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(District court erred in granting summary judgment to defendants on theory of judicial estoppel in Chapter 13 debtor's post-confirmation action for rescission and damages under the Truth in Lending Act. Debtor was not aware of the cause of action until post-confirmation, but when the debtor learned of the cause of action his attorney made demand on the creditor for rescission. The creditor then initiated an adversary proceeding in the bankruptcy case more than six weeks before the deadline to object to confirmation, and this adversary proceeding put all creditors on notice of the cause of action. Summary judgment on judicial estoppel was inappropriate because questions of material fact existed as to the debtor's intent to manipulate the judicial system given that creditors were not prejudiced by the debtor's failure to disclose the cause of action.)
In re Murphy, 474 F.3d 143 (4th Cir. Jan. 18, 2007) (A confirmed Chapter 13 plan may be modified if the debtor experiences a substantial, unanticipated postconfirmation change in his financial condition. The trustee had moved in both of these consolidated cases to modify the respective plans to increase the amount to be paid to unsecured creditors. In the first case, debtors experienced a substantial decrease in their income but, through a refinancing, took equity out of their house to make plan payments. The court held that these combined events resulted in virtually no change to the debtors' financial condition and affirmed the bankruptcy court order denying the trustee's motion to modify the plan. The court noted that the debtors had taken the more noble course of seeking to fulfill their plan obligations even though their decrease in income could have motivated them to file their own motion to modify seeking to pay unsecured creditors less, and, for this, they should not be penalized. In the second case, debtor sold his condominium for dramatically more than its scheduled value. This constituted a substantial, unanticipated post-confirmation change in debtor's financial condition that justified modifying debtor's plan to provide for a 100% distribution to unsecured creditors. Additionally, in the second case, the proposed modification met the requirements of § 1329.)
In re Meza, 467 F.3d 874 (5th Cir. Oct. 16, 2006) (Chapter 13 debtor may not avoid trustee's motion to modify plan by paying the outstanding balance of the plan before the court rules on the motion to modify. Seeking an increase the distribution to unsecured creditors by requiring the debtor to make additional plan payments, the trustee filed a motion to modify based on a tax refund the debtor received. Debtor paid the outstanding balance after the trustee's motion but before the court heard the motion. The bankruptcy court erred in holding that under § 1329 the modification was untimely.)
Americredit Fin. Svcs., Inc. v. Nichols (In re Nichols), 440 F.3d 850 (6th Cir. Mar. 16, 2006) (Bankruptcy Court did not err in modifying Chapter 13 plan under § 1329 based on debtors' financial hardship. Modification of plan did not violate § 1325(a)(5)(B)(1) because secured lender was allowed to retain its lien.
