The Fifth Circuit recently vacated and remanded an order dismissing Tim Truman, the Chapter 13 Trustee's, Motion to Modify the Chapter 13 Plan of Sergio and Sharon Meza. After the Meza's plan had been confirmed, the Trustee received the Meza's income tax refund. Under the confirmed plan the Trustee was entitled to apply any tax refund to delinquent plan payments; however, the Meza's were not delinquent on any payments. Instead, the Trustee filed a Motion to Modify the Chapter 13 Plan requesting that a portion of the funds be used to pay the Meza's unsecured creditors. Subsequent to the Trustee filing the Motion to Modify, but prior to a hearing on the Motion, the Meza's refinanced their exempt homestead and paid the balance of their plan in full. The Meza's then objected to the Trustee's requested modification, arguing that it was untimely under 11 U.S.C. Section 1329 (a), which provides in part that "[a]t any time after confirmation of the plan but before the completion of payments under such plan, the plan may be modified, upon request of the debtor, the trustee, or the holder of an allowed unsecured claim." The bankruptcy court agreed with the Meza's, and the district court affirmed. The Fifth Circuit, however, disagreed and found that because the Motion was filed before the plan was fully paid, it was timely. Relying on the "plain language" of Section 1329(b)(2), that a "plan as modified becomes the plan unless, after notice and a hearing, such modification is disapproved," the court found that the Trustee's requested modification would become effected after the notice period unless disapproved. Therefore, the Motion was timely filed and the Debtors were precluded from making their final payment under the earlier confirmed plan. Of particular interest are two issues on which the court comments in dicta. The first comment indicates that a substantial or even unanticipated change is not required before seeking to modify a Chapter 13 Plan. Some circuits have held that any requested modification must be based on an unanticipated and substantial change. The Fifth Circuit, noting that " section 1329 does not provide for any threshold requirement to modify a bankruptcy plan" rejected the reasoning of other courts that impose such a burden. The Fifth Circuit's position on this issue could certainly benefit an unsecured/undersecured creditor seeking to modify a plan to increase plan payments. The second comment, found in a footnote, suggests that a Chapter 13 debtor (at least in the Northern District of Texas) should seek court permission before refinancing exempt property. Lenders and their counsel will certainly want to take note of the court's position on this issue. Here is a link to the full opinion: http://www.ca5.uscourts.gov/opinions/pub/05/05-10739-CV0.wpd.pdf Leslie