## Facts

- Two Chapter 13 cases were considered together because the parties stipulated to most facts: a joint case filed by Steven and Catherine Drew and a separate case filed by Ashby-Fox.
- Each debtor obtained confirmation of a Chapter 13 plan.
- About two years after confirmation, the court authorized the debtors to obtain credit to refinance their homes.
- The Drews’ property had been valued at $90,000 at confirmation and was later refinanced based on a higher value; the refinancing generated a lump-sum cash payout to the debtors.
- After the refinancings, the standing Chapter 13 trustee moved to modify the confirmed plans under 11 U.S.C. § 1329 to increase distributions to unsecured creditors, relying on (i) post-confirmation appreciation/equity and (ii) cash proceeds from the refinancings.
- The debtors objected, arguing that the trustee was barred by confirmation finality (including res judicata and equitable estoppel) from revisiting valuations or capturing post-confirmation equity and proceeds.

## Issues

1. Whether 11 U.S.C. § 1329(a)(1) permits a post-confirmation modification increasing payments to unsecured creditors based on a debtor’s post-confirmation refinancing and receipt of cash proceeds.
2. Whether the Chapter 13 trustee has standing to seek such a post-confirmation modification under § 1329.
3. Whether res judicata or equitable estoppel arising from plan confirmation and original valuations bars modification grounded in post-confirmation changes.
4. Whether post-confirmation appreciation and refinancing proceeds may be considered in assessing the debtor’s increased ability to pay for purposes of § 1329 modification.

## Decision

- The court held that § 1329(a)(1) authorizes post-confirmation plan modification, before plan completion, to increase payments to a class of claims, including unsecured claims.
- The court held that the Chapter 13 trustee has standing under § 1329 to seek modification to increase dividends to unsecured creditors.
- The court rejected the debtors’ confirmation-finality arguments, holding that res judicata and equitable estoppel did not bar modification based on post-confirmation refinancing-related changes.
- The court granted the trustee’s motions in substantial part and increased distributions to unsecured creditors based on the refinance-related improvement in the debtors’ financial capacity.

## Legal Principles

- A confirmed Chapter 13 plan may be modified under 11 U.S.C. § 1329(a)(1), after confirmation but before completion of payments, to increase payments to claims of a particular class.
- The Chapter 13 trustee is a statutorily authorized movant with standing to seek § 1329 modification to increase distributions to unsecured creditors.
- Confirmation finality does not prevent § 1329 modification when the basis for modification is a post-confirmation change in the debtor’s financial circumstances.
- Post-confirmation refinancing proceeds and equity increases may be treated as evidence of a materially increased ability to pay, supporting higher payments to unsecured creditors through § 1329 modification.

## Conclusion

The bankruptcy court permitted post-confirmation modification of Chapter 13 plans to increase unsecured-creditor distributions where the debtors refinanced their homes after confirmation and realized increased equity and cash proceeds, holding that the trustee had standing and that confirmation-based preclusion doctrines did not bar modification before plan completion.


In re Drew, 325 B.R. 765 (Bankr. N.D. Ill. 2005)