Catherine A. Oscar

However, the trustee’s memorandum only addresses his opposition to1
confirmation and makes no mention of dismissal.
UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
CATHERINE A. OSCAR 	:
Debtor 	: 	Bankruptcy No. 04-18900F
.................................................
MEMORANDUM
.................................................
Two contested matters are presently before me in this chapter 13
bankruptcy case. First, the debtor seeks confirmation of her proposed second amended
plan, filed on June 3, 2005. The standing chapter 13 trustee, William C. Miller, Esquire,
opposes confirmation. Second, the trustee seeks dismissal of this bankruptcy case. The
debtor opposes dismissal. 	The parties have submitted supporting memoranda. 1
An evidentiary hearing was held and the following facts were proven.
I.
On June 30, 2004, the debtor filed a voluntary petition in bankruptcy under
chapter 13. At the time of her bankruptcy filing, and presently, the debtor was married to
Alvin Oscar, and they both lived with their nine adopted children, whose ages ranged
from 2 to 16, at their home at 111 Clayton Court, North Wales, Pennsylvania. Ex. T-2.
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Mrs. Oscar was then employed as a physician’s assistant earning a monthly net income of
$810. Mr. Oscar, a former physician, was ill and unemployed.
Both Mr. and Mrs. Oscar receive social security benefits, and the debtor
reported on bankruptcy Schedule I that the total monthly income for her family of 11 was
$3,676, inclusive of her husband’s benefits. Ex. T-2. The debtor also disclosed on
Schedule J that her family monthly expenses averaged $3,666. These expenses did not
include any rent or home mortgage payments, but did include payments of $200 per
month for a car loan. Ex. T-1.
At the hearing on these contested matters, the debtor testified that she is no
longer employed, but that her husband is working part-time at a weight-loss clinic. He
earned at the time of the hearing about $1,000 per week before any deductions; however,
Mr. Oscar testified that he anticipated his earnings would be reduced in the fall of 2005 to
$500 per week. Thus, he was seeking other employment. Given his age and medical
condition (among other ailments, he has suffered considerable hearing loss and had
trouble responding to questions posed to him in court), he has found the job search
difficult.
Whether or not Mr. Oscar obtains future employment, the debtor conceded
that she could not afford to tender regular monthly mortgage payments to the first
mortgage holder, Bank One N.A., as those payments exceeded $3,000. Moreover, her
prepetition mortgage delinquency approximates $60,000. She and her husband believed
that, assuming Mr. Oscar earned $4,000 per month, and the mortgagee modified their
mortgage agreement, they could afford to pay approximately $1,500 per month
prospectively. At the present time, however, they are tendering no payments to Bank
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In addition to this pending adversary proceeding, the debtor, in a separate2
contested matter, challenged the right of Bank One to amend a proof of claim filed on its behalf
by the debtor. (The debtor’s proof of claim on behalf of the mortgagee stated that there was no
debt owed.) I previously rejected the debtor’s challenge by an order dated April 14, 2005, which
order is presently on appeal. My colleague, Judge Stephen Raslavich, has rejected an identical
argument raised by debtor’s counsel in a different chapter 13 case: In re Kevin Richardson, slip
op. Bankr. No. 04-33234 (May 18, 2005).
On August 3, 2004, the debtor also commenced an adversary proceeding against
WMC Mortgage Corporation, alleging that this creditor held a voidable second lien on her home.
She prevailed by default.
3
One. Moreover, as of the confirmation hearing, the debtor had been unable to save any
money, as she had paid delinquent utility bills, and purchased clothing and paid for
medical expenses for her children.
Perhaps to encourage Bank One to agree to modify the mortgage
agreement, the debtor commenced litigation against Bank One. Ex. D-2. In her
complaint, the debtor asserts that the mortgage lien held by Bank One is invalid because
the original loan agreement contained material violations of the federal Truth in Lending
Act, 15 U.S.C. §§ 1601, et seq., and she has attempted to rescind this loan. 	Bank One
has answered the complaint and contends that its lien is valid and the debtor’s purported
rescission is improper; indeed, it has filed a secured proof of claim in the amount of
$502,952.36. Ex. T-3. The Bank One litigation is still pending. 2
The plan that the debtor now seeks to confirm is dated June 3, 2005. Ex. D-
1. It provides that the debtor will pay $10 per month for 60 months to the chapter 13
trustee, for a total of only $600. From these payments, the plan calls for the trustee to
make distribution first to administrative claimants (viz. debtor’s counsel fees of $500) and
“then to any allowed arrears of the Class Three claimant.” Id. at ¶ 7. The sole class three
claimant is Bank One. Id., ¶ 6(C). The plan also states that “[t]he Debtor now opts not to
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The proposed plan also provides for payments of $200 per month to a creditor3
holding a lien upon an automobile. Ex. D-1, ¶ 5.
4
treat the alleged secured claim of the Bank in her plan.” Id., ¶ 4. 	Finally, the proposed3
plan provides that the “secured claims of local taxing authorities . . . will be paid directly
by arrangements made with those creditors outside of the plan.” Id., ¶ 6(D). The
Montgomery County Tax Claim Bureau has filed a secured proof of claim in the amount
of $5,489.85. Ex. T-3.
II.
The trustee raises numerous objections to confirmation, most of which are
related to the debtor’s pending litigation with Bank One and her proposed treatment of
that creditor’s secured claim.
First, the trustee argues that if Bank One were found to hold an allowed
secured claim consistent with the amount stated in its proof of claim, then the proposed
plan is not viable as required by section 1325(a)(6), in that the debtor does not provide for
that claim; thus, Bank One will be entitled to relief from the bankruptcy stay and the
debtor and her family will soon be ejected from their home. Their ejectment would give
rise to considerable expenses that would likely prevent the successful completion of her
plan.
Second, the trustee contends that if the debtor were successful in her
rescission litigation against Bank One, and if the mortgagee’s claim were allowed solely
as an unsecured claim, then this very large unsecured claim would render the debtor
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5
ineligible for chapter 13 relief under section 109(e). Third, the trustee maintains that if
the debtor were successful in her litigation against Bank One, and if the mortgagee’s
allowed claim were fixed at zero, then the debtor would own largely unencumbered real
estate worth more than $300,000; in that circumstance, since unsecured creditors are not
repaid in full, the debtor’s proposed plan violates section 1325(a)(4). Fourth, the trustee
asserts that the debtor’s proposed plan is not “fair and equitable” in that the debtor intends
to remain in the realty pending the outcome of her litigation with Bank One without
tendering any payments. Section 1325(a)(3) requires that chapter 13 plans be proposed in
good faith. And finally, after hearing the testimony offered at the confirmation hearing,
the trustee contends that the debtor’s proposed plan violates section 1322(a)(1), in that the
debtor is not committing all present income to her reorganization effort.
A.
The debtor complains that the trustee’s objections were made orally and
thus cannot be considered. Local Bankr. Rule 3015-1(c) states that:
an objection to confirmation of a debtor’s . . . chapter 13 plan
. . . shall be filed and served on the debtor, the debtor’s
counsel, the trustee, and the United States trustee no later than
five (5) days before the date of the hearing on confirmation of
the plan . . ., unless the court otherwise permits.
(emphasis added).
In this instance, the chapter 13 trustee had filed and served upon the debtor
his motion to dismiss this case, which service was made many months prior to the
confirmation hearing. 	This motion complained that the debtor’s then-proposed plan did
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As will also be discussed, absent a recommendation from the trustee that a plan4
be confirmed, a chapter 13 debtor has the burden of persuasion at a confirmation hearing. 	For
this reason, and knowing in advance that the trustee was not intending to recommend
confirmation of her plan, the debtor should have been prepared to demonstrate that her proposed
reorganization plan met all statutory requirements.
Moreover, to the extent that the debtor was unprepared to address the objection
raised by the trustee under section 1322(a)(1), which objection was only raised after the
evidentiary record was concluded, that additional objection has been rendered superfluous, given
that the record supports the trustee’s other confirmation challenges.
6
not provide for the secured proofs of claims filed, which is one of the trustee’s current
confirmation objections. Furthermore, the trustee orally stated his objections to
confirmation in open court, with debtor’s counsel present, more than one week prior to
the actual confirmation hearing. Indeed, I postponed the confirmation hearing until 10
days after the trustee’s oral objections were made in order to afford the debtor ample time
to consider those objections and present any evidence necessary to meet them.
Under these circumstances, I conclude that the debtor had adequate notice
of the trustee’s opposition to confirmation and his reasons for that opposition. Cf. United
States v. Vulpis, 807 F. Supp. 284, 287 (S.D.N.Y. 1991) (adequate notice of criminal
contempt was provided by statements made in open court). Moreover, these
circumstances also warrant the exercise of my discretion to waive the written objection
requirement of the local rule. See Matter of Mesta Machine Co., 30 B.R. 178, 181
(Bankr. W.D. Pa. 1983) (“[I]t is a well settled principle that a Court may waive its own
local rules for good cause.”); Matter of Canipe, 20 B.R. 81 (Bankr. W.D.N.C. 1982)
(court waives deadline established in the local rules for filing objections to
confirmation). 4
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B.
The Bankruptcy Code identifies the requirements for approval of a chapter
13 plan. Certain requirements are set forth in section 1322:
(a) The plan shall—
(1) provide for the submission of all or such portion of future
earnings or other future income of the debtor to the
supervision and control of the trustee as is necessary for the
execution of the plan;
(2) provide for the full payment, in deferred cash payments, of
all claims entitled to priority under section 507 of this title,
unless the holder of a particular claim agrees to a different
treatment of such claim; and
(3) if the plan classifies claims, provide the same treatment
for each claim within a particular class.
11 U.S.C. § 1322(a). As noted earlier, the trustee maintains in this dispute that the
debtors’ proposed amended plan does not comply with section 1322(a)(1), because after
the bankruptcy case commenced, the debtor’s spouse became employed and his earnings
(above what the debtor previously earned) are not committed to the reorganization
process.
In addition, section 1325 provides:
(a) Except as provided in subsection (b), the court shall confirm a plan if—
(1) the plan complies with the provisions of this chapter and
with the other applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of
title 28, or by the plan, to be paid before confirmation, has
been paid;
(3) the plan has been proposed in good faith and not by any
means forbidden by law;
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(4) the value, as of the effective date of the plan, of property
to be distributed under the plan on account of each allowed
unsecured claim is not less than the amount that would be
paid on such claim if the estate of the debtor were liquidated
under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for
by the plan–
(A) the holder of such claim has accepted the plan;
(B)(i) the plan provides that the holder of such
claim retain the lien securing such claim; and
(ii) the value, as of the effective date of the
plan, of property to be distributed under the plan
on account of such claim is not less than the
allowed amount of such claim; or
(C) the debtor surrenders the property securing
such claim to such holder; and
(6) the debtor will be able to make all payments under the
plan and to comply with the plan.
b)(1) 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 three-year period beginning on the date that
the first payment is due under the plan will be
applied to make payments under the plan.
(2) For purposes of this subsection, "disposable income"
means income which is received by the debtor and which is
not reasonably necessary to be expended--
(A) for the maintenance or support of the debtor
or a dependent of the debtor, including
charitable contributions (that meet the definition
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of "charitable contribution" under section
548(d)(3)) to a qualified religious or charitable
entity or organization (as that term is defined in
section 548(d)(4)) in an amount not to exceed
15 percent of the gross income of the debtor for
the year in which the contributions are made;
and
(B) if the debtor is engaged in business, for the
payment of expenditures necessary for the
continuation, preservation, and operation of
such business.
(c) After confirmation of a plan, the court may order any
entity from whom the debtor receives income to pay all or any
part of such income to the trustee.
11 U.S.C. § 1325.
Section 1325(a)(4)’s provision is referred to as the “best interest of creditors
test.” In essence, a chapter 13 plan must provide unsecured creditors with a dividend at
least equal to what those creditors would receive in a chapter 7 liquidation. See generally
In re Solomon, 67 F.3d 1128, 1132 (4th Cir. 1995); In re Nevins, 2005 WL 984182, at *4
(Bankr. E.D. Pa. 2005). The provisions of 1325(b) are referred to as the “disposable
income test.” In general, when a chapter 13 debtor proposes a reorganization plan that
does not call for payment in full to her unsecured creditors—as occurs in this case—her
plan may not be confirmed over the objection of an unsecured creditor or the chapter 13
trustee unless the debtor’s proposed plan calls for payment of her “disposable income” for
a three year period. See, e.g., In re Freeman, 86 F.3d 478 (6th Cir. 1996); In re Solomon.
The debtor has the ultimate burden of persuasion that her proposed chapter
13 plan meets the statutory requirements for confirmation. See, e.g., In re Hill, 268 B.R.
548, 552 (B.A.P. 9th Cir. 2001) (“The debtor, as the chapter 13 plan proponent, has the
burden of proof on all elements of plan confirmation.”); In re Norwood, 178 B.R. 683,
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687 (Bankr. E.D. Pa. 1995). While this burden is lessened when the chapter 13 trustee
recommends confirmation, see In re Hines, 723 F.2d 333 (3d Cir. 1983), the trustee has
made no such recommendation in this instance. 	Where an objection to confirmation is
raised under section 1325(b), the initial burden of production falls on the objecting trustee
or unsecured creditor to show that the debtor is not applying all of her disposable income
to the plan for three years. See, e.g., In re Andreacchio, 2004 WL 2495409, at *2 (Bankr.
E.D. Pa. 2004); In re McGilberry, 298 B.R. 258, 260 (Bankr. M.D. Pa. 2003). If that
initial burden is satisfied, then the debtor bears the burden of persuasion on the question
of disposable income. Id.; see also In re Heath, 182 B.R. 557, 561 (B.A.P. 9th Cir. 1995)
(objector has an initial burden of production before the debtor has the ultimate burden of
persuasion).
III.
To some extent, the trustee’s position in this contested matter has been
echoed by my judicial colleague in a recently decided chapter 13 case:
Before the Court is a Motion to Dismiss the instant
Bankruptcy case, as having been filed in bad faith. For the
reasons which follow, the Motion will be granted and the case
will be dismissed for want of good faith, as well as other good
cause.
The present case represents a bankruptcy filing of a type
which has become somewhat commonplace. Faced with
financial problems, Debtors file a bankruptcy case. Prior
thereto they have concluded that in connection with a
prepetition mortgage loan transaction a violation of the
provisions of one or more consumer protection statutes
occurred. After commencement of the bankruptcy case, the
Debtors commence an adversary proceeding to assert such
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claims, in some instances, such as here, requesting that their
remedy, if successful, be the rescission of the loan.
The Court herein in no way means to imply that the above
course of action is disfavored, let alone prohibited. On the
contrary, it is a permissible course of action which this Court
has encountered many times. In these circumstances,
however, this Court has consistently made clear that while any
such litigation is pending the Debtors, since they may
ultimately be unsuccessful on their claims, must make/keep
current on payments called for under their Chapter 13 plan,
including, without limitation but in particular, postpetition
monthly mortgage payments. Any other practice would, of
course, be grossly unfair, because if the Debtors fail to make
their regular monthly mortgage payments, yet do not prevail
in their lawsuit, they will essentially have reserved to
themselves in the interim possession of the mortgaged
premises at no cost. This Court has thus placed particular
emphasis on a debtor’s adherence to the foregoing condition
i.e., current payments, as a factor to be considered where a
request for dismissal of the bankruptcy case is made. The
factor is implicated here and, as hereinafter discussed, it
militates heavily against the Debtors.
In re Daniels, Bankr. No. 04-11496, slip. op., at 1-2, http://www.paeb.uscourts.gov/
pages/ pubopins (Raslavich. J) (April 25, 2005).
As noted in the quotation, the Daniels decision arose in the context of a
motion to dismiss a chapter 13 case brought by the mortgagee. The debtor, in essence,
argues in this dispute that Bank One has not objected to her proposed plan and thus any
potential unfairness toward Bank One is of no concern to the chapter 13 trustee. This
contention, however, overlooks 11 U.S.C. § 1302(b)(2)(C), which grants the trustee the
right to appear and be heard at confirmation hearings, as well as the observation made by
the Third Circuit Court of Appeals that chapter 13 trustees should independently
determine if a proposed plan meets statutory requirements. In re Szostek, 886 F.2d 1405,
1414 (3d Cir. 1989). Thus, I do not find the trustee’s current objections outside the broad
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scope of his duties. Furthermore, the trustee is correct that the debtor’s proposed
reorganization plan fails to comply with the various statutory confirmation requirements
if one considers the possible outcomes of her litigation with Bank One, save (perhaps) a
mutually consensual outcome.
Section 1325(a)(6) requires that visionary or speculative chapter 13 plans
not be approved. As stated in In re Fantasia, 211 B.R. 420, 423 (B.A.P. 1st Cir. 1997)
(citations omitted):
To satisfy feasibility, a debtor’s plan must have a reasonable
likelihood of success, i.e., that it is likely that the debtor will
have the necessary resources to make all payments as directed
by the plan. 11 U.S.C. § 1325(a)(6). The debtor carries the
initial burden of showing that the plan is feasible. Before
confirmation, the bankruptcy court should be satisfied that the
debtor has the present as well as the future financial capacity
to comply with the terms of the plan.
Therefore, the failure of a chapter 13 debtor to propose a plan that addresses
likely future contingencies has resulted in a denial of confirmation, based upon a lack of
feasibility. See, e.g., In re Goodavage, 41 B.R. 742 (Bankr. E.D. Va. 1984) (failure to
provide for likely medical expenses); In re Jones, 10 B.R. 128 (Bankr. E.D. Va. 1981)
(confirmation is denied where the court found a budget unrealistic for not including
amounts for home maintenance or automobile insurance, and little for recreation or food
and clothing); In re Hockaday, 3 B.R. 254 (Bankr. S.D. Cal. 1980) (confirmation is
denied where the debtor only budgeted $10 for emergencies); see also In re Smith, 207
B.R. 888, 890 (B.A.P. 9th Cir. 1996) ( “In cases where the debtors have very young or
handicapped dependents, the absence of a budget for life insurance may call a Chapter 13
plan into question.”).
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When litigation is pending as of the time of the confirmation hearing, the
likely outcome of that litigation may be considered as part of the debtor’s burden to
establish the feasibility of her plan. See In re Yeager, 2004 WL 422049, at *3 (Bankr.
E.D. Pa. 2004); see also In re Shields, 148 B.R. 783 (Bankr. E.D. Pa. 1993) (chapter 13
plan that is premised upon the debtor’s setting aside of a foreclosure sale is not feasible
when there is no likelihood that the foreclosure sale will be set aside).
Here, the debtor is enmeshed in litigation with her mortgage holder, Bank
One, but her proposed reorganization plan does not address the various contingencies
arising from that litigation. While there was no evidence presented by which I could
opine as to the merits of the debtor’s pending rescission claim, the confirmation process
need not await the outcome of that litigation. See generally In re Bell, 314 B.R. 54, 61
n.5 (Bankr. E.D. Pa. 2004) (determination of confirmation should not be delayed by
pendency of an adversary proceeding). Indeed, this chapter 13 case has already been
pending for more than 14 months.
As written, the debtor’s proposed plan implies that she holds no liability to
this creditor. That result is extremely unlikely. To the extent it is based upon the
amended proof of claim litigation, I have already concluded that Bank One was entitled to
file an amended proof of claim, which claim exceeds $500,000. To the extent the plan is
premised upon successfully rescinding the Bank One loan, the trustee has cited numerous
appellate court decisions holding that a TILA rescission does not entitle the borrower to
retain the original loan proceeds and pay the lender nothing. See Trustee’s Memorandum,
at 6 n.5.
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But even if the debtor’s pending adversary proceeding or proof of claim
litigation were to eliminate completely Bank One’s claim, then the trustee is correct that
her proposed plan would improperly permit the debtor to retain all the equity in her home,
valued by her at more than $300,000, without paying unsecured creditors in full, in
violation of the best interest of creditors’ test. See In re Wile, 304 B.R. 198, 204 (Bankr.
E.D. Pa. 2004).
If the debtor were entitled to rescind the mortgage loan in her pending
adversary proceeding, it is highly likely that Bank One would remain a creditor. See In re
Daniels, Bankr. No. 04-11496, slip. op., at 6-7, http://www.paeb.uscourts.gov/ pages/
pubopins. Judge Raslavich has observed that most courts would permit Bank One to hold
a claim for the principal amount of the loan (less payments received). 	Id.; see e.g.,
Quenzer v. Advanta Mortgage Corp. USA, 288 B.R. 884, 888-89 (D. Kan. 2003). Courts
may differ whether rescission by the chapter 13 debtor must be conditioned upon the
debtor’s tender of the entire outstanding principal amount—Judge Raslavich has held that
a tender is required, see id., while Chief Judge Sigmund has permitted this sum to be
repaid over the life of the proposed plan. In re Williams, 291 B.R. 636 (Bankr. E.D. Pa.
2003); see also In re Bell, 314 B.R. at 62. But the debtor’s proposed plan provides for no
repayment to Bank One of the rescission amount at all. This failing renders the debtor’s
plan non-confirmable. See In re Williams, 291 B.R. at 662 (“Absent a plan providing for
the payment of BankOne's claim as so noted, confirmation will elude this Debtor.”).
Furthermore, for purposes of determining confirmation of this proposed
plan, I need not now decide that, were rescission granted, Bank One would be entitled to
have its rescission claim repaid in full. If I assume arguendo that this creditor would hold
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only a general unsecured claim, which claim could be treated as other unsecured claims,
denial of confirmation would still be warranted for two reasons. First, because the
debtor’s plan to pay only $600 would violate the best interest test found in section
1325(a)(4), just mentioned. Second, because the amount of Bank One’s unsecured claim
likely would exceed the statutory debt ceiling established by section 109(e) for chapter 13
cases.
The debtor contends that these confirmation defects are not germane
because her amended plan simply does not provide for Bank One’s secured claim. That
is, the debtor argues that she will treat Bank One’s claim outside the reorganization
process, and so the trustee need not be concerned with it. I disagree with this analysis.
First, as noted earlier, the debtor’s second amended plan was not carefully
drafted. While stating that the debtor “now opts not to treat the alleged secured claim of
the Bank in her plan,” Ex. D-1, ¶ 5, the plan also calls for the trustee to make distribution
to the “allowed arrears of the Class Three claimant” after paying Class One claimants
(allowed administrative expenses). Ex. D-1, ¶ 7. Class Three consists solely of the
secured claim held by Bank One. Ex. D-1, ¶ 6(C). The debtor offered no evidence that
she can afford to repay the allowed arrears, which, in prior litigation, Bank One asserted
would exceed $60,000. 	Therefore, the proposed plan, as written, probably does provide
for Bank One’s secured claim.
Second, if Bank One will hold an allowed unsecured claim, based upon the
outcome of the pending adversary proceeding, or based upon an undersecured status, see
11 U.S.C. § 506(d), the debtor’s plan must provide for it as it provides for other
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Allow unsecured claims are place in class 6 and are to be paid pro rata. Ex. D-1.5
Generally, a chapter 13 debtor will not provide for a secured claim when the6
debtor is current with the creditor and intends simply to continue making payments according to
the loan note, or intends to surrender the collateral.
16
unsecured claims. 	See 11 U.S.C. § 1322(a)(3). Thus, to the extent that the debtor’s plan5
did proposed not to treat Bank One’s unsecured claim, her plan could not be approved.
Third, if Bank One holds a secured claim, I appreciate that a chapter 13 plan
need not provide for that claim. See 8 Collier on Bankruptcy, ¶ 1325.06[1][b] (15th ed.
rev. 2005). Nonetheless, if a confirmed plan does not provide for a secured claim,
generally that secured creditor can easily obtain relief from the bankruptcy stay to
exercise its non-bankruptcy law rights to recover its collateral. See, e.g., In re Vincente,
260 B.R. 354, 357-58 (Bankr. E.D. Pa. 2001); 8 Collier on Bankruptcy, ¶ 1325.06[1][b] at
1325-25. Were that to occur, the trustee is correct that it is unlikely that the debtor here
would be able to complete her proposed plan, as the debtor has maintained that it is
essential that she retain ownership of the Clayton Court property. See Debtor’s
Memorandum, at 4. 6
Indeed, the trustee’s justified concern that a forced sale of the debtor’s
home is the likely result, were her proposed reorganization plan approved, is further
increased because the Montgomery County Tax Claim Bureau has also asserted a lien
claim in this case, and the debtor offered no evidence as to her ability to address that
secured claim. Therefore, even if the debtor’s plan had been more carefully written and
did not provide for the secured claim of Bank One, it could not be approved.
The only outcome of the Bank One litigation that might not offend some
provision of section 1322 or 1325 would be a settlement, by which Bank One retained a
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The feasibility of this arrangement depends upon Mr. Oscar continuing to earn at7
least $4,000 per month and the accuracy of the debtor’s estimate of what she could afford to pay
that creditor.
17
lien in excess of the value of the realty, and would accept reduced monthly mortgage
payments, with such payments made directly by the debtor to the creditor. 	As a7
component of a settlement, the creditor might actively support confirmation of the
proposed plan and agree not to seek to modify the bankruptcy stay. If I assume that the
debtor’s husband would continue earning $1,000 per week, and if the reduction in
mortgage payments freed sufficient funds for the debtor to repay the Tax Claim Bureau,
the debtor’s proposed plan might then be feasible.
However, there is absolutely no evidence that Bank One will agree to
modify its mortgage to accommodate the debtor’s current financial limitations. In
addition, in light of Mr. Oscar’s testimony that he anticipated a reduction in his income
unless he found another position, and in light of prior difficulties in finding
employment—which difficulties are increased by his observed hearing loss—I am not
persuaded by the evidence presented that the debtor could afford to repay Bank One even
the $1,500 monthly figure she mentioned.
In sum, for the reasons just stated, the debtor has not met her burden of
persuasion, over the objection of the chapter 13 trustee, to approve a plan calling for
nominal monthly trustee payments and no mortgage or tax delinquency payments, while
she litigates with her mortgage holder over the latter’s liability under the Truth in Lending
Act. This plan proposal may be dictated by her very difficult financial circumstances;
however, based upon the facts adduced at the hearing, this reorganization proposal has
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Given this conclusion, I need not consider the trustee’s additional objection to8
confirmation based upon section 1322(a)(1).
As the trustee has not addressed his own motion to dismiss, I shall reschedule a9
hearing on that matter.
18
not been proven to be feasible. It also upsets the delicate balance established by the
various confirmation requirements found in section 1325.
Accordingly, confirmation shall be denied. 	An appropriate order shall be8
entered. 9
Case 04-18900-bif Doc 71 Filed 09/12/05 Entered 09/12/05 15:37:44 Desc Main
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UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
In re 	: 	Chapter 13
CATHERINE A. OSCAR 	:
Debtor 	: 	Bankruptcy No. 04-18900F
.................................................
ORDER
.................................................
AND NOW, this 12th day of September 2005, for the reasons stated in the
accompanying memorandum, it is hereby ordered that confirmation of the debtor’s
proposed chapter 13 plan, dated June 3, 2005, is denied.
It is further ordered that a hearing on the trustee’s request to dismiss this
case shall take place on September 27, 2005, at 4:00 P.M., in Bankruptcy Courtroom #2.
Both parties shall be prepared to address the provisions of 11 U.S.C. § 1307(c)(5).
____________________
BRUCE FOX
United States Bankruptcy Judge
copies to:
Mrs. Catherine A. Oscar
111 Clayton Court
North Wales, PA 19454
David A. Scholl, Esq.
Regional Bankruptcy Center of SE PA
Law Office of David A. Scholl
6 St Albans Avenue
Newtown Square, PA 19073
William C. Miller, Esq.
Chapter 13 Trustee
111 S. Independence Mall
Suite 583
Philadelphia, PA 19106
Case 04-18900-bif Doc 71 Filed 09/12/05 Entered 09/12/05 15:37:44 Desc Main
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