Pierrotti v. IRS (In re Pierrotti)
- Summarized by Leslie Hyman , Pulman, Cappuccio, Pullen & Benson
- 13 years 6 months ago
- Citation:
- No. 10-31048 (5th Cir. June 22, 2011)
- Tag(s):
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- Ruling:
- The Fifth Circuit ruled that a debt that is already due and payable before a Chapter 13 bankruptcy filing may not be “maintained” under 11 U.S.C. § 1322(b)(5). The court concluded that section 1322(b)(5) applies only to debts for which, by their pre-bankruptcy terms, the final payment is not due until after the end of a Chapter 13 plan’s maximum term. Because the tax deficiencies in issue were fully matured and due and payable before the debtor filed for bankruptcy, the debts could not be modified to extend payment past the five-year maximum term for his Chapter 13 plan.
- Procedural context:
- The bankruptcy court denied confirmation of a Chapter 13 debtor's plan because it contained a proposed payment of debt to the IRS over a period of fifteen years. The debtor appealed and the bankruptcy certified the issue for direct appeal to the Fifth Circuit.
- Facts:
- The debtor attempted to use 11 U.S.C. § 1332(b)(2) to “modify” claims by the IRS for tax deficiencies into a long-term debt payable over a period of fifteen years and then “cure and maintain” that debt under section 1332(b)(5). The tax deficiencies were fully matured and due and payable before the debtor filed for bankruptcy. The IRS objected to the debtor's proposed plan on the ground, among others, that the proposed payment period was longer than the five-year term of the bankruptcy plan and the bankruptcy court agreed and denied confirmation of the proposed plan.
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