SHEILA ANN TRANTHAM, Debtor — Appellant, v. STEVEN G. TATE, Trustee — Appellee
Local rules and local standard plans cannot force a chapter 13 debtor to disregard one of the options in Section 1327 and require revesting of estate assets on discharge.
- Rochelle Quick Take
View Rochelle Summary- Case Type:
- Consumer
- Case Status:
- Reversed and Remanded
- Citation:
- No. 22-2263 (4th Circuit, Aug 13,2024) Published
- Tag(s):
- Ruling:
- The Fourth Circuit held that local Chapter 13 form plans cannot "abridge, modify, or enlarge" a debtor's substantive rights under the Bankruptcy Code. In particular, they cannot require property of the debtor's estate to vest in the debtor when the court enters a final decree as opposed to at confirmation.
- Procedural context:
- The United States Bankruptcy Court for the Western District of North Carolina held that a debtor cannot propose a plan that contradicts the local form’s default vesting provision. The district court agreed. The Fourth Circuit disagreed, so it reversed and remanded for further proceedings.
- Facts:
- The debtor petitioned for Chapter 13 bankruptcy protection in the United States Bankruptcy Court for the Western District of North Carolina. The debtor proposed a repayment plan using the bankruptcy court’s required form plan, Local Form 4. The Form’s vesting provision states that “[a]ll property of the Debtor remains vested in the estate and will vest in the Debtor upon entry of the final decree.” The debtor struck through that provision and instead proposed that the property of the estate vest at confirmation. The Chapter 13 Trustee objected to the debtor's plan because her changes to the vesting schedule “contradict[ed] the plan form language” in Local Form 4. The bankruptcy court sustained the objection.
- Judge(s):
- Chief Judge Albert Diaz; Circuit Judge James Harvie Wilkinson III; and Senior Circuit Judge Diana Gribbon Motz
