Meyer v. Renteria (In Re Renteria)

DUNN, Bankruptcy Judge,

concurring.

I agree entirely with the disposition in the majority Opinion with respect to the issue presented in this appeal. I write separately to stake out some turf based on further interpretation of § 1322(b)(1) in light of information from the factual record on which the Trustee did not focus.

The Trustee insisted on a “zero-sum game” in this case. It did not have to be that way. Although the plan that originally was proposed projected a 0% dividend to the general unsecured creditors, at the § 341(a) meeting, Renteria stipulated to increase her plan payments by an additional $7,196.06 over the 36-month life of the plan in light of a loan payoff during the plan term. See note 4 in the majority Opinion, supra. There is no evidence in the record before us that the Trustee attempted to negotiate any further increase in the distribution to general unsecured creditors in Renteria’s plan. The Trustee further admitted that Renteria’s plan was filed in good faith. The stipulated increase in plan payments was not offset by any projected increases in expenses. Renteria’s Schedules I and J reflected net disposable income of Renteria and her nonfiling spouse of $709.60 per month.13 Accordingly, the stipulated increase in plan payments represented more than ten months of the disposable income of Rente-ria’s household, as calculated at the outset of her chapter 13 case. That increase in plan payments was incorporated in the order confirming Renteria’s plan. In a chapter 7 case, Renteria’s general unsecured creditors would receive nothing.

Based on the language of § 1322(b)(1), its interpretation by federal courts at all levels, and the sparse legislative history, so ably analyzed in the majority Opinion, to me, the most plausible interpretation of the “however clause” is that Congress wanted to make crystal clear, in light of Utter and Montano, that a chapter 13 debtor has the right to classify separately unsecured claims with co-obligors from other unsecured claims without eliminating *848the prohibition on unfair discrimination. That interpretation, again to me, appears most consistent with the objective of the Bankruptcy Code to treat like obligations as consistently as possible, recognizing the “practical” and “realistic” considerations reflected in the Senate Report accompanying the OBIA. As expressed in the legislative history of the Bankruptcy Code, “Though the general policy of the bankruptcy laws is equality of distribution among all creditors, current law makes certain exceptions based on a showing of special circumstances or special need.” H.R. Rep. 95-595, 95th Cong., 1st Sess. 186 (1977), reprinted in 1978 U.S.C.C.A.N. 5693, 6147.

Section 1322(b)(1) clearly allows unsecured claims with co-obligors to be treated “differently” than other unsecured claims. In my view, “differently” means that some separately classified claims can be treated “better” or “worse” than others. As noted in the ChapteR 13 BaNKruptoy treatise,

The 1984 amendments to § 1322(b)(1) complement or work contrary to the co-debtor stay in § 1301, depending on your perspective. Debtors are protected by the codebtor stay from indirect collection actions, to the extent the plan proposes to pay the cosigned claim; creditors with cosigners typically [but not always] get more favorable treatment through the plan because of § 1322(b)(1). The 1984 amendments reward the creditor that demanded a cosigner at the time of the original loan and somewhat balance the extraordinary injunction in § 1301.

Chapter 13 BaNkruptcy, supra, § 150.1[9]. The “however clause” recognizes that reality, while allowing for a fact-based determination in each case as to whether such different treatment crosses the “unfair discrimination” line.

The 1984 amendment is awkwardly worded. To give meaning to all words in the amended section [1322(b)(1) ], it must be true that a debtor’s power to treat cosigned consumer debts “differently” has content separate from the proscription against unfair discrimination: The awkward language is resolved by holding that all different treatments are not necessarily fair discriminations.

Nelson v. Easley (In re Easley), 72 B.R. 948, 956 (Bankr.M.D.Tenn.1987). See also Chapter 13 Bankruptcy, supra, § 150.1[26] (“The Code could have said that all separate classifications of co-signed claims are permitted if Congress intended that the existence of a cosigner justified all different treatments. Because the statute does not say that, it is fair to infer that some justification is required.”).

In this case, Renteria separately classified Preston’s claim, providing for payment in full with interest to Preston in order to protect her mother as co-obligor. As confirmed, Renteria’s plan further provided for additional plan payments in excess of $7,000 that would allow for a significant distribution to the other unsecured creditors. Renteria’s plan provided for different treatment of Preston’s claim from other unsecured claims, as expressly allowed by § 1322(b)(1), but did not leave the general unsecured creditors with no potential for a meaningful distribution. The Trustee conceded that Renteria’s plan was proposed in good faith. Based on the factual record before us, that does not look like unfair discrimination to me.

. To the extent that a nonfiling spouse regularly contributes to the family’s actual household expenses, such contributions are included in the definition of "current monthly income.” § 101(10A)(B). See also § 1325(b)(4); In re Vollen, 426 B.R. 359, 366 (Bankr.D.Kan.2010) ("The Court concludes that the 'CMI of the debtor and the debtor’s spouse combined’ language in § 1325(b)(4), when applied in the case of a married debt- or with a non-filing spouse, must refer to the debtor's CMI which, by definition, contains not only what her income may be, but also the contributions the non-debtor spouse makes to the household.”).