                 FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

In the Matter of: CESAR IVAN             No. 11-55452
FLORES; ANA MARIA FLORES,
                           Debtors.         D.C. No
                                         6:10-29956-MJ

ROD DANIELSON,
                  Trustee-Appellant,       OPINION

                 v.

CESAR IVAN FLORES; ANA MARIA
FLORES,
               Debtors-Appellees.


     Appeal from the United States Bankruptcy Court
          for the Central District of California
      Meredith A. Jury, Bankruptcy Judge, Presiding

            Argued and Submitted En Banc
       March 19, 2013—San Francisco, California

                 Filed August 29, 2013

Before: Alex Kozinski, Chief Judge, and Harry Pregerson,
  Diarmuid F. O’Scannlain, Sidney R. Thomas, Barry G.
   Silverman, Susan P. Graber, Kim McLane Wardlaw,
Richard A. Paez, Mary H. Murguia, Morgan Christen, and
          Jacqueline H. Nguyen, Circuit Judges.
2                     FLORES V. DANIELSON

                   Opinion by Judge Graber;
                   Dissent by Judge Pregerson


                           SUMMARY*


                            Bankruptcy

    Affirming the judgment of the bankruptcy court, the en
banc court held that when a Chapter 13 debtor has no
“projected disposable income,” 11 U.S.C. § 1325(b)(1)(B)
permits plan confirmation only if the length of the proposed
plan is at least equal to the applicable commitment period
under § 1325(b)(4).

    The en banc court overruled the holding of Maney v.
Kagenveama (In re Kagenveama), 541 F.3d 868 (9th Cir.
2008), that § 1325(b)(1)(B) does not impose a minimum
duration for a Chapter 13 plan if the debtor has no projected
income. Joining the Sixth, Eighth, and Eleventh Circuits, and
reaffirming another aspect of Kagenveama, the en banc court
held that under § 1325(b)(1)(B), the applicable commitment
period acts as a temporal, as distinct from a monetary,
requirement that defines a plan’s minimum duration.
Agreeing with the Sixth and Eleventh Circuits, the en banc
court held that this temporal requirement applies regardless
of the debtor’s protected disposable income.

   Dissenting, Judge Pregerson, joined by Chief Judge
Kozinski, wrote that the majority’s interpretation of

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  FLORES V. DANIELSON                     3

§ 1325(b)(1)(B) promoted goals that were at odds with
Congress’s purpose when it enacted Chapter 13 to provide
debtors with a fresh start. In addition, the majority read
language into Chapter 13 bankruptcy law that was not present
in the plain text of § 1325(b)(1)(B). Judge Pregerson
interpreted § 1325 to mean that the applicable commitment
period in which debtors are required to distribute projected
disposable income to unsecured creditors applies only to
debtor with projected disposable income.


                       COUNSEL

Elizabeth A. Schneider, Office of Rod Danielson, Chapter 13
Trustee, Riverside, California, for Trustee-Appellant.

Robert J. Pfister (argued), Klee, Tuchin, Bogdanoff & Stern
LLP, Los Angeles, California, and Nancy B. Clark, Borowitz
& Clark, LLP, West Covina, California, for Debtors-
Appellees.

William Andrew McNeal (argued) and Gilbert B. Weisman,
Becket & Lee LLP, Malvern, Pennsylvania, for Amici Curiae
American Express Travel Related Services Co., Inc.,
American Express Bank, FSB, and American Express
Centurion Bank.

Tara Twomey, National Consumer Bankruptcy Rights Center,
San Jose, California, for Amicus Curiae National Association
of Consumer Bankruptcy Attorneys.
4                      FLORES V. DANIELSON

                              OPINION

GRABER, Circuit Judge:

    In Maney v. Kagenveama (In re Kagenveama), 541 F.3d
868, 875 (9th Cir. 2008), we held that 11 U.S.C.
§ 1325(b)(1)(B) does not impose a minimum duration for a
Chapter 13 bankruptcy plan if the debtor has no “projected
disposable income,” as defined in the statute. Today, sitting
en banc, we overrule that aspect of Kagenveama and hold that
the statute permits confirmation only if the length of the
proposed plan is at least equal to the applicable commitment
period under § 1325(b)(4). Accordingly, we affirm the
judgment of the bankruptcy court.

                            I. Background

    Debtors Cesar and Ana Flores filed a petition for relief
under Chapter 13 of the Bankruptcy Code. They have
unsecured debts. They proposed a plan of reorganization
under which they would pay $122 per month (1%) of
allowed, unsecured, nonpriority claims for three years.
Chapter 13 Trustee Rod Danielson objected to the plan,
arguing, as now relevant, that § 1325(b) requires a minimum
duration of five years for persons in Debtors’ circumstances.1

    The bankruptcy court sustained the Trustee’s objection,
holding that Debtors were not entitled to a shorter plan
duration because the Supreme Court’s decision in Hamilton
v. Lanning, 130 S. Ct. 2464 (2010), is clearly irreconcilable


    1
   The Trustee has never questioned Debtors’ good faith in proposing the
plan. See 11 U.S.C. § 1325(a)(3) (setting forth requirement of the debtors’
good faith).
                        FLORES V. DANIELSON                              5

with Kagenveama.2 The bankruptcy court confirmed a plan
of five years’ duration, which provided for monthly payments
of $148 to unsecured creditors.3

    Debtors timely appealed to the Bankruptcy Appellate
Panel. The bankruptcy court then certified the plan-duration
issue for direct appeal to this court pursuant to 28 U.S.C.
§ 158(d)(2). A divided panel of this court reversed, reasoning
that Lanning is not clearly irreconcilable with Kagenveama
and that, under Kagenveama, § 1325(b) allows a shorter plan
duration for Debtors. Danielson v. Flores (In re Flores),
692 F.3d 1021, 1038 (9th Cir. 2012). We then voted to rehear
the case en banc. Danielson v. Flores (In re Flores),
704 F.3d 1067 (9th Cir. 2012).4

                              II. Analysis

    Chapter 13 is a mechanism available to “individual[s]
with regular income” whose debts are within statutory limits.
11 U.S.C. §§ 101(30), 109(e). Unlike Chapter 7, which
requires debtors to liquidate nonexempt assets to pay
creditors, Chapter 13 permits debtors to keep those assets if


  2
    See Miller v. Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc)
(holding that a three-judge panel is not bound by prior circuit precedent
if an intervening decision of a higher authority “undercut[s] the theory or
reasoning underlying the prior circuit precedent in such a way that the
cases are clearly irreconcilable”).
 3
      Debtors do not dispute the increase from $122 to $148 per month.
      4
     We review de novo issues of statutory construction, including a
bankruptcy court’s interpretation of the Bankruptcy Code. Samson v. W.
Capital Partners, LLC (In re Blixseth), 684 F.3d 865, 869 (9th Cir. 2012)
(per curiam).
6                  FLORES V. DANIELSON

they “agree to a court-approved plan under which they pay
creditors out of their future income.” Lanning, 130 S. Ct. at
2468–69 (citing 11 U.S.C. §§ 1306(b), 1321, 1322(a)(1),
1328(a)). A bankruptcy trustee oversees the filing and
execution of the plan. 11 U.S.C. § 1322(a)(1); see also
28 U.S.C. § 586(a)(3).

    Section 1325 of the Bankruptcy Code sets forth the
circumstances in which the bankruptcy court “shall” confirm
a debtor’s proposed repayment plan and those in which it
“may not” do so. Under subsection 1325(b)(1), if the trustee
or an unsecured creditor objects to a debtor’s proposed plan,
the court may not approve the plan unless at least one of two
conditions is met. As relevant here, the second of those
conditions is that “the plan provides that all of the debtor’s
projected disposable income to be received in the applicable
commitment period beginning on the date that the first
payment is due under the plan will be applied to make
payments to unsecured creditors under the plan.” 11 U.S.C.
§ 1325(b)(1)(B) (emphasis added). The statute further
provides that the “applicable commitment period” of a plan
“shall be” either

       (A) subject to subparagraph (B), . . .

           (i) 3 years; or

           (ii) not less than 5 years, if the [debtor’s]
           current monthly income . . . , when
           multiplied by 12, is not less than [the
           median annual family income in the
           applicable state]; and
                   FLORES V. DANIELSON                      7

       (B) may be less than 3 or 5 years, whichever
       is applicable under subparagraph (A), but only
       if the plan provides for payment in full of all
       allowed unsecured claims over a shorter
       period.

Id. § 1325(b)(4). The debtor’s “current monthly income” and
“disposable income” are calculated according to statutorily
defined formulae. See id. § 101(10A) (defining “current
monthly income”); id. § 1325(b)(2) (defining “disposable
income”); see also Lanning, 130 S. Ct. at 2469, 2471–74,
2478 (holding that courts must calculate “projected
disposable income,” which is not statutorily defined, using a
“forward-looking” approach (emphasis added)).

    It is undisputed that Debtors’ current monthly income is
above-median and that subsection 1325(b)(4)(B)’s exception
to the five-year applicable commitment period set forth in
§ 1325(b)(4)(A)(ii) does not apply. Debtors nonetheless
contend that their proposed three-year plan was permissible
because § 1325(b)(1)(B) does not set forth a minimum plan
duration for debtors who, like them, have no projected
disposable income.

    Courts have interpreted § 1325(b)(1)(B)’s condition for
plan confirmation in three distinct ways. See Baud v. Carroll,
634 F.3d 327, 336–38 (6th Cir. 2011) (describing split of
decisions and collecting cases), cert. denied, 132 S. Ct. 997
(2012). First, a minority of bankruptcy courts view the
“applicable commitment period” solely as a monetary
“multiplier”; under that “monetary” approach, the number of
months in the applicable commitment period is multiplied by
the debtor’s projected disposable monthly income to
determine the total payments that a debtor must make, but the
8                   FLORES V. DANIELSON

period has no temporal significance. Id. at 336–38 & n.7.
Second, other bankruptcy courts, as well as this court in
Kagenveama, have held that, although the statute does set
forth a temporal requirement, that temporal requirement does
not apply to debtors whose projected disposable income is
less than or equal to $0. Baud, 634 F.3d at 337. Third and
finally, a majority of courts have held that a plan cannot be
confirmed unless its length is at least as long as the applicable
commitment period, without regard to “whether the debtor
has positive, zero[,] or negative projected disposable
income.” Id. at 336–37. We therefore must consider two
issues: (1) whether, under § 1325(b)(1)(B), the applicable
commitment period acts as a temporal requirement that
defines a plan’s minimum duration; and (2) if it does, whether
that requirement applies to debtors who have no projected
disposable income.

    With respect to the first issue, we hold that the statute
defines a temporal, as distinct from a monetary, requirement
for confirmation under § 1325(b)(1)(B). Most importantly,
the statute defines the applicable commitment period as
having a duration: “3 years,” “not less than 5 years,” or “less
than 3 or 5 years,” depending on the debtor’s current monthly
income and the plan’s provisions for payments to unsecured
creditors. 11 U.S.C. § 1325(b)(4). Furthermore, the
requirement of § 1325(b)(1)(B) that the plan provide for
payment of the debtor’s disposable income “to be received in
the applicable commitment period” suggests an ongoing
series of payments for the future duration of that period. A
plan cannot provide for the payment of income to be received
                      FLORES V. DANIELSON                              9

during a defined period unless it remains in effect during that
period.5

    Three of our sister courts—the Sixth, Eighth, and
Eleventh Circuits—are among the courts that have rejected
the view that the applicable commitment period is merely a
monetary multiplier for determining the amount that the
debtor must pay to unsecured creditors. Baud, 634 F.3d at
344; Whaley v. Tennyson (In re Tennyson), 611 F.3d 873, 880
(11th Cir. 2010); Coop v. Frederickson (In re Frederickson),
545 F.3d 652, 660 (8th Cir. 2008). We join those courts and
hold that the applicable commitment period determines the
minimum duration that a plan must have to be confirmable
under § 1325(b)(1)(B). In doing so, we reaffirm one aspect
of the decision in Kagenveama, in which the panel reasoned
that, in general, the applicable commitment period imposes a
temporal requirement because the “plain meaning of the word
‘period’ indicates a period of time.” 541 F.3d at 876.

    With respect to the second issue, we must decide whether
a court may confirm a plan that is shorter than the applicable
commitment period defined by § 1325(b)(4) if the debtor has


  5
    Our interpretation of § 1325(b)(1)(B) does not render that provision
redundant with § 1322(d), which sets forth the maximum periods of time
for a Chapter 13 bankruptcy, because § 1325(b)(1)(B) concerns the plan’s
minimum duration. Although both the maximum and the minimum will
be five years for many debtors whose income, like that of the debtors in
this case, is above-median, 11 U.S.C. §§ 1322(d)(1), 1325(b)(4)(A)(ii), a
range of permissible plan durations remain possible if a proposed plan to
repay all allowed unsecured creditors’ claims in full warrants a shorter
applicable commitment period under § 1325(b)(4)(B). Furthermore,
§ 1325(b) is triggered only if the trustee or a creditor objects, whereas
§ 1322(d) applies in all cases, a distinction that suggests that Congress
intended the two sections to serve different functions.
10                    FLORES V. DANIELSON

no projected disposable income. In light of the statute’s text,
purpose, and legislative history, we now hold that the
temporal requirement of § 1325(b) applies regardless of the
debtor’s projected disposable income.

     In Kagenveama, we held that the § 1325(b)(1)(B)
temporal requirement contains an implicit exception because
the “‘applicable commitment period’ is exclusively linked to
§ 1325(b)(1)(B) and the ‘projected disposable income’
calculation.” 541 F.3d at 876. Noting that “[n]othing in the
Bankruptcy Code states that the ‘applicable commitment
period’ applies to all Chapter 13 plans,” the panel concluded
that “[w]hen there is no ‘projected disposable income,’ there
is no ‘applicable commitment period.’” Id. at 876, 877. The
Sixth and Eleventh Circuits have disagreed and have held that
§ 1325(b) contains no such exception for debtors with no
projected disposable income. See Baud, 634 F.3d at 351
(“[T]he temporal requirement of the applicable commitment
period applies to debtors facing a confirmation objection even
if they have zero or negative projected disposable income.”);
Tennyson, 611 F.3d at 880 (“[T]he ‘applicable commitment
period’ is a temporal term that prescribes the minimum [plan]
duration . . . . The only exception to this minimum period, if
unsecured claims are fully repaid, is provided in
§ 1325(b)(4)(B).”).6 We now agree with the other circuits’
interpretation.

   Our analysis begins with the statute’s text. Miranda v.
Anchondo, 684 F.3d 844, 849 (9th Cir.), cert. denied,


     6
    In Frederickson, the Eighth Circuit expressly declined to decide
whether such an exception to § 1325(b)’s temporal requirement exists
when a debtor’s projected disposable income is either zero or negative.
545 F.3d at 660 n.6.
                   FLORES V. DANIELSON                      11

133 S. Ct. 256 (2012). Although § 1325(b) is somewhat
ambiguous, see Baud, 634 F.3d at 351 (noting that “the
plain-language arguments” for and against an exception to
§ 1325(b)’s temporal requirement “are nearly in equipoise”),
that subsection is best read to impose its temporal
requirement regardless of the debtor’s projected disposable
income. Most significantly, the statute makes neither
§ 1325(b)(4)’s calculation of the applicable commitment
period nor § 1325(b)(1)(B)’s requirement that a plan provide
for payments over that period explicitly contingent on a
particular level of projected disposable income. Thus, even
though a debtor’s payments to unsecured creditors will, at
least initially, amount to $0 if the debtor has no projected
disposable income, the statute requires the debtor to commit
to the plan for the duration of the applicable commitment
period.

    Furthermore, “the words of a statute must be read in their
context and with a view to their place in the overall statutory
scheme.” Gale v. First Franklin Loan Servs., 701 F.3d 1240,
1244 (9th Cir. 2012) (internal quotation marks omitted). The
structure of Chapter 13 confirms that § 1325(b)(1)(B)
establishes a minimum plan duration even if the debtor has no
projected disposable income.         A debtor’s applicable
commitment period is not, as the panel reasoned in
Kagenveama, “exclusively linked to § 1325(b)(1)(B) and the
‘projected disposable income’ calculation.” 541 F.3d at 876.
Rather, the applicable commitment period is expressly
incorporated as a temporal limit for purposes of plan
modification under § 1329.

   Under § 1329(a), a bankruptcy court may modify a plan
at any time after plan confirmation, so long as the
modification occurs before the completion of payments under
12                 FLORES V. DANIELSON

the plan. But a modified plan “may not provide for payments
over a period that expires after the applicable commitment
period under section 1325(b)(1)(B) after the time that the first
payment under the original confirmed plan was due.”
11 U.S.C. § 1329(c) (emphasis added). Thus, the statute
defines the temporal window within which modified
payments under § 1329 may be made by reference to the
applicable commitment period. Indeed, the quoted text would
make no sense unless the applicable commitment period
describes a length of time that can expire or be altered. With
respect to plan modification, then, the applicable commitment
period serves as a measure of plan duration that is wholly
unrelated to the amount of the debtor’s disposable income.

    A minimum duration for Chapter 13 plans is crucial to an
important purpose of § 1329’s modification process: to
ensure that unsecured creditors have a mechanism for seeking
increased (that is, non-zero) payments if a debtor’s financial
circumstances improve unexpectedly. See Fridley v.
Forsythe (In re Fridley), 380 B.R. 538, 543 (B.A.P. 9th Cir.
2007) (“Subsequent increases in [a debtor’s] actual income
can be captured for creditors by way of a § 1329 plan
modification . . . .”). The bankruptcy court may modify a
plan to “increase . . . the amount of payments on claims of a
particular class.” 11 U.S.C. § 1329(a)(1). In other words,
even if a debtor has no projected disposable income at the
time of plan confirmation, and his or her statutorily required
payments under § 1325(b)(1)(B) are therefore $0, unsecured
creditors may request a later modification of the plan to
increase the debtor’s payments if the debtor acquires
disposable income during the pendency of the applicable
commitment period. Creditors’ opportunity to seek increased
payments that correspond to changed circumstances would be
undermined by an interpretation of § 1325(b)(1)(B) that
                       FLORES V. DANIELSON                             13

relieves debtors from a minimum plan duration merely
because they have no projected disposable income at the time
of plan confirmation.7

     Interpreting § 1325(b)(1)(B) to impose a minimum plan
duration is also consistent with the prevailing interpretation
in our circuit of §§ 1328(a) and 1329(a). Much as § 1329(a)
permits modification until “completion of payments under
[the] plan,” § 1328(a) entitles the debtor to discharge “after
completion by the debtor of all payments under the plan.” In
Fridley, the Ninth Circuit Bankruptcy Appellate Panel
(“BAP”) considered when a plan is “completed” for purposes
of § 1329(a) and § 1328(a). The debtors in that case had not
paid all allowed unsecured claims in full, but sought
discharge after prepaying the payments that they were
required to make under their confirmed plan. Fridley, 380
B.R. at 540. The BAP ruled that the debtors were not entitled
to discharge because “prepayment does not ‘complete’ [a]
plan for purposes of §§ 1328(a) or 1329.” Id. at 545. Rather,
it held, “[t]he ‘applicable commitment period’ in § 1325(b) is
a temporal requirement . . . [and] the statutory concept of
‘completion’ of payments includes the completion of the
requisite period of time.” Id. at 546. The BAP reached that
conclusion even though that case, like this one, involved
debtors who had no projected disposable income and for


   7
     This conclusion is bolstered by the sections of the Code that allow
creditors to monitor a debtor’s financial situation during the bankruptcy.
For instance, Chapter 13 debtors, upon request, must provide post-petition
reports of the amount and sources of their income, see 11 U.S.C.
§ 521(f)–(g), and the “obvious purpose of this self-reporting obligation is
to provide information needed by a [creditor] to decide whether to propose
hostile § 1329 plan modifications,” Fridley, 380 B.R. at 544. The purpose
of these monitoring provisions would be undermined if each plan did not
have a minimum duration.
14                 FLORES V. DANIELSON

whom § 1325(b)(1)(B) accordingly would permit monthly
payments of $0 to unsecured creditors. Id. at 540.

    Because the text of § 1325(b) is ambiguous, we also look
to legislative history in construing its temporal requirement.
See Wilson v. Comm’r, 705 F.3d 980, 987–88 (9th Cir. 2013)
(holding that we may consult legislative history as an aid to
the interpretation of ambiguous text). Congress amended
§ 1325(b), adding the statutory text concerning the
“applicable commitment period” that is at issue here, in the
Bankruptcy Abuse Prevention and Consumer Protection Act
of 2005 (“BAPCPA”), Pub. L. No. 109-8, § 318, 119 Stat. 23.
The legislative history of BAPCPA supports our
interpretation of § 1325(b)(1)(B) as requiring a minimum
plan duration:

       Chapter 13 Plans To Have a 5–Year
       Duration in Certain Cases. Paragraph (1) of
       section 318 of the Act amends Bankruptcy
       Code sections 1322(d) and 1325(b) to specify
       that a chapter 13 plan may not provide for
       payments over a period that is not less than
       five years if the current monthly income of
       the debtor and the debtor’s spouse combined
       exceeds certain monetary thresholds. If the
       current monthly income of the debtor and the
       debtor’s spouse fall below these thresholds,
       then the duration of the plan may not be
       longer than three years, unless the court, for
       cause, approves a longer period up to five
       years. The applicable commitment period
       may be less if the plan provides for payment
       in full of all allowed unsecured claims over a
       shorter period. Section 318(2), (3), and (4)
                   FLORES V. DANIELSON                       15

       make conforming amendments to sections
       1325(b) and 1329(c) of the Bankruptcy Code.

H.R. Rep. No. 109–31(I), § 318, at 79 (2005), reprinted in
2005 U.S.C.C.A.N. 88, 146 (boldface type added). Although
the quoted section of the House Report is confusingly
worded, its title suggests that above-median debtors are to be
held to a five-year minimum plan duration without regard to
their expenses or disposable income, unless they pay
unsecured claims in full over a shorter period.

    Finally, our interpretation of § 1325(b)(1)(B) is consistent
with the policies that underlie the Bankruptcy Code and the
BAPCPA amendments. “The principal purpose of the
Bankruptcy Code is to grant a ‘fresh start’ to the ‘honest but
unfortunate debtor.’” Marrama v. Citizens Bank, 549 U.S.
365, 367 (2007) (quoting Grogan v. Garner, 498 U.S. 279,
286, 287 (1991)). But that generality is not the end of the
story. We have recognized that bankruptcy also serves the
“often conflicting” policy of promoting creditors’ interest in
repayment. Dumont v. Ford Motor Credit Co. (In re
Dumont), 581 F.3d 1104, 1111 (9th Cir. 2009); see also
Ransom v. FIA Card Servs., N.A., 131 S. Ct. 716, 729 (2011)
(describing “BAPCPA’s core purpose [as] ensuring that
debtors devote their full disposable income to repaying
creditors”). The imposition of a minimum duration is
consistent with both of those policies: By ensuring the
availability of plan modification over the applicable
commitment period, even when the debtor cannot make any
payments at the outset, our reading permits Chapter 13 to
operate as a mechanism for repayment over time by wage
earners, in accordance with their actual ability to pay. See
generally 8 Collier on Bankruptcy ¶ 1300.02 (Alan N.
Resnick & Henry J. Sommer eds., 16th ed. 2012).
16                 FLORES V. DANIELSON

    In Lanning, the Supreme Court relied in part on similar
considerations in rejecting an interpretation of § 1325(b) that
would require courts to calculate projected disposable income
using a “mechanical approach” that depends only on a
debtor’s current monthly income during the six-month period
preceding the bankruptcy filing date. 130 S. Ct. at 2469–70.
The Court favored a “forward-looking” approach that takes
into account known or nearly certain information about
changes in a debtor’s earning power during the plan period.
Id. at 2475. The policy justification for looking to future
earnings is that a failure to do so “would deny creditors
payments that the debtor could easily make.” Id. at 2476. In
other words, the statute is meant to allow creditors to receive
increased payments from debtors whose earnings happen to
increase. Lanning involved pre-confirmation adjustments to
plan payments, “to account for known or virtually certain
changes” in a debtor’s income. Id. at 2475. But the same
logic persuades us that Congress intended § 1325(b)(1)(B) to
ensure a plan duration that gives meaning to § 1329’s
modification procedure as a mechanism for post-confirmation
adjustments for unforeseen increases in a debtor’s income.
That mechanism will achieve its purpose most effectively if
the Chapter 13 plan has a minimum duration within which
modification is possible. Accordingly, the policy that
underlies Lanning also supports our reading of
§ 1325(b)(1)(B).

                       III. Conclusion

    In summary, we hold that a bankruptcy court may confirm
a Chapter 13 plan under 11 U.S.C. § 1325(b)(1)(B) only if the
plan’s duration is at least as long as the applicable
commitment period provided by § 1325(b)(4). Accordingly,
we overrule Kagenveama’s holding regarding the meaning of
                  FLORES V. DANIELSON                   17

“applicable commitment period” and affirm the bankruptcy
court’s ruling.

   The mandate shall issue forthwith.

   AFFIRMED.



PREGERSON, Circuit Judge, dissenting, with whom
KOZINSKI, Chief Judge, joins:

    The majority overrules our holding in Maney v.
Kagenveama that the Chapter 13 “applicable commitment
period” does not mandate a five-year plan length for above
median debtors with no projected disposable income.
541 F.3d 868, 876 (9th Cir. 2008). The majority’s
interpretation of 11 U.S.C. § 1325(b)(1)(B) promotes goals
that are at odds with Congress’s purpose when it enacted
Chapter 13 to “provide the debtor with a fresh start.” H.R.
REP. NO. 95-595, at 117 (1977), reprinted in
1978 U.S.C.C.A.N. 5963, 6079. The majority also reads
language into Chapter 13 bankruptcy law that is not present
in the plain text of § 1325(b)(1)(B).

I. Bankruptcy’s Purpose is to Provide Debtors with a
   Fresh Start

    Congress enacted the Bankruptcy Reform Act of 1978,
Pub. L. No. 95-598, 92 Stat. 2549 to make “bankruptcy a
more effective remedy for the unfortunate consumer debtor.”
H.R. REP. NO. 95-595, at 4 (1977). At the time, Congress
lamented that “[e]xtensions on plans, new cases, and newly
incurred debts put some debtors under court supervised
18                 FLORES V. DANIELSON

repayment plans for seven to ten years.” Id. at 117. Congress
went on to say that such lengthy repayment plans were “the
closest thing there is to indentured servitude.” Id. Congress
stated that “bankruptcy relief should be effective, and should
provide the debtor with a fresh start.” Id. (emphasis added).
Chapter 13 bankruptcy was intended to be helpful to debtors
and creditors. Debtors are able to preserve existing assets if
they complete a repayment plan under the supervision of a
Chapter 13 trustee. SCOTT ET AL., 8 COLLIER ON
BANKRUPTCY 1300-12 (Lawrence P. King et al. eds., 15th ed.
rev. 2007). Creditor interests are promoted through
recoveries from future income that are not available in
Chapter 7 liquidation. Id.

    Congress updated the bankruptcy laws for the first time
since 1978 with the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, Pub. L. No. 109-8, 119
Stat. 23 (2005). At the law’s signing, President George W.
Bush reiterated many of the purposes expressed by Congress
in 1978:

       Our bankruptcy laws are an important part of
       the safety net of America. They give those
       who cannot pay their debts a fresh start. . . .
       Under the new law, Americans who have the
       ability to pay will be required to pay back at
       least a portion of their debts. Those who fall
       behind their state’s median income will not be
       required to pay back their debts. . . . The act
       of Congress I sign today will protect those
       who legitimately need help, stop those who
       try to commit fraud, and bring greater stability
       and fairness to our financial system.
                   FLORES V. DANIELSON                     19

Press Release, White House Press Office, President Signs
Bankruptcy Abuse Prevention, Consumer Protection Act
(Apr. 20, 2005), reprinted in 2005 U.S.C.C.A.N. S7, 2005
(emphasis added).

II. The Applicable Commitment Period does not
    Mandate a Five-Year Chapter 13 Plan for Debtors
    with no Projected Disposable Income

    Unlike the majority, I interpret § 1325 to mean that the
applicable commitment period in which debtors are required
to distribute projected disposable income to unsecured
creditors applies only to debtors with projected disposable
income.

    Chapter 13 bankruptcy, as enacted in the Bankruptcy
Reform Act of 1978, allows a debtor to use future income to
pay off debt, while allowing her to keep her assets. See H.R.
REP. NO. 95-595 at 118 (1977); see also 8 SCOTT ET AL.,
supra, at 1300–12. A Chapter 13 debtor is designated “above
median” when her annualized “current monthly income,”
11 U.S.C. § 101(10A), is greater than the yearly “median
family income” in her state. 11 U.S.C. § 1325(b)(2)–(3);
11 U.S.C. 101(10A). The Floreses are above median debtors.
When an above median Chapter 13 debtor’s monthly
expenses are greater than her monthly income as calculated
under 11 U.S.C. § 707(b)(2)(A)–(B), she is deemed to have
no projected disposable income. See 11 U.S.C. § 1325(b)(3).
Here, it is undisputed that the Floreses’ expenses are greater
than their income and that they have no projected disposable
income.

   A Chapter 13 debtor is solely responsible for filing a
proposed payment plan. 11 U.S.C. § 1321. Among the
20                 FLORES V. DANIELSON

requirements for Chapter 13 plans are: that the plan is
proposed and the petition is filed in good faith; that the
holders of secured claims approve of the plan; that the debtor
will be able to make all payments under and comply with the
plan; and that the total payments to be made under the plan
are not less than the amount that would be paid if the estate
of the debtor were liquidated under Chapter 7. 11 U.S.C.
§ 1325(a)(3)–(7). Above median debtors are instructed that
“the [Chapter 13] plan [they propose] may not provide for
payments over a period that is longer than five years.”
11 U.S.C. § 1322(d)(1).

    The Floreses proposed a three-year plan during which
they would make monthly payments of $122. The trustee
objected to the Floreses’ proposed plan on the ground that the
plan should have required payments for five years, rather than
three years. The bankruptcy judge increased the monthly
payments to $148 and the length of the plan to five years; the
monetary increase is not contested on appeal. It is undisputed
that the Floreses’ three-year Chapter 13 plan was proposed in
good faith, that the Floreses are able to comply with the plan,
and that the Floreses are paying more than they would be if
they liquidated their assets under Chapter 7. It is also
undisputed that the Floreses’ three-year Chapter 13
bankruptcy plan was less than five years pursuant to
§ 1322(d)(1).

    If a trustee or unsecured creditor objects to a debtor’s
Chapter 13 plan, the bankruptcy court may not approve the
plan unless “the plan provides that all of the debtor’s
projected disposable income to be received in the applicable
commitment period . . . will be applied to make payments to
unsecured creditors under the plan.”             11 U.S.C.
§ 1325(b)(1)(B). The applicable commitment period is three
                   FLORES V. DANIELSON                     21

years for debtors with below median income and five years
for debtors with above median income. 11 U.S.C.
§ 1325(b)(4)(A). Because the Floreses are above median
debtors, their corresponding applicable commitment period
is five years. The Floreses, however, have no projected
disposable income. Thus, the Floreses will contribute no
projected disposable income to unsecured creditors over their
five year applicable commitment period.

     Courts have approached the applicable commitment
period in several different ways. Some courts, such as the
majority here, endorse what is called the temporal approach,
where the applicable commitment period is treated as a time
requirement for Chapter 13 plan length. This approach has
been endorsed by the Sixth, Eighth, and Eleventh Circuits,
and district courts in the Fifth, Seventh, and Tenth Circuits.
See Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011); In re
Tennyson, 611 F.3d 873 (11th Cir. 2010); In re Frederickson,
545 F.3d 652 (8th Cir. 2008); In re Martin, 464 B.R. 798
(C.D.Ill. 2012); In re Wing, 45 B.R. 705 (D. Co. 2010); In re
Meadows, 410 B.R. 242 (N.D. Tx. 2009). Other courts have
endorsed the monetary approach, where debtors contribute a
set amount of money in a time period that may be shorter than
the applicable commitment period. This approach has been
endorsed by district courts in the Second and Third Circuits.
See In re Green, 378 B.R. 30 (N.D.N.Y. 2007); In re Vidal,
418 B.R. 135 (M.D. Pa. 2009). I continue to endorse the
hybrid approach we endorsed in Kagenveama and in the
original Flores opinion.         Under that approach, “the
‘applicable commitment period’ sets the minimum temporal
duration of a plan, but it is inapplicable to a plan submitted
. . . by a debtor with no ‘projected disposable income.’”
Danielson v. Flores, 692 F.3d 1021, 1027 (9th Cir. 2012).
22                 FLORES V. DANIELSON

    The Chapter 13 “applicable commitment period” does not
explicitly apply to debtors who qualify for Chapter 13
bankruptcy but have no projected disposable income. The
majority concludes, however, that the “applicable
commitment period” should determine the requisite length of
a Chapter 13 plan for all debtors, whether or not they have
projected disposable income. The majority disregards the
portion of § 1325(b)(1)(B) that ties the “applicable
commitment period” to the period of time when projected
disposable income is supposed to be distributed to unsecured
creditors. Under § 1325(b)(1)(B), the bankruptcy court may
not approve the plan unless “the plan provides that all of the
debtor’s projected disposable income to be received in the
applicable commitment period . . . will be applied to make
payments to unsecured creditors under the plan.” By doing
so, the majority interprets § 1325(b)(1)(B) to say that when
a trustee objects to a Chapter 13 plan, the bankruptcy court
may not approve the plan unless “the plan provides that all of
the debtor’s [Chapter 13 payments] to be received in the
applicable commitment period . . . will be applied to make
payments to unsecured creditors under the plan.”
§ 1325(b)(1)(B).

    The majority’s reading of § 1325(b)(1)(B) is at odds with
the provision’s plain language. A debtor’s payments under a
Chapter 13 bankruptcy plan are different than the disposable
income a debtor is projected to earn over a period of years.
After the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (BAPCPA), a debtor does not need to
have projected disposable income to qualify for, and make
payments under, a Chapter 13 bankruptcy plan. See Henry E.
Hildebrand II, Impact of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 of Chapter 13 Trustees,
79 AM. BANKR. L.J. 373, 389 (2005) (“The formula utilized
                   FLORES V. DANIELSON                     23

in the means test [to determine projected disposable income]
has no relation to the proposed plan and bears no relationship
to the amount of money that actually may be available from
a debtor for payments to unsecured creditors if a plan is
confirmed.”).

    Nor is there any indication from Congress that the
statutory difference between projected disposable income and
Chapter 13 plan payments was an unintended consequence or
oversight. See Susan Jensen, A Legislative History of the
Bankruptcy Abuse Prevention and Consumer Protection Act
of 2005, 79 AM. BANKR. L.J. 485, 567–68 (2005) (explaining
that, like the Bankruptcy Reform Act of 1978, the BAPCPA
of 2005 was adopted in the absence of economic depression
and panic, and is the culmination of nearly ten years of work,
involving hundreds of participants) (citation omitted).

    The majority concludes that the exception permitting a
shorter applicable commitment period under § 1325(b)(4)(B)
does not apply to the Floreses. The majority’s conclusion is
correct, but the majority’s reasoning is flawed. The majority
understands shortening the applicable commitment period to
be the same thing as shortening the length of the plan. The
exception reads:

       [The applicable commitment period] may be
       less than 3 or 5 years . . . only if the plan
       provides for payment in full of all allowed
       unsecured claims over a shorter period.

Id. The majority reasons that the Floreses may not propose
a plan with an applicable commitment period that is shorter
than five years because the Floreses have not proposed a plan
in which their unsecured claims will be paid in full. Under a
24                 FLORES V. DANIELSON

reading of the plain text of the statute, however, the exception
is inapplicable to the Floreses. Because the Floreses have no
projected disposable income to distribute to unsecured
creditors during the applicable commitment period, there is
no applicable commitment period that applies to them. Thus,
the § 1325(b)(4)(B) exception has no bearing on the length of
the plan the Floreses may propose.

    The majority’s concern that only a mandatory minimum
plan duration will “allow creditors to receive increased
payments from debtors whose earnings happen to increase”
is unfounded. Maj. 16. As above median debtors with no
projected disposable income, the Floreses are bound by
several statutory requirements that are helpful to creditors:
that their plan be proposed in good faith; that they are able to
comply with the plan and make all payments; and that they
pay more in Chapter 13 bankruptcy than they would in
Chapter 7 bankruptcy. Moreover, the Floreses’ plan may be
modified after the plan is confirmed, but before payments are
completed, by the debtor, trustee, or the holder of an allowed
unsecured claim. 11 U.S.C. § 1329(a). The plan may be
modified to:

       (1) increase or reduce the amount of payments
       on claims of a particular class provided for by
       the plan;

       (2) extend or reduce the time for such
       payments;

       (3) alter the amount of the distribution to a
       creditor whose claim is provided for by the
       plan to the extent necessary to take account of
                   FLORES V. DANIELSON                     25

       any payment of such claim other than under
       the plan; or

       (4) reduce amounts to be paid under the plan
       by the actual amount expended by the debtor
       to purchase health insurance.

Id. Section 1329(c) reiterates that even though a plan may be
extended after it is confirmed, a “court may not approve a
[Chapter 13 plan] period that expires after five years.”

    There is no statutory language to support the majority’s
finding that when Trustee Danielson objected to the Floreses’
proposed plan length of three years, the bankruptcy court was
statutorily prohibited from approving a plan shorter than five
years in length.

                      CONCLUSION

    Under the majority’s reading of § 1325(b)(1)(B), above
median debtors with no projected disposable income will be
forced to propose five year plans in contravention of
Congress’s purpose when it implemented Chapter 13 to make
“bankruptcy a more effective remedy for the unfortunate
consumer debtor.” H.R. REP. NO. 95-595, at 5966 (1977).
The majority misreads § 1325(b)(1)(B) to require that the
bankruptcy court approve a Chapter 13 plan only if all of a
debtor’s Chapter 13 payments—rather than projected
disposable income—will be received during the applicable
commitment period.

   After Trustee Danielson objected to the Floreses’
proposed plan, the bankruptcy court was not statutorily
26                FLORES V. DANIELSON

precluded from approving the Floreses’ three-year Chapter 13
repayment plan. Therefore, I respectfully dissent.
