Stephen Scott Peters and Belenda Faye Peters

UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF NORTH CAROLINA
DURHAM DIVISION
In re: 	)
)
Stephen Scott Peters, 	)
Belenda Faye Peters, 	) 	Chapter 13
) 	Case No. 25-80018
Debtors. 	)
___________________________________)
ORDER OVERRULING TRUSTEE’S OBJECTION TO CONFIRMATION OF AMENDED
CHAPTER 13 PLAN
This 	case 	came 	before 	the 	Court 	for 	hearing 	on 	October 	16,
2025, on the Amended Chapter 13 Plan filed by Stephen Scott Peters
and Belenda Faye Peters (“Debtors”), ECF No. 24, the Objection to
Confirmation 	of 	Plan, 	ECF 	No. 	28, 	filed 	by 	the 	standing 	trustee
(“Trustee”), 	and 	the 	response 	filed 	by 	Debtors. 	ECF 	No. 	29.
Counsel 	for 	Debtors 	and 	Trustee 	appeared 	at 	the 	hearing. 	At 	the
conclusion 	of 	the 	hearing, 	the 	Court 	continued 	the 	matter 	to
October 	28, 	2025. 	At 	the 	continued 	hearing, 	the 	Court 	orally
overruled the portion of Trustee’s objection based on 11 U.S.C. §
1325(b)(1) 	and 	continued 	the 	matter 	to 	November 	5, 	2025. 	At 	the
continued 	hearing, 	the 	parties 	stated 	that 	they 	had 	agreed 	to 	a
SO ORDERED.
SIGNED this 10th day of November, 2025.
Case 25-80018 Doc 37 Filed 11/10/25 Page 1 of 11

resolution of the remaining portions of the objection. 	This Order
effectuates 	and 	further 	explains 	the 	Courts 	oral 	ruling 	on 	the
Trustee’s objection.
BACKGROUND
Debtors 	commenced 	this 	case 	by 	filing 	a 	voluntary 	petition
under 	chapter 	13 	on 	January 	27, 	2025. 	ECF 	No. 	1. 	With 	their
petition, Debtors filed Official Form 122C-1 statement of current
monthly income. 	Id. at 53-56. 	Debtors calculated a yearly income
of $168,474.72, which is greater than the applicable median family
income. 	Id. 	at 	55. 	Thus, 	Debtors 	indicated 	that 	the 	applicable
commitment 	period 	under 	§ 	1325(b)(4) 	would 	be 	5 	years. 	Id.
Debtors 	likewise 	filed 	Official 	Form 	122C-2 	calculation 	of
disposable income. 	Id. at 57-64. 	Debtors calculated their monthly
disposable 	income 	under 	§ 	1325(b)(2) 	to 	be 	$2,145.90, 	id. 	at 	63,
and as a result, their undisputed total disposable income over the
applicable commitment period under § 1325(b)(1)(B)1 is $128,754.00.
1 Section 1325(b)(1) provides:
If the trustee or the holder of an allowed unsecured claim objects
to the confirmation of the plan, then the court may not approve the
plan unless, as of the effective date of the plan—
(A)the value of the property to be distributed under the plan on
account of such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor’s projected disposable
income to be received in the applicable commitment period beginning
on the date that the first payment is due under the plan will be
applied to make payments to unsecured creditors under the plan.
11 U.S.C. § 1325(b)(1).
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Debtors also filed the Plan in which they propose to pay unsecured
claims 	in 	full 	over 	the 	life 	of 	the 	plan 	under 	§ 	1325(b)(1)(A)
without 	interest. 	Id. 	Trustee 	objected, 	arguing 	that 	allowed
non-priority unsecured claims should be paid in full with interest
at 	8.00% 	per 	annum 	because 	Debtors 	elected 	not 	to 	apply 	all 	of
their monthly disposable income to the plan payment. 	ECF No. 28.
The 	parties 	dispute 	whether 	§ 	1325(b)(1)(A) 	requires 	interest 	on
allowed 	non-priority 	unsecured 	claims 	when 	those 	claims 	will 	be
paid in full over the term of the plan, but Debtors do not commit
all their monthly disposable income to payments under the plan.2
DISCUSSION
The 	purpose 	of 	chapter 	13 	of 	the 	Bankruptcy 	Code 	is 	to
facilitate 	“a 	sincerely-intended 	repayment 	of 	pre-petition 	debt
consistent with the debtor’s available resources.” 	In re Okoreeh-
Baah, 	836 	F.2d 	1030, 	1033 	(6th 	Cir. 	1988). 	To 	that 	end, 	chapter
13 	“allows 	a 	debtor 	to 	retain 	his 	property 	if 	he 	proposes, 	and
gains 	court 	confirmation 	of, 	a 	plan 	to 	repay 	his 	debts 	over 	a
three- 	to 	five-year 	period.” 	Harris 	v. 	Viegelahn, 	575 	U.S. 	510,
514 (2015) (citing 11 U.S.C. §§ 1306(b), 1322, 1327(b)).
Section 	1325(b)(1) 	is 	written 	in 	the 	disjunctive, 	meaning
2 Nothing in the language in 11 U.S.C. § 1325(b)(1) distinguishes between debtors
who propose to pay unsecured creditors in full while contributing their full
monthly disposable income to payments under the plan until the claims are paid
in full, and those who propose to pay the unsecured creditors in full over the
life of the plan without contributing the totality of their disposable income
on a monthly basis.
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that 	the 	plan 	must 	comply 	with 	either 	paragraph 	(A) 	or 	(B), 	not
both. 	Thus, 	to 	overcome 	an 	objection 	to 	confirmation, 	a 	debtor
may pay either the full amount of projected disposable income for
the 	applicable 	commitment 	period 	under 	(B), 	or 	all 	allowed
unsecured claims in full under (A). 	Courts are split as to whether
debtors opting to pay unsecured claims in full under (A) must pay
interest on the unsecured claims. 	See In re Gillen, 568 B.R. 74,
77 (Bankr. C.D. Ill. 2017) (collecting cases).
Chapter 13 requires payment of post-confirmation interest to
holders of allowed claims in certain circumstances. 	Debtors must
pay 	post-confirmation 	interest 	to 	holders 	of 	allowed 	secured
claims under § 1325(a)(5)(ii), which provides that the court shall
confirm a plan if “the value, as of the effective date of the plan,
of 	property 	to 	be 	distributed 	under 	the 	plan” 	on 	a 	secured 	claim
is 	not 	less 	than 	the 	allowed 	amount 	of 	the 	secured 	claim. 	See,
e.g., In re Davenport, 627 B.R. 705, 727 (Bankr. D.D.C. 2020) (“the
allowed secured claim being paid under a confirmed plan based on §
1325(a)(5)(B) is 	the 	allowed 	secured 	claim 	determined 	as 	of 	the
effective date of the plan (here, the date of confirmation of the
plan), 	together 	with 	postconfirmation 	interest 	assuring 	that 	the
creditor receives the present value of its allowed claim”).
Debtors 	similarly 	are 	required, 	under 	§ 	1325(a)(4), 	to 	pay
interest to holders of allowed unsecured claims to the extent those
claims 	hypothetically 	would 	be 	paid 	if 	the 	debtors’ 	estates 	were
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liquidated under chapter 7 on the effective date of the plan. 	See,
e.g., 	In 	re 	Evans, 	No. 	10-80446C-13D, 	2010 	WL 	2976165, 	at 	*4
(Bankr. M.D.N.C. July 28, 2010). 	Section 1325(a)(4) provides that
the court shall confirm a plan if “the value, as of the effective
date of the plan, of property to be distributed under the plan” to
unsecured creditors is not less than the unsecured creditors would
receive in a liquidation under chapter 7. 	Thus, the phrase “value,
as 	of 	the 	effective 	date 	of 	the 	plan” 	has 	been 	consistently
interpreted 	to 	require 	interest 	in 	order 	to 	obtain 	the 	present
value 	of 	the 	claim 	as 	of 	the 	effective 	date 	of 	the 	plan. 	In 	re
Stewart-Harrel, 	443 	B.R. 	219, 	222 	(Bankr. 	N.D. 	Ga. 	2011)
(collecting 	cases); 	see 	also 	8 	Collier 	on 	Bankruptcy 	¶
1325.05[2][b] 	(Alan 	N. 	Resnick 	& 	Henry 	J. 	Sommer 	eds., 	16 th ed)
(“Collier”) (observing similarity of requirement for present value
under §§ 1325(a)(4) and (a)(5)).3
In 	contrast 	with 	phrasing 	in 	the 	hypothetical 	liquidation
required 	for 	the 	best 	interests 	test 	under 	§ 	1325(a)(4) 	and 	the
treatment 	of 	allowed 	secured 	claims 	under 	§ 	1325(a)(5)(ii), 	§
1325(b)(1) 	prohibits 	the 	court 	from 	confirming 	the 	plan 	over 	an
objection 	of 	the 	trustee 	or 	an 	unsecured 	creditor 	unless 	“as 	of
the effective date of the plan—(A) the value of the property to be
3 See Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 232 (2007)
(“identical words and phrases within the same statute should normally be given
the same meaning”).
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distributed 	under 	the 	plan 	on 	account 	of 	such 	claim 	is 	not 	less
than the amount of such claim.” 	Trustee contends that the phrase
“as of the effective date of the plan” in (b)(1) should be read to
impose the same current value requirement imposed by §§ 1325(a)(4)
and (a)(5)(ii). 	Under this interpretation, Trustee contends that
the placement of the phrase “as of the effective date of the plan”
is 	not 	determinative 	of 	its 	meaning, 	and 	that 	the 	meaning 	of 	the
paragraph 	is 	properly 	interpreted 	as 	if 	it 	were 	written, 	“the
value[, as of the effective date of the plan,] of the property to
be distributed under the plan on account of such claim is not less
than 	the 	amount 	of 	such 	claim.” 	So 	written, 	the 	paragraph 	would
impose 	a 	present 	value 	requirement 	when 	considering 	the 	value 	of
the property to be distributed. 	Debtors argue that the different
placement 	of 	the 	phrase 	leads 	to 	a 	different 	result. 	Under
Debtors’ argument, since unlike §§ 1325(a)(4) and (a)(5)(ii), the
phrase “as of the effective date of the plan” immediately succeeds
the 	phrase 	“the 	court 	may 	not 	approve 	the 	plan 	unless,” 	rather
than 	“value,” 	the 	phrase 	instead 	refers 	to 	its 	last 	antecedent—
the date on which the court is to determine whether (A) or (B) is
satisfied. 	The latter is the better interpretation.
The 	plain 	language 	of 	the 	statute 	and 	the 	placement 	of 	the
phrase reflects an intentional distinction between the meanings of
Case 25-80018 Doc 37 Filed 11/10/25 Page 6 of 11

the language by Congress.4 	See In re Gillen, 568 B.R. at 79 (“The
differing juxtaposition of the phrase ‘as of the effective date of
the 	plan’ 	must 	be 	considered 	to 	be 	a 	purposeful 	placement 	by
Congress 	that 	conveys 	a 	distinction 	from 	the 	similar 	but 	not
identical phrasing of section 1325(a)(4) and (a)(5)(B)(ii).”);5 In
4 See Russello v. United States, 464 U.S. 16, 23-24 (1983) (“[W]here Congress
includes particular language in one section of a statute but omits it in another
section 	of 	the 	same 	Act, 	it 	is 	generally 	presumed 	that 	Congress 	acts
intentionally and purposely in the disparate inclusion or exclusion.”) (internal
citations omitted).
5 Although this Court agrees with the observation in Gillen that the language
indicates an intentional distinction by Congress, and agrees with that court’s
ultimate 	conclusion 	that 	the 	language 	does 	not 	impose 	a 	present 	value
requirement 	under 	paragraph 	(A), 	the 	Court 	respectfully 	disagrees 	with 	its
presumption that Congress did not intend for the phrase “as of the effective
date of the plan” to apply to paragraph (B). 	See 568 B.R. at 79. 	The Gillen
court reasoned:
In this Court's view, if Congress had intended to require a debtor
to 	pay 	interest 	on 	allowed 	unsecured 	claims 	under section
1325(b)(1)(A), Congress would have maintained statutory consistency
by 	placing 	the 	phrase 	“as 	of 	the 	effective 	date 	of 	the 	plan”
immediately 	after 	the 	word 	“value.” 	The 	different 	placement 	is
best construed as conveying a different meaning. 	Additionally, it
is not at all apparent what additional meaning the phrase “as of
the effective date of the plan” provides to section 1325(b)(1)(B),
which makes perfect sense without that phrase and becomes confusing
only when the phrase is included. 	So the placement of the phrase
“as of the effective date of the plan” in the prefatory portion
of section 	1325(b)(1) is 	unlikely 	to 	have 	been 	because 	Congress
intended it to modify subparagraph (B) in addition to subparagraph
(A). 	A reasonable explanation for its placement is that Congress
moved it outside of subparagraph (A) so that subparagraph (A) would
not be misconstrued as containing a present value requirement.
Id. 	If the phrase is correctly read to define when the court determines whether
(A) or (B) is satisfied, the perspective of the court from the effective date
applies equally to the determination whether the value of the property to be
distributed under the plan equals the amount of the claim under (A) as it does
to the point in time at which the court must “project” a debtor’s disposable
income under paragraph (B). 	In fact, it is because we must read the statute to
give meaning to each phrase, that the plain language dictates the result in
this case. 	See In re Edward, 560 B.R. 797, 799-800 (Bankr. W.D. Wash. 2016)
(“Putting the phrase ‘as of the effective date of the plan’ before both (A) and
(B) 	of Section 	1325(b)(1) has 	the 	effect 	of 	making 	the 	phrase 	applicable 	to
both subsections.”).
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re 	Moore, 	635 	B.R. 	451, 	459 	(Bankr. 	D.S.C. 	2021) 	(applying 	the
last 	antecedent 	rule 	of 	statutory 	interpretation 	and 	determining
that 	the 	phrase 	does 	not 	require 	present 	value) 	(citing 	In 	re
Bateman, 	515 	F.3d 	272, 	277 	(4th 	Cir. 	2008)).6 	As 	explained 	in
Collier:
[11 	U.S.C. 	§ 	1325(b)(1)(A)] 	requires 	only 	payment 	of
such claims in full, and not payment of property having
a “value, as of the effective date of the plan” equal to
full payment. 	It does not require payment of the present
value 	of 	the 	claim, though 	such 	payment 	may 	be
independently 	required 	under 	the 	best 	interests 	of 	the
creditors 	standard. 	Unlike 	the 	situation 	where 	a
creditor’s 	right 	to 	immediate 	payment, 	either 	through
liquidation 	of 	nonexempt 	property 	in 	chapter 	7 	or
through 	enforcement 	of 	its 	lien, 	is 	being 	denied, 	the
disposable 	income 	test 	is 	not 	meant 	to 	compensate 	for
the time value of deferring payment. 	Although the words
“as of the effective date of the plan” appear earlier in
subsection 	1325(b), 	their 	presence 	does 	not 	appear 	to
indicate a requirement of plan payments having a present
value equal to the full amount of unsecured claims. 	If
this 	had 	been 	Congress’s 	intent 	Congress 	would
presumably 	have 	used 	the 	same 	language 	as 	it 	used
elsewhere 	to 	indicate 	a 	present 	value 	test, 	“value, 	as
of 	the 	effective 	date 	of 	the 	plan.” 	Also, 	there 	is 	no
indication 	in 	the 	legislative 	history 	that 	a 	present
value test was intended. 	Moreover, if the phrase “as of
the 	effective 	date 	of 	the 	plan” 	were 	applied 	to
subparagraph (A) of subsection 1325(b)(1), it would also
be 	necessary 	to 	apply 	it 	to 	subparagraph 	(B), 	which 	is
grammatically 	illogical. 	It 	seems 	more 	likely 	that 	the
words 	“as 	of 	the 	effective 	date 	of 	the 	plan” 	in
subsection 	1325(b) 	refer 	only 	to 	the 	timing 	of 	the
court’s analysis under that subsection.
6 	Rule 	of 	the Last 	Antecedent, 	Black's 	Law 	Dictionary 	(11th 	ed. 	2019)
(“[Q]ualifying 	words 	or 	phrases 	modify 	the 	words 	or 	phrases 	immediately
preceding them and not words or phrases more remote, unless the extension is
necessary from the context or the spirit of the entire writing.”).
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Collier ¶ 1325.11[3].7
Requiring interest under §§ 1325(a)(4) and (a)(5)(ii) but not
§ 1325(b)(1) not only is consistent with the context and language
of 	each 	section 	but 	also 	reflects 	consistent 	bankruptcy 	policy.
Absent 	chapter 	13, 	a 	secured 	creditor 	through 	liquidation 	of 	its
collateral 	would 	be 	paid 	the 	value 	of 	its 	collateral. 	In 	re
Gillen, 	568 	B.R. 	at 	78 	(citing 	Collier 	¶ 	1325.06[3][b][iii][B]).
Similarly, unsecured creditors in a chapter 7 would receive payment
upon 	liquidation 	of 	the 	debtor’s 	assets 	and 	thus, 	interest 	is
necessary to ensure unsecured creditors are no worse off in chapter
13 	where 	the 	recovery 	of 	value 	is 	deferred. 	Id. 	(citing 	Collier
¶ 1325.05[2][b]). 	In contrast, unsecured creditors have no right
to receive a debtor’s postpetition income under chapter 7.8
Although 	chapter 	13 	gives 	creditors 	access 	to 	income 	that
they would not have in a chapter 7, it does not go even further to
require 	debtors 	to 	provide 	the 	present 	value 	of 	property 	that
debtors have not yet received. 	Even if Debtors applied all their
monthly 	projected 	disposable 	income 	to 	payments 	under 	the 	plan,
the unsecured creditors would not be paid immediately. 	To require
7 The import of the last sentence in Collier is that it would be illogical to
apply a present value requirement when a debtor elects to commit all of the
debtor’s projected disposable income to payments under the plan in paragraph
(B). 	It is not illogical to apply the phrase in the same sense with respect to
both paragraphs in the subsection, as the latter option “seems more likely” to
be the correct interpretation. 	Collier ¶ 1325.11[3].
8 Debtors’ post-petition earnings are not property of the chapter 7 estate. 	See
11 U.S.C. § 541(a)(6).
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Debtors to pay interest under § 1325(b)(1)(A) would give creditors
a 	windfall 	over 	the 	amounts 	they 	would 	receive 	even 	if 	Debtors
were contributing all their monthly disposable income. 	See In re
Gillen, 568 B.R. at 79 (“Where there is no forced deferral of any
pre-existing 	payment 	right, 	there 	is 	no 	entitlement 	to
interest.”). 	Therefore, the plain language of the Code is entirely
consistent 	with 	bankruptcy 	policy 	reflected 	in 	other 	provisions.
For 	these 	reasons, 	§ 	1325(b)(1)(A) 	does 	not 	require 	payment 	of
interest to holders of unsecured claims who will be paid the full
amount of their respective claims over the plan term.
NOW, 	THEREFORE, 	it 	is 	hereby 	ORDERED, 	ADJUDGED, 	and 	DECREED
that 	the 	Trustee’s 	Objection 	to 	Confirmation 	of 	Debtors’ 	Amended
Chapter 13 Plan is overruled.
[END OF DOCUMENT]
Case 25-80018 Doc 37 Filed 11/10/25 Page 10 of 11

Parties to be Served
25-80018
John Paul Hughes Cournoyer
U.S. Bankruptcy Administrator 	via electronic notice
Anita Jo Kinlaw Troxler
Chapter 13 Trustee 	via electronic notice
Koury Lee Hicks
Counsel for Debtors 	via electronic notice
Stephen Scott Peters
1701 Doe Run Road
Mebane, NC 27302
Belenda Faye Peters
1701 Doe Run Road
Mebane, NC 27302
Case 25-80018 Doc 37 Filed 11/10/25 Page 11 of 11