Deans v. O'Donnell

Deans v. O'Donnell

Opinion

 [*968]  PHILLIPS, Circuit Judge:

Margaret Ann Deans appeals a district court order affirming a bankruptcy court's refusal to confirm her Chapter 13 bankruptcy plan. Deans' plan was rejected because found not "proposed in good faith" as required by 11 U.S.C. § 1325(a) (3), a finding based upon the view of the courts below that any plan, such as Deans ', that provides no "substantial and meaningful" repayments to the debtor's unsecured creditors cannot qualify under § 1325(a) (3). Deans v. O'Donnell, 14 B.R. 997 (E.D. Va. 1981). Because this view misconstrues the statutory good faith requirement, we vacate and remand for reconsideration of Deans' plan.

 [*969]  I

Deans filed her voluntary petition for Chapter 13 bankruptcy with a proposed repayment plan on March 27, 1981.  [**2]  Her plan divided her creditors into two classes, holders of secured claims and holders of unsecured claims. The only member of the first class was General Motors Acceptance Corp. (GMAC), with a claim of $6,913. This claim was secured only to the extent of the fair market value of the security, a 1979 Chevrolet worth $3,625. The second class contained six unsecured creditors with claims totalling $4,013. GMAC was also a member of this class to the extent that its claims exceeded the value of its security. Under the proposed plan, Deans was to pay the trustee $120.42 per month for three years. The plan provided that the trustee would distribute the payments first to pay the priority items listed in § 507 and then to GMAC in the amount of the present value of its security. The unsecured creditors would not receive any distribution under the proposed plan.

The statements filed by Deans, a full-time secretary, indicated that she received a steady take-home pay of $862 per month. All of Deans' assets were exempt under § 522. She listed her monthly expenses as $733, leaving a surplus of $129 per month from which her monthly payment to the trustee could be made.

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