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Debtor Can Complete Chapter 13 Plan Beyond 60 Months

On Behalf of | Jul 22, 2015 | Bankruptcy |

In the recent case of In re Klass, 2015 WL 3537100 (Bankr. W.D. Pa. 6/4/15), the bankruptcy court ruled that the debtor could cure a default in her plan payment, even after the 60 month limit expired. In this case, the debtors were $1,123.00 behind in their plan payments 61 months after the case was filed. The Chapter 13 trustee filed a motion to dismiss, but indicated that she would withdraw her motion to dismiss if the debtors remitted sufficient funds to cure the default. A creditor of the debtors joined the trustee’s motion. Before the hearing scheduled by the court, the debtors paid the trustee the full balance owed to complete their plan and the trustee withdrew her motion.

However, the creditor pursued her motion claiming that the debtors violated section 1322(d) by taking more than 60 months to complete their plan. The court held that the “failure to make payments as required under a confirmed plan constitutes a plan default. A plan default does not turn into a violation of section 1322(d) simply because it occurs in month 60. When a plan default occurs early in the case, debtors often are given an opportunity to cure the default within a reasonable period of time provided they are acting in good faith. The result should be no different when the default occurs at the end of the case to to circumstances that were unknown at the time of confirmation. As the case enters its final months, debtors who have established a lengthy track record of good faith should not be denied an opportunity to cure a deficiency solely because 60 months have passed. To do so would impose a standard of perfection at the conclusion of the plan term that does not exist at any other point in the case,” In this case the court found no prejudice to creditors in the delay as the debtors cured the default and completed the plan prior to the hearing date.

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