Chapter 13 Bankruptcy Cases: The Applicable Commitment Period is a Temporal Requirement
In a case just decided March 28, 2014, the Court of Appeals for the Fourth Circuit issued its opinion in Pliler v. Stearns (In re Pliler), No. 13-1445, 2014 WL 1259569 (4th Cir. Mar. 28, 2014), holding that the Applicable Commitment period, as defined by 11 U.S.C. § 1325(b)(4) in the Bankruptcy Code, is a temporal requirement.
In other words, in a case when general unsecured creditors are not paid in full, the 3 year requirement for below median income debtors and the 5 year requirement for above median income debtors are periods of time required by the Bankruptcy Code for debtors to remain in their Chapter 13 cases, even for debtors who have no disposable income as defined under the calculation followed in 11 U.S.C. § 1325(b). The Fourth Circuit follow all other Circuit Courts of Appeal that have considered the issue.
The practical effects of Pliler will require more time to fully understand; however, one result in the Eastern District of North Carolina, such as in the Raleigh area, is that there will be many more Chapter 13 cases that last a full 36 months for below median income debtors and a full 60 months for above median income debtors. Prior to Pliler, many Chapter 13 cases discharged and finished before the full term of months because the debtors showed no projected disposable income and paid the claims they were required to pay in full before the full term ran out.
For better or worse, Pliler is the law of the Fourth Circuit. Give Sasser Law Firm a call if we can help explain why Pliler matters and whether a Chapter 13 case is a good option for you.
A copy of the Pliler opinion can be found by clicking on the link attached here.