Recent Opinion Establishes Rule of Law in Chapter 13 Cases in the Bankruptcy Court, Eastern District of New York.

In the case of In Re: Denis J. Coughlin, Case Number: 11-76202-AST (June 15, 2017) a client of the firm was threatened with the revocation of a bankruptcy discharge in a motion made by the court itself. The court had chosen this case to establish the effect of failure to pay post-petition mortgage payments on debtors’ rights to their discharge and the court’s authority to revoke a discharge. Over a five year Chapter 13 plan, the client had missed a few mortgage payments, but the bank did not complain of this until the end of the case. Although the Court determined that a discharge should not have been issued because of the missed mortgage payments, the Court found that the discharge could not be taken away absent fraud or mistake. Mr. Solomon successfully defended his client’s discharge and the Court found that neither fraud nor mistake was present. The client kept their discharge. Most importantly, Judge Alan S. Trust determined in this 31 page decision that a chapter 13 debtors’ direct payments to a secured creditor pursuant to a “cure and maintain” plan are payments “under the plan” and a debtor who fails to make such payments is not entitled to a discharge under §1328(a).