Randall J. Nelson

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF WISCONSIN

In re:

Randall Nelson, Case No. 19-24458-beh

Debtor. Chapter 13

In re:

Wilfredo Ramos, Case No. 20-21169-beh

Debtor. Chapter 13

DECISION AND ORDER ON DEBTORS’ REQUESTS TO MODIFY THEIR

CONFIRMED CHAPTER 13 PLANS

Does 11 U.S.C. § 1329(c) foreclose the ability of a Chapter 13 debtor to

modify his confirmed plan to alter the plan payment amount while maintaining

an extended plan period previously approved under (now-expired) 11 U.S.C.

§ 1329(d)? Debtors Randall Nelson and Wilfredo Ramos have confirmed

Chapter 13 plans with payment periods of 84 months and 76 months,

respectively. Whether they may modify their plans again while leaving those

extended payment periods in place is a question of statutory interpretation.

FACTUAL BACKGROUND

A. Randall Nelson

Debtor Randall Nelson filed a voluntary petition and Chapter 13 plan on

May 6, 2019. Case No. 19-24458, ECF Nos. 1 and 2. The Court confirmed his

amended 60-month plan on February 21, 2020. ECF No. 39. The debtor filed a

proposed modified plan on January 13, 2021, which the Court confirmed on

February 17, 2021. ECF No. 59. The modified plan took advantage of then-

existing 11 U.S.C. § 1329(d), a provision of the Coronavirus Aid, Relief, and

Economic Security Act (“CARES Act”), Pub. L. 116-136, 134 Stat. 281 (March

27, 2020), and extended the plan payment period to 84 months.

On March 28, 2022—25 months after the debtor’s plan was first

confirmed—the Chapter 13 trustee filed a motion to dismiss Mr. Nelson’s case,

based on failure to make plan payments and to supply a copy of his 2020 tax

returns. ECF No. 61. The debtor objected and noted his ability to make/catch

up on payments due to anticipated receipt of rents. The parties reached a

resolution, which included provision for a further modified plan. The Court

entered an order on April 25, 2022, denying the trustee’s motion to dismiss

and, among other things, noting that the debtor had to file a modified plan no

later than May 31, 2022.1 ECF No. 67.

When the modified plan was not filed by that deadline, the trustee

certified default, but later withdrew her certification after the debtor filed a

modified plan and budget. See ECF Nos. 69, 72, 73, and 74. The proposed

modification sought to change only the payment amount in section 2.1 of the

plan, requiring the debtor to make monthly payments to the trustee of $1,838.

The modification further provided: “All remaining terms of the Chapter 13 Plan

last confirmed on February 17, 2021 are unaffected.” ECF No. 72, at 3. The

trustee objected to this proposed modification on the basis that it did not

provide for a feasible plan. ECF No. 78. The parties agreed to settle the

trustee’s objection on the condition that the debtor file a modified feasible plan

by August 19, 2022, and the trustee submitted a proposed order imposing this

requirement for the Court to sign. Thereafter the Court notified the debtor and

trustee via docket entry: “Given that [the] text of s. 1329(c) provides that a

court may not approve a [plan payment] period that expires after five years

beyond the time the first payment was due, the Court will modify the proposed

1 Given the parties’ agreed resolution of the trustee’s March 28, 2022 motion to dismiss, which

included requiring the debtor to submit a plan modification—after the sunset of § 1329(d)—the

Court should have called the question before entering its April 25 order. That oversight does

not dilute the salience of the question as it relates to the parties’ proposed resolution of the

trustee’s later objection to confirmation, see infra, by requiring a further plan modification by

August 19, 2022, and pointedly, not requiring that any further modified plan include a

payment term consistent with 11 U.S.C. § 1329(c).

order on the trustee’s objection to confirmation by adding the phrase

‘compliant with s. 1329(c)’ unless the debtor requests a hearing on the matter

within 10 business days.” The debtor requested a hearing.

Both counsel for the debtor and counsel for the Chapter 13 trustee

presented their views on the issue identified by the Court. Namely, the parties

recognized that Congress did not amend the text of § 1329(c) (or § 1329(d)) to

address whether debtors with existing CARES Act payment period extensions

may modify any term of their plans while keeping a previously-confirmed

payment period of more than 60 months. After some discussion, the Court

allowed counsel for debtor and the trustee to submit letter briefs addressing

their positions.

B. Wilfredo Ramos

Debtor Wilfredo Ramos filed his initial Chapter 13 plan on February 28,

2020. See Case No. 20-21169, ECF No. 9. The Court confirmed the plan, as

amended, on March 1, 2021. See ECF Nos. 75 and 80. Shortly thereafter,

mortgage lender Deutsche Bank National Trust Company filed a motion for

relief from the automatic stay based on the debtor’s failure to make post-

petition mortgage payments. The Court denied the motion in an order dated

June 2, 2021. In doing so, the Court imposed a six-month “doomsday” period

during which the debtor was required to make timely mortgage payments or

risk Deutsche Bank being granted immediate relief from the automatic stay,

and also allowed the bank to file a supplemental claim in the amount of

$9,605.60. See ECF No. 90. To accommodate the bank’s supplemental claim

without having to increase his monthly plan payment amount, the debtor

elected to extend his plan payment period to 76 months pursuant to 11 U.S.C.

§ 1329(d). ECF No. 92. The Court confirmed the modified plan on July 20,

2021. ECF No. 94.

Several months later, Deutsche Bank filed an affidavit of default. After a

series of hearings on the matter, the parties stipulated to allowing Deutsche

Bank to file another supplemental claim for $2,111.52. ECF No. 130. The

Chapter 13 trustee thereafter filed a motion to dismiss for failure to make

payments necessary to ensure timely plan completion. ECF No. 132. At this

point, the debtor was in the 16th month of his confirmed plan. The trustee

withdrew his motion after the debtor filed a further modified plan on July 11,

2022. See ECF Nos. 134 and 140. This latest proposed modification would

provide for payment of the most recent supplemental claim by increasing the

debtor’s monthly plan payment from $468 to $520. ECF No. 134. Though no

one objected to the proposed plan, the Court held a hearing to consider

whether the proposed modification violates 11 U.S.C. § 1329(c), as it would

require the debtor to make (increased) plan payments for a period that exceeds

five years. After conclusion of additional briefing by counsel for the debtor, the

Court took the matter under advisement.

ARGUMENTS OF THE PARTIES

These cases present the same question: Does 11 U.S.C. § 1329(c)

foreclose the ability of Chapter 13 debtors to modify their plans in some respect

while maintaining an extended payment period previously confirmed under

now-expired 11 U.S.C. § 1329(d)?

Debtor Nelson contends that imposing the 60-month limitation of

§ 1329(c) on debtors wishing to maintain their CARES Act extended periods

would yield an absurd result, citing In re Goodrich, 587 B.R. 829, 841 (Bankr.

D. Vt. 2018) (granting reconsideration to review interpretation of a BAPCPA

provision after eleven years of analysis by other courts, and considering the

statute’s text, context, and purpose). Attempting to demonstrate an absurdity,

he hypothesizes a debtor in month 65 of an 84-month plan who needs to

modify his payment amount to maintain feasibility. See Case No. 19-24458,

ECF No. 87. That hypothetical debtor, he argues, would be unable to modify at

all if bound by § 1329(c), forcing him to make the difficult choice of allowing his

case to be dismissed or to remain in an “unfeasible plan that is destined for

failure[.]” Id. To avoid such a choice, he points to In re Mercer, where a

bankruptcy court allowed debtors to modify the payment amount of their

CARES Act plan and maintain their extended payment period, despite the

expiration of § 1329(d). See 640 B.R. 577, 581 (Bankr. D. Colo. 2022).

Debtor Ramos likewise relies on Mercer as authority for allowing him to

modify his plan in the manner proposed. See Case No. 20-21169, ECF No. 146.

He also directs the Court to In re Carter, 638 B.R. 379 (Bankr. N.D. Ill. 2022),

for the proposition that a plan can be modified to run longer than 60 months.

See 638 B.R. at 398 (“[Section 1329(c)] is satisfied so long as the modification

itself does not expressly alter the plan term to one longer than 60 months, even

if the effect of the modification is that a plan may run longer than 60 months.”)

(citing Germeraad v. Powers, 826 F.3d 962, 968 (7th Cir. 2016)). See ECF No.

145. Carter, however, does not help the debtor, because Mr. Ramos’s proposed

modification would result in a plan that, by its express terms, provides for a

payment period exceeding the 60-month limit of section 1329(c). See 638 B.R.

at 398 ([“[T]he general proposition taken by the court from [Germeraad] is more

broad: Even after the 60th month of a plan, a court may modify a plan—even if

the resulting plan will result by definition in a plan longer than 60 months—so

long as the court does not extend the plan term itself beyond 60 months.”); see

also Germeraad, 826 F.3d at 970–71 (“[Section 1329] contains three general

limits on the bankruptcy court’s power to approve the request. First,

modification is allowed only if it will modify the plan in one of the ways

specified in § 1329(a)(1)–(4). Second, a modification must comport with the

provisions of the Code listed in § 1329(b)(1). Finally, . . . a modification may not

result in a plan providing for payments over a term that is longer than the period

specified in § 1329(c) . . . .”) (emphasis added).

Mr. Ramos points out that his extended plan period already is in place

and he does not seek further modification of that period, therefore, he argues,

he is not asking the Court to “‘approve a period that expires after five years

[after the time that the first payment under the original confirmed plan was

due].’” ECF No. 146, at 2. He asserts that if the Court were to deny a request to

modify only his payment amount, that denial would serve as a retroactive

denial of his prior, permitted, payment-period extension under § 1329(d). He

notes that the Chapter 13 trustees in this district agree that further

modifications of payment amounts would not run afoul of § 1329(c). Id.

For their part, the trustees argue that restricting debtors with plan

period extensions previously approved under § 1329(d) to a 60-month plan on

a subsequent modification thwarts the Bankruptcy Code’s overall purpose of

aiding Chapter 13 debtors to complete their cases. According to the trustees,

because § 1329(d) was enacted to allow debtors a longer period to complete

their cases, Congress could not have intended now to force those debtors—

many of whom remain adversely affected by the COVID-19 pandemic—to revert

back to a 60-month plan period. Finally, they contend that §§ 1329(c) and

1329(d) are conflicting provisions that must be harmonized. See Case No. 19-

24458-beh, ECF No. 88 (incorporating by reference the trustee’s letter brief

submitted in In re Lewis, Case No. 18-26550-beh, ECF No. 134) (cautioning

against construing statutory provisions in ways that would lead to absurd

results, citing In re Goodrich, 587 B.R. at 841, and warning against a statutory

construction that would fail to give both provisions full effect, citing In re

Plunkett, 89 B.R. 776, 782 (Bankr. E.D. Wis. 1988) (concluding that 11 U.S.C.

§ 541(d) does not prevent a trustee from invoking his strong-arm powers under

11 U.S.C. § 544(a)(3) and reading § 541(d) to avoid making the provision

“redundant and mere surplusage”)).

DISCUSSION

Since 1978, 11 U.S.C. § 1329(c) has read:

A plan modified under this section 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, but the court may not approve a

period that expires after five years after such time.

11 U.S.C. § 1329(c) (emphasis added). The maximum plan period provided by

subsection (c) was expanded between 2020 and 2022 by 11 U.S.C. § 1329(d)(2).

The latter, temporary provision allowed qualifying debtors to modify their

confirmed Chapter 13 plans to provide for payments up to two additional years:

A plan modified under paragraph (1) may not provide for payments

over a period that expires more than 7 years after the time that the

first payment under the original confirmed plan was due.

11 U.S.C. § 1329(d)(2) (emphasis added). Subsection (d) became effective on

March 27, 2020, shortly after the COVID-19 outbreak took hold in this

country. From the first, Congress established that this option to prolong plan-

length would be available for a limited time. After one extension, the provision

was stricken as of March 27, 2022.2

With the sunset of § 1329(d), debtors like Mr. Nelson and Mr. Ramos—

those who previously obtained CARES Act extensions of their plan periods and

now seek to modify another aspect of their plans (like the amount of monthly

plan payments) while retaining the extended payment periods—are left without

a clear path to confirmation.

One bankruptcy court decision offers mild support for the debtors’ view

that they may modify their plans as proposed. In In re Mercer, a Colorado court

allowed debtors who had previously modified their plan to provide for payments

over a period of seven years under section 1329(d) to further modify their plan

to adjust the payment amount to creditors, while keeping the plan duration at

seven years despite the sunset of § 1329(d). The court explained: “It is this

Court’s view that any plan extension beyond five years that this Court

approved before the sunset date should remain in effect despite a subsequent

modification to the plan after the sunset date.” 640 B.R. at 581. The Mercer

court supplied no analysis for its view.

2 Subsection (d) was added by the CARES Act on March 27, 2020 to permit extension of a plan

up to a total of seven years for debtors experiencing a material financial hardship due to

COVID-19 and applied to any case for which a Chapter 13 plan had been confirmed before the

enactment date. Congress originally enacted a one-year sunset for this subsection, see Pub. L.

No. 116-136, §§ 1113(b)(2)(A)(iii) and 1113(b)(2)(B), but then delayed the sunset until March 27,

2022, and expanded eligibility by affording the payment period extension to debtors like Mr.

Ramos, whose plans were confirmed before March 27, 2021. See COVID-19 Bankruptcy Relief

Extension Act of 2021, Pub. L. No. 117-5, 135 Stat 249 (Mar. 27, 2021). This decision refers

collectively to each of these plans as “CARES Act” plans.

Another bankruptcy court, in two separate cases decided by the same

judge, reached conclusions about the ability to modify a plan post-expiration of

§ 1329(d), relying on plain statutory text. In In re Sykes, 638 B.R. 578 (Bankr.

E.D. Mich. 2022), the bankruptcy court denied a post-confirmation request to

modify a debtor’s plan by extending its term from 60 to 65 months. The request

was filed several weeks before March 27, 2022, but the hearing on confirmation

fell several days after March 27, meaning § 1329(d) was no longer in effect.

Moreover, that district’s local rules provided that a proposed post-confirmation

plan modification did not become effective until the court entered the

confirmation order.3 For those reasons, the bankruptcy court denied

confirmation and similarly denied reconsideration.

In In re Bohinski, 638 B.R. 870 (Bankr. E.D. Mich. 2022), the debtor filed

a proposed post-confirmation plan modification several days before March 27,

2022. The proposed modification would have changed the Chapter 13 plan

period from 64 to 67 months. In mid-April, after the time for objection had

passed, the court denied confirmation. It concluded that because § 1329(d) had

been stricken, confirming a plan period of 67 months would be contrary to law.

The Bohinski court reminded that the maximum length of a modified plan is

the five-year period described in § 1329(c). Id. at 871. Implicitly at least, the

Bohinski reasoning suggests that the court would not confirm a post-CARES

Act plan modification where the changed term is one other than plan duration

but the plan duration remains extended beyond 60 months.

3 See also 11 U.S.C. § 1329(d)(1)(B) (“ . . . the plan may be modified upon the request of the

debtor if— . . . the modification is approved after notice and a hearing”); compare 11 U.S.C.

§ 1329(b)(2) (“The plan as modified becomes the plan unless, after notice and a hearing, such

modification is disapproved.”); Germeraad v. Powers, 826 F.3d 962, 969 (7th Cir. 2016) (section

1329(b)(2) means that the modification is effective, i.e., that the plan is modified, on the date

the party requests modification of the plan, unless the court later disapproves it); In re Mercer,

640 B.R. at 581 (“It is hard for this Court to imagine what other meaning to give to [section

§ 1329(d)(1)(B)’s requirement that the modification must be approved] than to hold that

§ 1329(d) motions to modify are not effective until they are approved. Holding otherwise would

render this element superfluous. So, the Court must acknowledge that § 1329(d), unlike

§ 1329(b)(2), requires approval and not merely a filing that is not later disapproved.”).

Bohinski, rather than Mercer, better adheres to the plain text of

§ 1329(c), which provides that “[a] plan modified under this section”—not a

modification under this section—“may not provide for payments over a period

that expires after [five years].” 11 U.S.C. § 1329(c) (emphasis added). Although

the debtors would like the Court to cabin the applicability of section 1329(c) to

the discrete terms of the proposed modification at issue, the statutory text is

not so limited. Compare Germeraad, 826 F.3d at 971 (“[A] modification may not

result in a plan providing for payments over a term that is longer than the

period specified in § 1329(c) . . . .”). For the following reasons, this Court makes

express what the Bohinski court implied, concluding that a request to modify a

confirmed plan that expressly results in a plan payment period exceeding 60

months fails to comply with 11 U.S.C. § 1329 and cannot be granted.

A. Section 1329(c) is not ambiguous as applied to the debtors.

While apparently acknowledging that the text of § 1329(c) is plain, the

debtors and Chapter 13 trustees contend that § 1329(c) is ambiguous at least

as applied to debtors like Mr. Nelson and Mr. Ramos, asserting that Congress

could not have intended the sunsetting of § 1329(d) combined with the ongoing

application of § 1329(c) to foreclose further plan modifications for debtors

wishing to retain their CARES-Act-extended payment periods.

One problem with this ambiguity/conflict argument, which necessarily

compares now-stricken § 1329(d) with the continuing § 1329(c), is that

statutory interpretation cases most often analyze whether operation of two co-

existing statutory provisions creates ambiguity. See, e.g., Goodrich, 587 B.R. at

838–39 (reconsidering interpretation of BAPCPA provision and canvassing

other courts’ methodology); Plunkett, 89 B.R. at 781–82 (reading Code sections

541(d) and 544(a)(3)—both co-existing—to reconcile alleged conflict). Here,

§§ 1329(d) and (c) no longer co-exist. Only § 1329(c) is operative. See Lamie v.

U.S. Trustee, 540 U.S. 526, 534 (2004) (“The starting point in discerning

congressional intent is the existing statutory text, and not the predecessor

statutes. It is well established that ‘when the statute’s language is plain, the

sole function of the courts—at least where the disposition required by the text

is not absurd—is to enforce it according to its terms.’ So we begin with the

present statute.”) (internal citations omitted).

The converse situation does occur—courts may attempt to interpret

current Code provisions by considering prior bankruptcy statutes. See, e.g.,

Goodrich, 587 B.R. at 840 n.11 (“In efforts to decipher the meaning of newly

added provisions, three of the four BAPCPA decisions considered pre-BAPCPA

bankruptcy statutes and practice.”) (citing Milavetz, Gallop & Milavetz, P.A. v.

United States, 559 U.S. 229, 244 (2010); Hamilton v. Lanning, 560 U.S. 505,

515–17 (2010); Hall v. United States, 566 U.S. 506, 513–14 (2012)). But the

lineage is not direct here; § 1329(c) pre-existed § 1329(d) and continues intact

after sunset of the latter.4

Assuming § 1329(c) is ambiguous here, the Court could look to legislative

history, though it should do so with caution. See, e.g., Lamie, 540 U.S. at 536

(instructing that courts should “avoid the pitfalls that plague too quick a turn

to the more controversial realm of legislative history”); Dobbs v. Jackson

Women’s Health Org., 142 S. Ct. 2228, 2256 (2022) (“This Court has long

disfavored arguments based on alleged legislative motives,” recognizing that

inquiries into such motives “are a hazardous matter.”) (citing United States v.

O’Brien, 391 U.S. 367, 383 (1968)). While the parties have not cited it, there is

some legislative history of the COVID-19 Bankruptcy Relief Extension Act of

4 The debtors’ and trustees’ unintended-consequences argument mirrors the argument made in

a case where the debtor sought to extend her plan under the CARES Act, but because the

original plan was not confirmed before the March 27, 2020 effective date of § 1329(d)(2), the

debtor could not take advantage of the temporary extension window Congress created. See,

e.g., In re Robinson, Case No. 19-22498-beh, 2020 WL 7234031, at *2 (Bankr. E.D. Wis. Dec. 8,

2020) (“The debtor argues that the statutory language produces a result here that is ‘at odds

with the manifest intent of the legislature.’ Counsel asserts ‘[t]he debtor was clearly the type of

individual that Congress intended to provide relief to, and it would be inequitable to deny her

this relief due to a literal reading of the statutory language essentially putting form over

function.’”) (internal citations omitted). The Robinson court acknowledged that while the United

States Supreme Court has recognized there can be interpretive exceptions to a plain language

read of statutory text, such an exception should be reserved for the “rare case,” see id. at *3

(citing Ron Pair Enterprises, 489 U.S. 235, 242 (1989)). Neither the debtors nor the Chapter 13

trustees argue that either of the debtor’s situations here is a “rare case.”

2021. That history illumines why the accommodation of § 1329(d) was not

permanent, but finite:

Mr. NADLER. Madam Speaker, H.R. 1651, the COVID-19 Bankruptcy

Relief extension Act of 2021, is bipartisan legislation to temporarily

extend, until March 27, 2022, the COVID-19 bankruptcy relief

provisions enacted as part of the CARES Act in the December 2020

omnibus appropriations bill.

Since the bankruptcy provisions of the CARES Act will expire next

week, it is urgent for Congress to ensure that families and small

businesses do not lose access to these economic lifelines.

These provisions were enacted last year to provide critical relief to

families and small businesses forced into bankruptcy because of the

ongoing pandemic. For example, they . . . protect individuals and

creditors alike from the effects of the pandemic derailing the court-

ordered repayment plans that promise a way out of chapter 13

bankruptcy.

. . .

Extending these necessary protections until March of next year will

provide much-needed certainty that the bankruptcy system will

remain responsive to debtors and creditors alike during this

extraordinarily disruptive crisis.

. . .

Mr. ISSA. . . . Madam Speaker, this pandemic, everyone knows, has

uprooted lives and caused untold destruction to families, to workers,

and to small businesses. And many see the partisan behavior as

destructive during this time, and they often do not see the bipartisan

behavior.

Today’s extension, H.R. 1651, is an example of bipartisan behavior on

behalf of the American people. Repeated and lengthy government

shutdowns in response to the pandemic have devastated the ability of

millions to work, pay bills, and support their families, and keep their

small businesses afloat.

. . .

In 2020, Congress passed five bipartisan COVID relief packages. The

CARES Act allowed a variety of temporary relief measures for families

and small business. When it was passed, we believed that, in fact,

once the vaccine was available, that we would be able to put this

behind us. But today, when over 10 percent of Americans have

received a vaccine, we now know that the road to full recovery is longer

ahead of us even after we begin going to work.

So allowing . . . debtors to file chapter 13 to modify their payment

plans are only some of the critical items that the CARES Act did.

Today we are making sure these will continue until March of 2022.

This bill also extends through 2022 bankruptcy relief provisions

included in the December 2020 COVID relief package. This extension

will provide individuals and businesses with certainty and simplicity

as they look at an economic recovery that, although it is underway,

may be long.

167 Cong. Rec. H1389–90 (daily ed. March 16, 2021) (emphasis added).

These statements reflect an intent that the accommodation of § 1329(d)

be temporary. They describe a rationale that limited, and not permanent, relief

was required because vaccines and other measures would be part of the

nation’s economic recovery, notwithstanding the recovery process could be

long. See also In re Ritter, 626 B.R. 35, 40–41 (Bankr. C.D. Cal. 2021)

(“Congress passed § 1329(d) in March 2020 in order to allow debtors

experiencing financial hardship due to COVID to modify their plans. . . . At the

same time, Congress enacted sweeping provisions providing for forbearance on

federally insured personal mortgage loans. . . . This combination was intended

to keep debtors in their homes and prevent massive foreclosures during a

health crisis where the public had been instructed to stay at home to reduce

the spread of the disease.”).

Moreover, there is no dispute that Congress took some action after the

passage of the CARES Act, and even after the sunset of § 1329(d), to remedy

new or remaining problems that later came to light. For example, Congress

enacted (now-repealed) 11 U.S.C. § 1328(i) in December 2020, months after the

CARES Act and passage of § 1329(d), to address the existing issue of mortgage

forbearances during the pandemic. As the bankruptcy court in In re Ritter

explained:

[Section 1329(d)], however, did not adequately address the

situation where a debtor had complied with all requirements of the

plan and was ready for a discharge but could not keep up with

mortgage payments due to COVID-19 related financial

setbacks. . . . Section 1328(i) allows debtors who have suffered

COVID-19 related financial distress to still obtain a discharge even

though they have obtained a forbearance agreement or loan

modification for their residential mortgage.

626 B.R. at 41. See also Bankruptcy Threshold Adjustments and Technical

Corrections Act, Pub. L. 117-151, 136 Stat 1298 (June 21, 2022) (amending 11

U.S.C. § 1182 retroactively to extend the debt limit increase of $7,500,000

under the CARES Act for Subchapter V debtors through 2024, and fixing an

apparent mistake by Congress in the CARES Act regarding the eligibility of

affiliates of a corporation to file a Subchapter V case). But Congress did not act

to amend § 1329(c) so as to separately accommodate existing CARES Act plans.

Well before the COVID crisis arose, courts agreed that § 1329 did not

allow an unlimited range of post-confirmation modifications. See In re

Witkowski, 16 F.3d 739, 745 (7th Cir. 1994) (“modifications under § 1329 are

not limitless . . . . Rather, by the express terms of the statute, modifications are

only allowed in three limited circumstances [now four circumstances after

amendment in 2005]” described in § 1329(a)). With the sunset of § 1329(d), the

only Code provision addressing length of payment periods for modified plans is

§ 1329(c). Congress made a policy choice in § 1329(c) when it set 60 months as

the outside duration for a Chapter 13 payment period.

The legislative history of the Bankruptcy Code indicates that

Congress was unhappy with practices that had developed in

certain parts of the country under Chapter 13’s predecessor that

had resulted in debtors remaining under court-supervised

repayment plans for seven to ten years, which Congress

characterized as being close to indentured servitude.

In re Black, 292 B.R. 693, 700 (B.A.P. 10th Cir. 2003) (citing Congressional

Report). Congress temporarily altered that policy choice for a 24-month period,

when the country’s debtors and creditors were abruptly affected by the COVID-

19 outbreak.

Even if the parties’ argument strikes one as a practical solution,

numerous courts have cautioned against judicial curing of a seeming

congressional inadvertence. For example, in Stearns v. Pratola (In re Pratola),

589 B.R. 779 (N.D. Ill. 2018), the district court described the arguments

presented to the bankruptcy court as to whether student loan debt was part of

the § 109(e) calculus for Chapter 13 eligibility. The Pratola court then explained

how adherence to plain text must take precedence, notwithstanding compelling

policy considerations:

After noting that ineligibility under § 109(e) is usually cause for

dismissal or conversion of a Chapter 13 case but is not an absolute

bar, the Bankruptcy Court concluded that it was without clear

direction from either the Bankruptcy Code or case law as to whether

cause for dismissal under § 1307(c) exists in this situation. Id. at 7.

Based on this perceived ambiguity, the Bankruptcy Court turned to

legislative history and policy considerations regarding educational

debt to determine whether Debtor’s case should be dismissed. The

Bankruptcy Court concluded that based on the history surrounding

the debt limits’ enactment, Congress could not have intended to

exclude someone like Debtor, an otherwise eligible individual

exceeding § 109(e)’s unsecured debt limit solely because of

educational debt, from Chapter 13 relief. . . .

Based on these considerations, the Bankruptcy Court held that there

was no cause for dismissal of Debtor’s Chapter 13 case under

§ 1307(c). The Bankruptcy Court specifically noted that “[d]ismissing

[Debtor’s] case would not advance the Congressional intent behind

the debt limits, and doing so would hinder the principal purpose of

the Bankruptcy Code—to grant a ‘fresh start’ to the honest but

unfortunate debtor.” Id. at 12 (citation omitted). . . .

. . .

The Court is not unsympathetic to the policy concerns raised by the

Bankruptcy Court and highlighted by Debtor . . . regarding

individuals with large amounts of educational debt, but the power to

create such an exception to § 109(e) lies with Congress rather than

the courts. . . . . Courts must enforce statutes as written; they cannot

“rewrite the statute that Congress has enacted.” Puerto Rico, 136

S. Ct. at 1949 (quoting Dodd v. United States, 545 U.S. 353, 359, 125

S. Ct. 2478, 162 L.Ed.2d 343 (2005)). Creating an exception to

Chapter 13’s eligibility requirements effectively rewrites the statute,

substituting a discretionary substantive standard for the bright-line

rule established by Congress.

. . .

. . . Under the plain terms of § 109(e), Debtor exceeds the statutory

debt limit and so is ineligible to proceed as a Chapter 13; the nature

of his debt is irrelevant. By taking its nature into account and

considering potential policy reasons why Congress would not want to

include such debt in § 109(e)’s debt limits, the Bankruptcy Court

interpreted the statute in a way that contravened its plain text.

589 B.R. at 783, 790–91.

Another bankruptcy court adhered to Seventh Circuit guidance when

plain statutory text conflicts with a practitioner’s or trial court’s sense of

expediency: “The Seventh Circuit has dispatched a clear message . . . that

courts must not engage in judicial legislation, holding that a court of equity

does not have ‘free floating discretion to redistribute rights in accordance with

its personal views of justice and fairness.’” In re Nieves, 246 B.R. 866, 872–73

(Bankr. E.D. Wis. 2000) (quoting Matter of Chicago, Milwaukee, St. Paul &

Pacific Railroad, 791 F.2d 524 (7th Cir. 1986)).

Moreover, application of the construction canon to “avoid absurd results”

has been narrowed. See In re University of Wisconsin Oshkosh Foundation, Inc.,

586 B.R. 458, 463 (Bankr. E.D. Wis. 2018), citing Jaskolski v. Daniels, 427

F.3d 456, 462 (7th Cir. 2005). The Jaskolski court explained:

What Daniels labels “absurd” results are nothing but the rough

cuts inevitable with decision by rule. . . . Today the anti-absurdity

canon is linguistic rather than substantive. It deals with texts that

don’t scan as written and thus need repair work, rather than with

statutes that seem poor fits for the task at hand. In other words,

the modern decisions draw a line between poor exposition and

benighted substantive choice; the latter is left alone, because what

judges deem a “correction” or “fix” is from another perspective a

deliberate interference with the legislative power to choose what

makes for a good rule. Admit the propriety of “fixing mistakes” and

you allow a general power to identify “mistakes,” which means a

privilege to make the real substantive decision.

427 F.3d at 462 (emphasis in original).

Here, the debtors and trustees ask the Court to “fix the mistake” of

Congress and conclude that Congress, when it enacted § 1329(d) and its one-

year extension, inadvertently failed to provide that CARES Act plans need not

abide by § 1329(c) for any future modifications. But such a “fix” by this Court

would deliberately interfere with the legislative power to fashion the rules. It

would appropriate to the Court the power to substantively override Congress’

earlier determination that a 60-month maximum strikes the best balance

against possible “indentured servitude.” It would appropriate to the Court the

power to veto what may well have been Congress’ vision, in March 2020 and

March 2021, that economic concessions to a pandemic must have some

limitation, some concrete stopping point. Respecting the plain text of § 1329(c)

as applied to modifications of CARES Act plans is not “hyperliteral and

contrary to common sense,” see Ritter, 626 B.R. at 42 (citing RadLAX Gateway

Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645 (2012)). Respecting and

applying the plain text of § 1329(c) here recognizes that “Congress is very

capable of limiting and conditioning the relief it fashions,” In re Gilbert, 622

B.R. 859, 864 (Bankr. E.D. La. 2020),5 and that Congress did not condition

§ 1329(c) following the sunset of § 1329(d).

In sum, the Court does not find the language of section 1329(c)

ambiguous, either on its own or applied to debtors Nelson and Ramos. Because

the statutory text is plain, the Court is bound to enforce it as written, and it

cannot confirm Mr. Ramos’s proposed modification, nor require Mr. Nelson to

file a modified plan that would expressly require a payment period exceeding

60 months.

B. Subsection 1329(a), on its own, does not require confirmation of a

modified plan.

As a separate but related argument, the Chapter 13 trustees assert that

failing to allow debtors like Mr. Nelson and Mr. Ramos to modify the payment

amount in their extended-period plans would run afoul of § 1329(a), which

states: “At any time after confirmation of the plan but before the completion of

payments under such plan, the plan may be modified, upon the request of the

debtor . . . to . . . .” This argument is not well-taken. While § 1329(a) permits a

5 The court in Gilbert acknowledged that “modification under § 1329 has its limits, . . . [and] [i]f

an unexpected event occurs late in the life of the debtor’s plan, the debtor may be without

recourse.” 622 B.R. 859, 862 n.1 (Bankr. E.D. La. 2020). Although Mr. Ramos argues that

a plain reading of § 1329(c) would work as a retroactive denial of his earlier plan-period

extension under § 1329(d), applying the restrictions of § 1329(c) now does not equate to going

back in time and denying the prior extension. Mr. Ramos’s current request to modify his plan

is a new development that now leaves him “with little recourse.”

debtor to modify a confirmed plan to “increase or reduce the amount of

payments on claims of a particular class provided for by the plan,” subsection

(a) is but one part of that statutory section. Another part, subsection (c), must

be read in the conjunctive—that is, as a limitation—on modifications allowed

by § 1329(a) because it refers to all modifications under this section:

A plan modified under this section 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, but the court may not approve a

period that expires after five years after such time.

11 U.S.C. § 1329(c).

C. Applying § 1329(c) to CARES Act plans does not result in a manifest

injustice.

Finally, the Chapter 13 trustees contend that interpreting § 1329(c) to

require a previously extended plan period to be reduced to 60 months would

“result in a limitation constituting a manifest injustice.” They cite In re Gentry,

Case No. 15-20990-BEH, 2020 WL 2479662, at *4, 2020 Bankr. LEXIS 1265,

at *11-12 (Bankr. E.D. Wis. May 13, 2020), generally for avoidance of manifest

injustice.

This argument is undeveloped. The concept of “manifest injustice”

discussed in Gentry concerned revisiting a prior decision that was clearly

erroneous and where failure to correct it would result in a manifest injustice.

The Chapter 13 trustees are not seeking reconsideration of a prior order, nor

do they argue that any prior orders of the Court were clearly erroneous.

Consequently, this argument is unavailing. See Tyler v. Runyon, 70 F.3d 458,

464 (7th Cir. 1995) (“[A] litigant who fails to press a point by supporting it with

pertinent authority, or by showing why it is sound despite a lack of supporting

authority, forfeits the point.”) (internal quotation marks omitted).

CONCLUSION AND ORDER

While the Court recognizes the frustration of these CARES Act debtors

who seek further modifications after the temporary window of § 1329(d) has

closed, the plain language of that sunset provision and the plain language of

on-going § 1329(c) require this Court to apply them as written.

Accordingly,

IT IS THEREFORE ORDERED that the Chapter 13 trustee’s objection to

confirmation of debtor Randall Nelson’s June 13, 2022 request to modify his

confirmed plan is sustained, with the requirement that the debtor file a

modified feasible plan that complies with 11 U.S.C. § 1329(c), as interpreted by

this Court, no later than 30 days from the date of this order.

IT IS FURTHER ORDERED that debtor Wilfredo Ramos’s July 11, 2022

request to modify his confirmed Chapter 13 plan is DENIED.

Dated: October 11, 2022

By the Court:

Beth E. Hanan

United States Bankruptcy Judge