. The
restaurant she works for has cut its hours substantially.

The Debtors asserted they had “become strapped financially” and proposed to modify the Plan to
require $22,564.00 through October 2020, followed by sixty payments in the amount of $378.00,
reduced from the confirmed amount of $783.00. The Debtors’ Motion to Modify did not indicate

3 G.58 Cuisine is a restaurant specializing in Chinese cuisine.
a change in employer for Ms. Borca and did not provide updated figures for the Debtors’ income
and expenses.
7. The Trustee objected to the Debtors’ Motion to Modify, asserting that for the
proposed modification to be feasible, the ongoing payments would need to be $379.00 per month.
On November 17, 2020, the court entered a Consent Order modifying the Plan to require

$22,564.00 through October 2020, followed by sixty payments in the amount of $379.00 through
October 2025 (“Modified Plan”).
8. The Modified Plan has a total term of ninety months, stretching seven years from
confirmation of the Plan as permitted by 11 U.S.C. § 1329(d) and West v. Costen, 826 F.2d 1376,
1378 (4th Cir. 1987). The Trustee projects that under the Modified Plan, general unsecured
creditors will receive a dividend of less than one-tenth of one percent on their claims totaling
$58,914.99.
9. On January 25, 2021, the Debtors filed the Motion to Incur Debt, seeking court
approval to finance the purchase of a residence. The Debtors asserted their rental expense had

increased to $1,700.00 per month, and they sought permission to incur a loan that would have a
monthly repayment amount not to exceed $2,000.00. The Trustee opposed the Motion to Incur
Debt, citing, in part, the Debtors’ characterization in the recent Debtors’ Motion to Modify that
they were strapped financially. The Trustee also noted that under the Modified Plan, the Debtors
had reduced their ongoing payments to the Trustee by $404.00 per month, and three months after
filing the Debtors’ Motion to Modify, the Debtors sought to purchase property that would increase
their housing expense by $300.00 per month.
10. At the February 24, 2021 hearing on the Motion to Incur Debt, both Debtors
testified about their financial circumstances, including their current employment and expenses.
Ms. Borca testified that she now works as a service manager at G.58 Cuisine restaurant,4 and in
2020 her hours were halved as a result of the coronavirus pandemic. In September 2020, Ms.
Borca had gross biweekly income of $1,028.29, and she continued to receive less than full pay
until at least November 2020. By February 2021, Ms. Borca was receiving gross biweekly income
over $2,000.00, comprising a salary payment ranging between $2,000.00 and $2,071.43 and cash

tips ranging from $340.41 to $584.50 per pay period. Ms. Borca testified that the restaurant
remained at reduced capacity, but the number of customers using the restaurant’s private room had
increased. Ms. Borca also stated that the Debtors no longer have a monthly childcare expense of
$600.00, because her mother has moved in with the Debtors and provides care for the Debtors’
son while he is enrolled in “virtual learning” at home. Ms. Borca testified that she does not
anticipate the Debtors’ son returning to in-person learning “anytime soon” due to the coronavirus
pandemic and her concerns for her mother’s health. She also stated that her daughter, for whom
she pays monthly child support, would be reaching eighteen years of age in May 2021, and her
child support obligation would end at that time.

11. Mr. Borca testified that he began working for GreenView Partners, LLC in April
or May of 2020. Mr. Borca presented an employee pay stub for the pay period of January 10, 2021
through January 23, 2021 showing gross biweekly earnings of $1,495.82. He testified that he
typically works more hours in the spring and summer, resulting in higher income. The Debtors
presented updated Schedules I and J reflecting gross monthly income of $2,513.33 for Mr. Borca
and $5,436.88 for Ms. Borca and net income of $2,194.08 each month, up from the $783.92 net
income amount as of the Petition Date. The Debtors’ updated net income includes Mr. Borca’s

4 Ms. Borca explained that on the Petition Date, she worked both at Bonefish Grill and G.58 Cuisine, and
post-petition she received a promotion at G.58 Cuisine that led her to leave Bonefish Grill and work solely at G.58
Cuisine. Ms. Borca did not state when she received the promotion at G.58 Cuisine.
ongoing VA disability payments in the amount of $1,255.00 and does not account for the monthly
payment of $379.00 under the Modified Plan. At the conclusion of the hearing on February 24,
2021, the court declined to allow the Motion to Incur Debt, citing the inequities that would result
from allowing the Motion to Incur Debt so soon after extending the Debtors’ repayment period to
their creditors under the Modified Plan. At the request of the Debtors, the court continued the

hearing on the Motion to Incur Debt.
12. The Trustee filed the Trustee’s Motion to Modify approximately four weeks after
the initial hearing on the Motion to Incur Debt. In the Trustee’s Motion to Modify, the Trustee
notes that Mr. Borca’s employment-related income has increased by seven percent, and Ms.
Borca’s income has increased by ninety-eight percent since the Petition Date. The Trustee also
notes the Debtors’ reduced current and anticipated expenses since the Petition Date and asserts
“[t]he collective changes to household income and expenses . . . constitute a substantial and
unanticipated change in the Debtors’ financial condition since modification of their Plan in
November 2020.”

13. The Trustee proposes that the Modified Plan be modified to require $24,504.00, as
paid through March 2021, followed by $1,239.00 per month for two months, followed by
$1,798.00 per month for twenty-three months beginning in June 2021, for a modified plan base of
$68,336.00 and a modified plan length of sixty months through April 2023, when the Debtors’
originally confirmed Plan was set to end. The Trustee’s proposed modification accounts for an
anticipated housing expense in the amount of $2,000.00 based on the Motion to Incur Debt that
was pending when the Trustee filed the Trustee’s Motion to Modify.5 The proposed modification
does not include Mr. Borca’s monthly VA disability payment in the calculation of funds that are

5 The court ultimately denied the Motion to Incur Debt in an Order entered on May 11, 2021.
available to pay to creditors.6 The Trustee asserts that the proposed modification does not violate
the time limits set forth in 11 U.S.C. § 1329(c) and would result in an approximate thirty-six
percent dividend to general unsecured creditors.
14. In the Fourth Circuit, a “party seeking modification [must] demonstrate[] that the
debtor experienced a ‘substantial’ and ‘unanticipated’ post-confirmation change in his financial

condition.” Murphy v. O’Donnell (In re Murphy), 474 F.3d 143, 149 (4th Cir. 2007) (quoting In
re Arnold, 869 F.2d 240, 243 (4th Cir. 1989)). This standard is implemented to preserve the
doctrine of res judicata as it relates to a court’s prior order confirming a plan or modified plan.
The Trustee, as the party seeking modification, bears the burden of proof. In re Matusak, No. 14-
02032-5-SWH, 2017 Bankr. LEXIS 3166, at *8 (Bankr. E.D.N.C. Sept. 19, 2017). Applicable to
any modification under 11 U.S.C. § 1329(a) are 11 U.S.C. §§ 1322(a), 1322(b), and 1323(c) and
the requirements of 11 U.S.C. § 1325(a), including the requirement of § 1325(a)(3) that the plan
be proposed in good faith. 11 U.S.C. § 1329(b)(1); 11 U.S.C. § 1325(a)(3).
15. In the Response, the Debtors raise three primary arguments against the Trustee’s

Motion to Modify. First, the Debtors assert as follows:
The re-opening of restaurants to pre-COVID levels was completely anticipated on
November 17, 2020 [when the court entered the Consent Order confirming the
Modified Plan]. The Motion filed by the Debtors[] on October 14, 2020 stated that
the reason for the CARES Act modification was due to the restaurant shut-downs
resulting from COVID. Although the exact trajectory of the pandemic and the
response of various governmental regulators and restaurant patrons has never been
proved fully predictable, it was widely known on November 17, 2020 that herd

6 The Honoring American Veterans in Extreme Need Act of 2019, also known as the HAVEN Act, added to
the list of income excluded from “current monthly income” “any monthly compensation, pension, pay annuity, or
allowance paid under title 10, 37, or 38 in connection with a disability, combat-related injury or disability, or death of
a member of the uniformed services, except that any retired pay excluded under this subclause shall include retired
pay paid under chapter 61 of title 10 only to the extent that such retired pay exceeds the amount of retired pay to which
the debtor would otherwise be entitled if retired under any provision of title 10 other than chapter 61 of that title.”
Pub. L. No. 116-52, 133 Stat. 1076 (2019); 11 U.S.C. § 101(10A)(B)(ii)(IV). The Trustee explained that he calculated
the proposed modified payment under the assumption that Mr. Borca’s VA disability income should also be excluded
from a calculation of the Debtors’ income and ability to pay for purposes of a plan modification.
immunity (aided by vaccines) would eventually be achieved and that lock downs
were not a viable long-term solution to the COVID problem.

In other words, the Debtors assert that the Trustee cannot carry his burden to show that the Debtors’
increase in income since confirmation of the Modified Plan was unanticipated.
16. Second, the Debtors assert that the Trustee may not propose a modified plan that
provides for payments over a period of time that expires after the Debtors’ applicable commitment
period of thirty-six months. The Debtors cite 11 U.S.C. § 1329(c), which provides that a modified
plan “may not provide for payments over a period that expires after the applicable commitment
period under section 1325(b)(1)(B) after the time that the first payment under the original
confirmed plan was due, unless the court, for cause, approves a longer period . . . .” 11 U.S.C. §
1329(c). The Debtors argue that “[a]lthough “for cause” may be found if a debtor needs additional
time to make plan payments, it should never be found to increase distributions on general
unsecured claims.”
17. Third, the Debtors assert that the proposed modification has not been made in good
faith, and it “is an abuse of the provisions, purpose and spirit of chapter 13.”
The Debtors have Experienced a Substantial and Unanticipated Change in Circumstances
18. The increase in income that the Debtors have experienced since the Petition Date
clearly is substantial. See Matusak, 2017 Bankr. LEXIS 3166, at *10 (finding an approximate
seventy-three percent increase in income post-petition to be substantial). The Debtors sought
modification of the Plan in October 2020 after they became unable to maintain payments that had

been feasible based on their income as of the Petition Date. Presumably, then, the Debtors’ income
may have been even lower as of confirmation of the Modified Plan than it was on the Petition
Date, making the increase from November 2020 to the filing of the Trustee’s Motion to Modify
even more substantial.7
19. To determine whether an increase is “unanticipated,” “a court must evaluate
‘whether a debtor’s altered financial circumstances could have been reasonably anticipated at the
time of confirmation by the parties seeking modification.’” Matusak, 2017 Bankr. LEXIS 3166, at

*10-11 (quoting In re Fitak, 92 B.R. 243, 250 (Bankr. S.D. Ohio 1988)). As a preliminary matter,
the Debtors argued at the hearing that the Trustee should be required to testify, subject to cross
examination, to satisfy his burden of proving that he could not have reasonably anticipated the
Debtors’ increase in income. Although there are undoubtedly circumstances where testimony from
the Trustee would be necessary to prove he did not anticipate a change, in this case, counsel for
the Trustee was able to cite from the case record the Debtors’ Motion to Modify and the Debtors’
testimony from February 24, 2021 and proffer to the court that the Debtors never indicated, to the
Trustee or the court, that they anticipated their income to rebound so significantly after
confirmation of the Modified Plan.

20. The court also notes that there is disagreement among the parties as to what exactly
was or was not anticipated. At both hearings on the Trustee’s Motion to Modify, the parties
discussed whether the Trustee could have anticipated restaurants expanding their opening hours
and dining capacities between November 2020 (confirmation of the Modified Plan) and March
2021 (the filing of the Trustee’s Motion to Modify), allowing for Ms. Borca to increase her
monthly income in a relatively short period of time.

7 The Debtors have not presented evidence of Mr. Borca’s income around the time the Debtors filed the
Debtors’ Motion to Modify. At the February 24, 2021 hearing on the Motion to Incur Debt, Ms. Borca presented pay
stubs showing gross biweekly income of $1,028.29 for the period ending September 18, 2020, $1,166.90 for the period
ending October 2, 2020 and $1,300.61 for the period ending October 30, 2020. That income, averaged on a monthly
basis, is slightly lower than Ms. Borca’s gross monthly income of $2,742.76 on the Petition Date, although the court
notes that Ms. Borca’s income consistently increased with each pay period during that time.
21. At the hearing on June 10, 2021, the Trustee asserted that the reopening of
restaurants aside, the court should examine whether the Trustee could have anticipated Ms. Borca’s
income increasing after confirmation of the Modified Plan to an amount that is ninety-eight percent
higher than her income on the Petition Date. In other words, the issue is not whether the Trustee
could have anticipated that as restaurants recovered from the pandemic, Ms. Borca would return

to her pre-pandemic wages. What the Trustee could not have anticipated, based on the case record
(including no record of disclosure that Ms. Borca received a promotion and began working full
time at G.58 Cuisine), was that Ms. Borca would return to her pre-pandemic income amount and
that that amount would be nearly double her income on the Petition Date. The Debtors went from
being “strapped financially” to having substantially more income than they did on the Petition
Date, rather than merely rebounding back to their Petition Date income level – the only income of
which the Trustee had knowledge according to the record. The Trustee has carried his burden to
establish that he could not have reasonably anticipated that Ms. Borca’s income would be ninety-
eight percent higher than her Petition Date income, mere months after confirmation of the

Modified Plan.
The Proposed Modification Does Not Violate § 1329(c)
22. The Debtors assert that the Fourth Circuit Court of Appeals case of Pliler v. Stearns,
747 F.3d 260 (4th Cir. 2014) is applicable to the circumstances of this case. In Pliler, the Court
was tasked with determining whether an above-median income debtor is required to maintain a
bankruptcy plan for five years unless all unsecured creditor claims are paid in full, even if the
debtor has negative disposable income. 747 F.3d at 262. The Court stated that –
Section 1329 expressly incorporates the applicable commitment period as a
temporal limit for purposes of plan modification. . . . As we saw in Carroll [v.
Logan], for example, Section 1329 modification may be used to increase plan
payments to creditors in the event that the debtors come into additional, unforeseen
income. 735 F.3d 147 [(4th Cir. 2013)]. But a modified plan ‘may not provide for
payments over a period that expires after the applicable commitment period under
section 1325(b)(1)(B) after the time that the first payment under the original
confirmed plan was due . . . .’ 11 U.S.C. § 1329(c). The modification statute thus
‘defines the temporal window within which modified payments . . . may be made
by reference to the applicable commitment period.’ In re Flores, 735 F.3d [855,]
859-60 [(9th Cir. 2013)]. In other words, for purposes of plan modification, the
applicable commitment period appears to serve as a measure of plan duration
wholly unrelated to debtors’ disposable income.

Id. at 266. The Debtors’ reliance on this excerpt from Pliler is misplaced. That portion of the
opinion was in response to the Plilers’ assertion that the applicable commitment period “exists
solely for its function within the confines of § 1325(b)(1)(B),” and the Court was making the point
that § 1329 also incorporates the applicable commitment period into plan modifications. See id.
Of course, the Fourth Circuit Court of Appeals did not include in its quotation of § 1329(c) the
portion allowing the court to approve a longer modified plan period for cause, but that exclusion
is because that language was not relevant to the Court’s point.
23. The Debtors assert that the maximum plan lengths set by 11 U.S.C. § 1322(d) and
the applicable commitment period set out in 11 U.S.C. § 1325(b)(4) are meant to protect below-
median income debtors from being forced to commit their income for unreasonably long periods
of time. See H.R. Rep. No. 595, 95th Cong., 1st Sess. 117 (1977) (“[I]nadequate supervision of
debtors attempting to perform under wage earner plans [has] made them a way of life for certain
debtors. Extensions on plans, new cases, and newly incurred debts put some debtors under court
supervised repayment plans for seven to ten years. This has become the closest thing there is to
involuntary servitude . . . .”). The Debtors argue that the language of § 1329(c) regarding the
length of a modified plan should be applied with that policy in mind. The Debtors also cite a
treatise which states that § “1329(c) makes it unmistakably clear that no plan modified after
confirmation may extend beyond the maximum period permitted for an original plan under section
1322(d),” 8 Collier on Bankruptcy ¶ 1329.07 (16th ed. 2021); however, the context of that
sentence, as is evident by the footnote citing Christensen v. Black (In re Black), 292 B.R. 693
(B.A.P. 10th Cir. 2003), is that a debtor may not modify a plan to extend beyond the five-year
maximum imposed by § 1322(d).
24. A reading of Collier as the Debtors suggest would ignore the provision in § 1329(c)

allowing for approval of a longer repayment period “for cause.” The court recognizes that in the
context of initial plan confirmation, some courts have found that if a below-median income
debtor’s plan is to last longer than three years, then the longer repayment period must be voluntary
and not at the behest of an objecting creditor. See In re Porter, 102 B.R. 773, 777 (B.A.P. 9th Cir.
1989) (collecting cases). In the context of a plan modification, the Debtors cite In re Moglia, No.
11-35022-elp13, 2014 Bankr. LEXIS 5197 (Bankr. D. Or. Dec. 30, 2014). In that case, the court
interpreted § 1329(a)(2) (allowing the plan to be modified to extend the time for repayment) and
§ 1329(c) “as allowing more time to make payments on a 36-month plan (such as if a debtor needs
additional time to cure mortgage arrearages or finish paying off a car), not allowing [extension]

from 36 to 60 months at the instigation of a creditor seeking to increase his recovery.” 2014 Bankr.
LEXIS 5197, at *7.
25. The Debtors also point out that Judge Humrickhouse in this district has declined to
extend a below-median income debtor’s thirty-six month plan to sixty months at the request of an
unsecured creditor. Judge Humrickhouse found that “providing unsecured creditors with an
increased dividend is insufficient on its own to constitute “cause” [to extend a plan’s length] under
§ 1329(c).” Matusak, 2017 Bankr. LEXIS 3166, at *13-14 (citing In re Karayan, 82 B.R. 541, 544
(Bankr. C.D. Cal. 1988)).
26. The court finds the Matusak case distinguishable for at least two reasons. First, the
debtor in that case had a thirty-six month plan and had not previously extended his plan beyond
his applicable commitment period. Second, in denying the creditor’s motion to modify the
debtor’s plan, Judge Humrickhouse noted that the debtor had “exemplified qualities of an honest
and forthright debtor, including diligently remitting all chapter 13 plan payments on time, even

during months in which his income decreased significantly.” 2017 Bankr. LEXIS 3166, at *14. In
this case, the Debtors’ Plan had a term of sixty months, and the Modified Plan has an even longer
term of ninety months. The Debtors also have not exemplified the qualities of honest and forthright
debtors. Although they may not have acted in bad faith, the Debtors’ reduction to their monthly
payments through the Modified Plan, followed very shortly by their attempt to better their financial
situation by purchasing and building equity in real property, certainly is not indicative of an earnest
effort to repay creditors in a timely manner.
27. The court finds the reasoning of the United States District Court for the Middle
District of Alabama persuasive from its opinion issued in McKinney v. Russell, 567 B.R. 384 (M.D.

Al. 2017). In that case, the debtor had a three-year applicable commitment period, but, like the
Debtors, she elected to propose a five-year plan to enable her to retain her vehicle. 567 B.R. at
388. A little over two years after she filed her petition, the debtor was involved in a car accident.
Id. The debtor obtained court approval to substitute the collateral securing the debt owed to her
vehicle lender, but she did not disclose that she was pursuing a personal injury claim related to the
accident. Id. Three years and eighteen days after the petition date, and over nine months after the
accident, the debtor sought court approval to employ counsel in her personal injury action and
accepted a settlement shortly thereafter. Id. at 388-89. The trustee sought modification of the
debtor’s plan, but the bankruptcy court denied the trustee’s motion and a subsequent motion to
reconsider, determining that the trustee had not shown cause for the proposed modified plan to
extend beyond the debtor’s applicable commitment period in order to “capture” the net proceeds
from the settlement. Id. at 389, 392.
28. The district court considered the matter on appeal. The district court noted the
continuing duty of Chapter 13 debtors to disclose evolving financial circumstances and the “whiff

of gamesmanship that lingers around the timing of the Debtor’s pursuit of the personal-injury cause
of action.” Id. at 389-90, 394-95. It also noted that “[c]ause is not defined in the Bankruptcy Code
. . . , and courts have found the legislative use of such a broad, open term indicates that cause ‘is
left to judicial discretion, to be decided on a case-by-case basis.’” Id. at 393 (quoting In re Poff, 7
B.R. 15, 17 (Bankr. S.D. Ohio 1980)). The district court placed significant weight on the fact that
the debtor had previously elected to perform under a sixty-month plan in order to retain her vehicle,
and while the original plan length did not “render unnecessary a showing of cause” in order for
the modified plan to last beyond the debtor’s applicable commitment period, it did “ameliorate
concerns expressed in the jurisprudence and commentary that Chapter 13 debtors should not be

forced into plans of extended length.” Id. The district court found that under the circumstances of
the debtor’s case, “[t]he unmistakable lack of balance between benefits and burdens underpins the
finding of cause for modification.” Id. at 394.
29. Similar to the debtor in McKinney v. Russell, the Debtors elected to extend their
repayment term to reduce their monthly financial burden and maintain encumbered collateral. In
this case, the Debtors extended the Plan a second time to make their monthly payments even more
manageable, and as soon as they recovered from the financial injuries they had suffered as a result
of the pandemic, they thought not about all of their forestalled creditors, but instead about how
they could benefit from their turn of fortune.
30. The court also notes that based on the record, it is unclear when Ms. Borca began
receiving her current level of income at G.58 Cuisine. It is possible that the substantial increase
in income occurred years ago, as Ms. Borca testified that she received the promotion post-petition
but did not specify when, and she also stated that she has “been the solo manager for . . . G.58 for
the last three years.” The Debtors apparently never disclosed the change in employment and

income to the Trustee or the court before the Debtors referenced Ms. Borca’s employment position
in the Debtors’ Motion to Modify and Ms. Borca testified about her employer and income in
February 2021. This lack of transparency may have run afoul of the disclosure directives in the
court’s Order and Notice to Debtor issued at the outset of this case, and it further supports a finding
of cause to approve a longer repayment period under 1329(c).
31. The Trustee’s proposed modification shortens the Modified Plan from its current
length back to the original length of the Plan, and although it increases the monthly payments, the
Debtors would still be able to discharge a significant amount of unsecured debt much sooner than
the anticipated discharge under the Modified Plan. Under the circumstances of this case, the court

finds that sufficient grounds exist to increase the Debtors’ plan payments in accordance with their
increased ability to repay creditors, and cause exists for the repayment period to extend beyond
the Debtors’ three-year applicable commitment period.
The Trustee has Proposed the Modification in Good Faith
32. The Trustee asserts that in evaluating the “good faith” requirement of 11 U.S.C. §
1325(a)(3), the court should consider the analysis of the United States Bankruptcy Court for the
Eastern District of Tennessee in In re Moore, 602 B.R. 40 (Bankr. E.D. Tenn. 2019). In that case,
the court considered a trustee’s proposed modification in light of the totality of the circumstances
of the debtors’ case in order to determine good faith. 602 B.R. at 51. In Murphy, the Fourth Circuit
Court of Appeals also appeared to do just that:
Murphy . . . is seeking to pocket over $80,000 by selling his residence less than a
year after his plan was confirmed, without paying a portion of that money to his
unsecured creditors, who are receiving under the current confirmed plan only about
thirty-seven cents on the dollar. In exercising his fiduciary duty, the Chapter 13
trustee proposed the modification in good faith to prevent Murphy from receiving
such a substantial windfall.

474 F.3d at 153.
33. The Debtors cite the Fourth Circuit Court of Appeals case of Deans v. O’Donnell
and argue that the court must examine whether the Trustee’s proposed modification constitutes
“an abuse of the provisions, purpose, or spirit of” Chapter 13 of the United States Bankruptcy
Code. 692 F.2d 968, 972 (4th Cir. 1982) (quoting 9 Collier on Bankruptcy 9.20 at 319 (14th ed.
1978)). The court has already found that the proposed modification does not violate § 1329(c),
and the modification is permissible under § 1329(a)(1) and (2). The purpose of the modification
is to allow the Debtors’ unsecured creditors to share in the Debtors’ improved circumstances
consistent with the applicable standards of Murphy and Arnold. The Trustee excluded Mr. Borca’s
VA disability income from his calculations and tailored the modification to be feasible even if the
Debtors ultimately are permitted to purchase a residence with a monthly payment similar to the
amount proposed in the Motion to Incur Debt. The modification does not run afoul of the standard
set in Deans v. O’Donnell, and the court finds that the Trustee has proposed the modification in
good faith.
34. The Trustee’s proposed modification is permissible under § 1329(a)(1) and (2), it
complies with the requirements of § 1329(b)(1), and it is not inconsistent with the limitation set in
§ 1329(c). The Trustee’s Motion to Modify should be allowed; now therefore,
It is ORDERED, ADJUDGED and DECREED as follows:
1. The Trustee’s Motion to Modify be, and hereby is, allowed; and
2. The Modified Plan be, and hereby is, further modified to require $24,504.00 as paid
through March 2021, followed by $1,239.00 per month for two months, followed by $1,798.00
per month for twenty-three months beginning in June 2021, for a modified plan base of $68,336.00
and a modified plan length of sixty months through April 2023.

END OF DOCUMENT

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10459179. Public record. Not legal advice.