JOE HENRY PLILER; KATHERINE MARIE PLILER, Debtors - Appellants,
RICHARD M. STEARNS, Trustee, Trustee - Appellee. NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, Amicus Supporting Appellants, ECAST SETTLEMENT CORPORATION, Amicus Supporting Appellee
Argued December 10, 2013
Appeal from the United States Bankruptcy Court for the Eastern District of North Carolina, at Wilson. (12-05844-8-RDD). Randy D. Doub, Chief Bankruptcy Judge.
ARGUED: Robert Lee Roland, IV, LAW OFFICES OF JOHN T. ORCUTT, P.C., Raleigh, North Carolina, for Appellants.
Christopher Scott Kirk, OFFICE OF THE BANKRUPTCY ADMINISTRATOR, Wilson, North Carolina; Isaac Andrew Johnston, OFFICE OF THE CHAPTER 13 TRUSTEE, Greenville, North Carolina, for Appellee.
ON BRIEF: Norma L. Hammes, NATIONAL ASSOCIATION OF CONSUMER BANKRUPTCY ATTORNEYS, San Jose, California; Tara Twomey, NATIONAL CONSUMER BANKRUPTCY RIGHTS CENTER, San Jose, California, for Amicus National Association of Consumer Bankruptcy Attorneys.
William Andrew McNeal, Gilbert B. Weisman, BECKET & LEE LLP, Malvern, Pennsylvania, for Amicus eCAST Settlement Corporation.
Before DUNCAN, WYNN, and THACKER, Circuit Judges. Judge Wynn wrote the opinion, in which Judge Duncan and Judge Thacker joined.
WYNN, Circuit Judge:
In this bankruptcy appeal, we must decide whether above-median-income debtors with negative disposable income are obligated to maintain Chapter 13 bankruptcy plans that last for five years when their unsecured creditors have not been paid in full. Our examination of the pertinent bankruptcy code provisions, case law, and legislative intent leads us to conclude that the answer is yes and, accordingly, to affirm the bankruptcy court's order.
Joe Henry Pliler and Katherine Marie Pliler (the " Plilers" ) filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code on August 10, 2012. Although the Plilers calculated their household income to be above North Carolina's median family income for comparably-sized households, they calculated their disposable income to be negative $291.20.
Along with the Chapter 13 petition, the Plilers filed a proposed Chapter 13 plan pursuant to 11 U.S.C. § 1321 (" Plan" ). Under the Plan, the Plilers proposed to pay $1,784 for fifteen months, and then $1,547 for forty months. The total of these payments, $88,640, would pay $3,335 in attorneys' fees, $3,988.80 for the Trustee's commission, $78,595 to secured creditors, and nothing to unsecured creditors.
The Plilers' proposed Plan contained early termination language that would have allowed them to complete their Plan within fifty-five months:
This Chapter 13 Plan will be deemed complete and shall cease and a discharge shall be entered, upon payment to the Trustee of a sum sufficient to pay in full: (A) Allowed administrative priority claims, including specifically Trustee's commissions and attorneys' fees and expenses ordered by the Court to be paid to the Debtor's Attorney, (B) allowed secured claims (including but not limited to arrearage claims), excepting those which are scheduled to be paid directly by the Debtor " outside" the plan, © Allowed unsecured priority claims, (D) Cosign protect consumer debt claims (only where the Debtor proposes such treatment), (E) Postpetition claims allowed under 11 U.S.C. § 1305, (F) The dividend, if any, required to be paid to non-priority general unsecured creditors (not including priority unsecured creditors) pursuant to 11 U.S.C. § 1325(b)(1)(B), and (G) Any extra amount necessary to satisfy the " liquidation test" as set forth in 11 U.S.C. § 1325(a)(4).
In October 2012, the Trustee filed an objection to confirmation ...