In re: Klaas — bankruptcy — affirmance — Krause

Here is the opening paragraph from today’s Third Circuit opinion deciding an interesting little question of bankruptcy procedure:

The Bankruptcy Code sets certain limits on the amount of time that debtors may be required to remain in Chapter 13 proceedings and make payments on their debts. This case presents two questions of first impression among the Courts of Appeals: whether bankruptcy courts have discretion to grant a brief grace period and discharge debtors who cure an arrearage in their payment plan shortly after the expiration of the plan term, and if so, what factors are relevant for the bankruptcy court to consider when exercising that discretion. Because we conclude the Bankruptcy Code does permit a bankruptcy court to grant such a grace period and the Bankruptcy Court did not abuse its discretion in granting one here, we will affirm the rulings of the District Court, which in turn affirmed the relevant order and judgment of the Bankruptcy Court.

The court observed that post-expiration arrearages appeared to be a recurring problem, and it criticized the Chapter 13 trustee’s handling of the problem here.

Joining Krause were Fisher and Vanaskie. Arguing counsel were Aurelius Robleto of Pittsburgh for the appellant, Phillip Simon for two appellees, and Owen Katz for the appellee trustee.