Dennis Anthony Jones and Vider Cynthia House Jones

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILSON DIVISION
IN RE:
DENNIS ANTHONY JONES, and
VIDER CYNTHIA HOUSE JONES,
DEBTORS
CASE NO.
05-07958-8-RDD
ORDER DENYING MOTION FOR SANCTIONS
REGARDING VIOLATIONS OF 11 U.S.C. § 524(a)
Pending before the Court is the Motion for Sanctions Regarding Violations of 11 U.S.C. §
524(a) (the “Motion”) filed by Dennis Anthony Jones and Vider Cynthia Jones (the “Debtors”) on
April 8, 2009 and the Response to the Motion for Sanctions (the “Response”) filed by Branch
Banking and Trust (“BB&T”) on April 21, 2009. On June 4, 2009, the Court conducted a hearing
in Fayetteville, North Carolina to consider these matters.
BACKGROUND
On September 30, 2005, the Debtors filed a voluntary petition under Chapter 13 of the
United States Bankruptcy Code. The Debtors’ Schedule D listed BB&T as a secured creditor with
a purchase-money lien against a 2005 Chrysler Pacifica Touring Wagon (the “Vehicle”). 	The
Debtors’ Chapter 13 Plan was included with the filing of their Petition and Schedules. The proposed
SO ORDERED.
SIGNED this 28 day of July, 2009.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
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1The debt repayment period with BB&T for the Vehicle was to mature on January 13, 2011, yet the
proposed plan repayment period was for thirty-six (36) months which ended in September 2008.
2
Plan listed BB&T as creditor number 3 on the list of debts in which the Debtors’ proposed to pay
the regular monthly payment outside the plan. 	Although the Debtors were current with their
payments to BB&T, the proposed Plan specifically provided a provision for arrearages in connection
with the BB&T debt to be paid inside the plan.
BB&T was served Notice of the Chapter 13 Bankruptcy Case by the Court on October 5,
2005. On January 1, 2006, the Court entered an Order Granting the Minutes of the 341 Meeting and
the Motion to Confirm Chapter 13 Plan. The motion for confirmation provided for payments to
BB&T outside the plan and for BB&T arrearages inside the plan. BB&T did not file a proof of claim
in this case, and filed no objection to confirmation.
The Debtors completed their plan in September 2008 at which time the Court entered the
discharge of the Debtors. Following the entry of the discharge, the Debtors surrendered the Vehicle
to BB&T1.
Upon receipt of the Vehicle from the Debtors, BB&T sold it for less than the balance due
under its contract. After deduction of the costs of sale and fees, a deficiency balance of $13,969.86
remained. Thereafter, BB&T contacted the Debtors in an attempt to collect the deficiency amount.
The Debtors filed a Motion to Reopen their Case and requested that the Court hear their
motion for sanctions against BB&T concerning an alleged violation of the discharge order because
of its collection efforts. BB&T did not object to the case being reopened as it pertained to whether
or not it was entitled to the deficiency claim. On March 30, 2009, the Court entered an Order
Granting the Debtor’s Motion to Reopen the Case.
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2In first considering whether this debt was discharged, the Court first must determine if the debt was
provided for in the proposed Plan. If the debt was provided for, the Court will then consider whether such debt is
discharged or if one of the enumerated exceptions to discharge under Section 1328 is applicable.
3
DISCUSSION
Pursuant to the Motion, the Debtors request that the Court enjoin BB&T from any further
collection efforts related to the deficiency claim. In its Response, BB&T asserts that the debt was
non-dischargeable under 11 U.S.C. § 1328(a) since it was not “provided for” under the plan. In the
alternative, BB&T argues that if the debt was “provided for” under the plan, it is a long-term debt
as defined in 11 U.S.C. § 1322(b)(5) and, therefore, is nondischargeable under 11 U.S.C. § 1328(a).
Section 1328(a) of Title 11 of the United States Code provides:
Subject to subsection (d), as soon as practicable after completion by the debtor of all
payments under the plan, and in the case of a debtor who is required by a judicial or
administrative order, or by statute, to pay a domestic support obligation, after such
debtor certifies that all amounts payable under such order or such statute that are due
on or before the date of the certification (including amounts due before the petition
was filed, but only to the extent provided for by the plan) have been paid, unless the
court approves a written waiver of discharge executed by the debtor after the order
for relief under this chapter, the court shall grant the debtor a discharge of all debts
provided for by the plan or disallowed under section of this title, except any debt 2
....
Emphasis added.
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4
The Supreme Court in Perrin v. U.S., recognized that statutory language should take its
“ordinary, contemporary, common meaning.” 444 U.S. 37, 42 (1979). The Supreme Court later held
that “[t]he most natural reading of the phrase to ‘provid[e] for by the plan’ is to ‘make a provision
for’ or ‘stipulate to’ something in the plan.” Rake v. Wade, 508 U.S. 464, 473 (1993).
The proposed and confirmed plan clearly identified BB&T as having regular monthly
payments paid and maintained outside the plan while pre-petition arrearages would be paid inside
the plan. BB&T, or a reference thereto, was prominently shown both under the section entitled Pay
Outside Plan and Pay Inside Plan. Therefore, based on the Supreme Court’s definition of provided
for in the plan, the Court finds that the Debtors’ plan clearly provides for the BB&T debt by making
a provision in the plan for direct payments to BB&T outside the plan and by identifying that BB&T
arrearages were to be paid inside the plan.
Having found that the BB&T debt was provided for in the proposed plan, the Court finds that
debt owed to BB&T would be discharged subject to any of the exceptions set forth in Section 1328
of the Bankruptcy Code.
Section 1328(a)(1)-(4) set forth the types of debts that are not discharged even if the debt is
provided for by the Plan. One such claim that is excepted from discharge are long-term debts, as
defined under § 1322(b)(5). Id. A long term debt treated under Section 1322(b)(5) is excepted from
discharge. 11 U.S.C. § 1328(a)(1).
First, Section 1322(b)(5) provides that the plan may provide for the “curing of any default
within a reasonable time and maintenance of payments while the case is pending on any unsecured
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5
claim or secured claim on which the last payment is due after the date on which the final payment
under the plan is due.” 	The debt owed to BB&T is a long term debt within the meaning of this
section. First, under the contract payment schedule, BB&T’s claim was scheduled to be paid in full
on January 13, 2011. The Plan was a thirty-six (36) month plan and the Debtor’s made their last
payment in September 2008.
Second, the Court does not find the Debtors’ argument persuasive that because there was no
arrearage on the claim, it therefore cannot be a long term debt as defined under Section 1322(b)(5)
and therefore, discharged. In this case, the Debtors’ filed plan contained a provision for curing a
BB&T default, as did the motion for confirmation.
The Court finds the analysis by the Bankruptcy Court in the Eastern District of Virginia in
In re Delauder helpful. 189 B.R. 639 (Bankr. E.D. Va. 1995). 	In the Delauder case, the court
considered the applicability of § 1322(b)(5) and recognized that even though that section is most
commonly used to cure mortgage or student loan defaults, nothing specific in the statute restricted
the provision to only those debts. Id. Specifically, the Court determined that there was no reason
why an automobile loan could not be treated as a long term debt under Section 1322(b)(5). 	Id.
Likewise, the Court went on to say that “[n]othing in the statutory language suggests that the
provision is restricted to circumstances where there is an existing default.” Delauder, 189 at 644.
Third, the plan clearly provided for the maintenance of regular payments to BB&T.
Pursuant to the terms of the plan, the debtors were to maintain regular payments on the BB&T debt
directly to BB&T.
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3 The present case is distinguishable from In re Lane. Case No. 97-6850-8-JRL (Bankr. E.D.N.C July 13,
2006). The Lane Court found that long-term debts under 11 U.S.C. § 1322(b)(5) are not always excepted from
discharge under Section 1328(a)(1). Id. In Lane, the debtors failed to provide any plan provisions or terms in
connection with arrearages. That portion of the plan omitted any reference to the long-term debt due to the State
Employees Credit Union (“SECU”). Id. Furthermore, neither the motion for confirmation, nor the confirmation
order listed a provision for arrearages related to SECU. Consequently, under the facts in Lane, the Court discharged
the long-term debt because the plan did not provide any plan provision term for curing defaults or maintenance of
regular payments. In this case, the Debtors’ plan clearly contemplated a cure of a default as the reference to BB&T is
listed in the section entitled Pay Inside of Plan and the Plan provided for maintenance of regular payments outside
the plan.
6
Therefore, based on the foregoing, the debt owed to BB&T is a long term debt as classified
under § 1322(b)(5) and therefore is an exception to debtors discharge under § 1328(a).3 The Debtors’
Motion for Sanctions is DENIED and BB&T’s unsecured claim of $13,969.86 was not discharged.
SO ORDERED
END OF DOCUMENT
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