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filed: April 12, 1994.


Appeal from the United States District Court for the Western District of Washington. D.C. No. CV-91-01391-D. Carolyn R. Dimmick, District Judge, Presiding.

Before: James R. Browning, William A. Norris, and Diarmuid F. O'Scannlain, Circuit Judges. Opinion by Judge Norris.

Author: Norris

NORRIS, Circuit Judge:

Vincent Anderson and Charolette Anderson (the "Andersons"), husband and wife, appeal the district court's affirmance of a bankruptcy court order denying confirmation of their Chapter 13 personal bankruptcy plan. Herb Satterlee, the Trustee, maintains that the bankruptcy court and district court correctly interpreted 11 U.S.C. § 1325(b)(1)(B) to require, as a prerequisite to Chapter 13 confirmation, that a plan provide that the debtor pay all actual disposable income to the Chapter 13 trustee during the life of the plan. We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(d).

Because 11 U.S.C. § 1325 (b)(1)(B) explicitly states that a plan must provide for payment of projected disposable income, not actual disposable income, we reverse and remand for further proceedings consistent with this opinion.


On December 12, 1990, the Andersons filed a Petition for Relief under the provisions of Chapter 13 of the Bankruptcy Code, 11 U.S.C. §§ 1301-1330. They proposed a personal bankruptcy plan that obligated them to pay the bankruptcy trustee $800 a month for 36 months, an amount that would not pay creditors in full. Because the Andersons' plan does not pay creditors in full, if the trustee or creditor objected, the bankruptcy court could not confirm the plan unless the Andersons pledged to pay all their projected disposable income to the trustee received during the three-year period that defines the normal duration of a Chapter 13 plan. See 11 U.S.C. § 1325(b)(1)(B). At a § 341 meeting,*fn1 the Trustee requested that the Andersons sign a "Best Efforts Certification."*fn2 The parties agree the Certification, if signed, would constitute an agreement by the Andersons to pay all actual disposable income to the trustee. The Trustee would determine the Andersons' actual disposable income by periodic review of their financial status and automatically adjust their payments. The Andersons refused to sign the Certification.

At the confirmation hearing on January 28, 1991, the Trustee argued to the bankruptcy court that the court could not confirm the Andersons' plan unless they signed the Certification and pledged to pay all actual disposable income to the Trustee for distribution to creditors. The bankruptcy court agreed and, because of the Andersons' refusal to sign the Certification, denied confirmation of their Chapter 13 plan.

On appeal to the district court, the Andersons argued, as they had to the bankruptcy court, that § 1325(b)(1)(B) required only that they pledge payment of all projected, not all actual, disposable income. The Andersons maintained that since $800 represented an accurate projection of their disposable income over the three years of the plan, their plan was confirmable. The district court was unpersuaded and affirmed the bankruptcy court's order denying confirmation. The Andersons appeal.


The language of the statute is clear. If the holder of an allowed unsecured claim or trustee objects to the confirmation of a Chapter 13 plan and the plan proposes less than full payment of a creditor's claim, the plan may be approved only if "as of the effective date of the plan," it provides for payment of "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 . . . ." 11 U.S.C. § 1325(b)(1)(B) (emphasis added).*fn3 The Fifth Circuit in Matter of Killough, 900 F.2d 61 (5th Cir. 1990) (per curiam), described the two-part process for arriving at § 1325(b)(1)(B)'s "projected disposable income" figure. "For practical purposes, this task is usually accomplished by multiplying the debtor's monthly income by 36. Next, the bankruptcy court must assess the amount of the debtor's income that is 'disposable.'"*fn4 Id. at 64 (citing 5 Collier on Bankruptcy Par. 1325.08[4][a] (15th ed. 1985)). The Fifth Circuit's interpretation fully accords with the plain language of the statute, and we adopt it.*fn5

The Andersons' plan states that "the Debtors will submit to the Trustee the sum of $800 per month for 36 months." The Trustee does not challenge the accuracy of $800 as a projection of the Andersons' disposable income. Cf. id. (explaining that when a creditor or trustee objects to a plan "the bankruptcy court had to find that her proposal devoted her entire 'projected disposable income' for the three years following her first payment toward her plan"). Instead, the Trustee argues that the $800 projection does not assure that the Andersons will pay all actual disposable income during the life of the plan. This argument has a fatal flaw: § 1325(b)(1)(B) does not require debtors to give such an assurance. Instead, § 1325(b)(1)(B) requires provision for "payment of all projected disposable income" as calculated at the time of confirmation, and we reject the Trustee's attempt to impose a different, more burdensome requirement on the debtors' plan as a prerequisite to confirmation.*fn6 See 11 U.S.C. § 1325(b)(1)(B).

The Trustee's efforts to force the Andersons to agree to a periodic adjustment of their payments without a court order is inconsistent with the procedures established for modifying a debtor's plan. See 11 U.S.C. § 1329.*fn7 Under § 1329, the trustee may request modification of the debtor's plan. 11 U.S.C. § 1329(a). If the debtor or a creditor objects to the modification, the trustee "must bear the burden of showing a substantial change in the debtor's ability to pay since the confirmation hearing and that the prospect of the change had not already been taken into account at the time of confirmation." 5 Collier on Bankruptcy Par. 1329.01[1][b] (15th ed. 1993); see also In re Arnold, 869 F.2d 240, 241 (4th Cir. 1989); Education Assistance Corp. v. Zellner, 827 F.2d 1222, 1226 (8th Cir. 1987); In re Fitak, 121 Bankr. 224, 228 (S.D. Ohio 1990).

In essence, the Trustee asks us to ignore § 1329 and sanction the use of the Certification requirement as a means of vesting the Trustee with the authority to unilaterally adjust the Andersons' payments without a court order. We reject the Trustee's argument that he may in this fashion extinguish the Andersons' statutory right to ask the bankruptcy court to disapprove a modification of the plan proposed by the Trustee.*fn8 By providing in § 1329 a mechanism to modify a confirmed plan, Congress plainly did not intend to vest trustees with such unfettered authority.*fn9 ...

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