In re Klaas – 3d Cir. – June 1, 2017
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.
