Notice of appeal filed 6-23-95 -- Aff'd 1-29-96 (Crow, J.)
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
ANTHONY C. BARBER, HEATHER L. BARBER,
ORDER DENYING DEBTORS' MOTION TO RECONSIDER
At a hearing on May 23, 1995, and by order entered on May 25, the Court sustained the chapter 13 trustee's objection to confirmation of the debtors' plan. The debtors have filed a motion for reconsideration. They appear by counsel Joseph I. Wittman. The trustee has filed an objection. The Court has reviewed the transcript of the hearing and considered the relevant pleadings, and is now ready to rule.
The debtors had proposed to pay directly to a credit union a debt secured by a car they had purchased shortly before filing for bankruptcy. They were current on the debt when they filed. In explaining why they would not be allowed to pay the debt directly rather than through the trustee, the Court noted that the debtors were proposing in their plan to pay more to the credit union than the value which they had listed in their schedules for the car, and that their debt to the credit union included more than the loan made for the car. The Court concluded there was no reason to deviate from the norm of requiring the debtors to pay the credit union through the trustee. Now, for the first time, the debtors suggest the credit union debt is a co-signed debt. It is inappropriate to assert new facts like this in a motion to reconsider. Furthermore, while the fact the debt is co-signed would make it permissible for the debtors to pay the unsecured portion of the debt ahead of their other unsecured debts, 11 U.S.C.A. §1322(b)(1), the Court does not believe this is a good reason to permit them to pay the debt directly rather than through the trustee.
The Court also noted at the hearing that one of the debtors, Mr. Barber, had filed chapter 13 cases in 1990 and 1992 which failed. Those bankruptcies had not been disclosed to the credit union on the application for the car loan. The debtors now suggest this omission was irrelevant because Mr. Barber did not sign the application. Some of the Court's remarks at the hearing may have misled counsel about the true impact Mr. Barber's prior bankruptcies had on the Court's denial of the relief the debtors were seeking. Those failed chapter 13 cases suggested that he would likely have difficulty making his payments as promised and that normal, rather than less, trustee supervision would be called for in his case. The debtors' new proposal to provide the trustee copies of the money orders or cashiers' checks they would use to pay the credit union might be worthwhile if direct payments to the creditor otherwise appeared to be appropriate, but the Court believes it is not sufficient in this case.
As the Court indicated at the hearing, this Court's general rule is that chapter 13 plan payments
must be made through the trustee. Exceptions are ordinarily made for current home mortgage
payments (though arrearages must go through the trustee), for secured debts that would be paid
off before the trustee could begin distributing money, and sometimes for lease payments. The
debtors' proposal does not fall within these exceptions, and they have not given the Court an
adequate reason to create another. Consequently, their motion to reconsider is hereby denied.
IT IS SO ORDERED.
Dated at Topeka, Kansas, this _____ day of June, 1995.
JAMES A. PUSATERI
CHIEF BANKRUPTCY JUDGE