                          PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


In Re: JAMES OWEN MURPHY, JR.,         
                          Debtor.


JAMES OWEN MURPHY, JR., d/b/a
Murphy’s Golf Shop,                          No. 05-1637
                Plaintiff-Appellant,
                 v.
GERALD M. O’DONNELL, Trustee,
             Defendant-Appellee.
                                       
In Re: STANLEY JOSEPH GORALSKI;        
DORIS ANN GORALSKI,
                          Debtors.


GERALD M. O’DONNELL, Chapter 13
Trustee,                                     No. 05-1844
               Trustee-Appellant,
                 v.
STANLEY JOSEPH GORALSKI; DORIS
ANN GORALSKI,
                Debtors-Appellees.
                                       
         Appeals from the United States District Court
       for the Eastern District of Virginia, at Alexandria.
            Claude M. Hilton, Senior District Judge.
     (CA-05-151-1-CMH; BK-03-15596-SSM; CA-05-353-1;
                      BK-03-12055-SSM)
2                           IN RE: MURPHY
                    Argued: November 28, 2006

                     Decided: January 18, 2007

        Before WILLIAMS and TRAXLER, Circuit Judges, and
                 HAMILTON, Senior Circuit Judge.



Affirmed by published opinion. Senior Judge Hamilton wrote the
opinion, in which Judge Williams and Judge Traxler joined.


                             COUNSEL

Bennett Allan Brown, Fairfax, Virginia, for Appellant in No. 05-
1637. Gerald M. O’Donnell, Alexandria, Virginia, for Appellee in
No. 05-1637/Appellant in No. 05-1844. Timothy John McGary, Fair-
fax, Virginia, for Appellees in No. 05-1844.


                              OPINION

HAMILTON, Senior Circuit Judge:

   The two cases before the court involve instances in which the
Chapter 13 trustee sought to modify a confirmed Chapter 13 plan to
increase the amount to be paid to the unsecured creditors.1 In the first
case, that of Stanley and Doris Goralski, the Chapter 13 trustee sought
to modify the confirmed Chapter 13 plan after the bankruptcy court
granted the Goralskis permission to refinance the mortgage on their
residence. In the refinancing, the Goralskis received some of the
equity in their residence in cash in exchange for a corresponding
amount of debt, and the Chapter 13 trustee sought a portion of this
money for the further benefit of the unsecured creditors. The Goral-
skis sought to refinance their mortgage primarily because Stanley
    1
   The cases were argued seriatim, but we have consolidated them for
decision.
                             IN RE: MURPHY                              3
Goralski’s earned income was cut approximately in half, making it
difficult for the Goralskis to make their plan payments and, at the
same time, pay their ordinary and necessary living expenses. In the
second case, that of James Owen Murphy, Jr., the Chapter 13 trustee
sought to modify the confirmed Chapter 13 plan after the bankruptcy
court granted Murphy permission to sell his condominium. The Chap-
ter 13 trustee sought a portion of the sale proceeds for the further ben-
efit of the unsecured creditors because, without a modification,
Murphy stood to pocket in excess of $80,000, as his condominium
had dramatically increased in value post-confirmation. The bank-
ruptcy court granted the motion to modify in Murphy’s case, but
denied it in the Goralskis’ case. See In re Murphy, 327 B.R. 760
(Bankr. E.D. Va. 2005). The district court affirmed the bankruptcy
court’s decisions. Murphy appeals the decision in his case, as does the
Chapter 13 trustee in the Goralskis’ case. For the reasons stated
below, we affirm.

                                    I

  The facts and procedural history in these two cases are not in dis-
pute and are set forth separately for the reader’s convenience.

                                    A

    Stanley and Doris Goralski filed a joint Chapter 13 petition in the
United States Bankruptcy Court for the Eastern District of Virginia on
April 29, 2003. The schedules filed with the petition reflected that
they owned real property located at 13617 Chevy Chase Lane, Chan-
tilly, Virginia, which they valued at $223,000. The schedules further
reflected that the property was subject to liens in the total amount of
$192,400. The Goralskis listed the sum of $89,438 as the amount of
their unsecured debt. The plan filed by the Goralskis with their peti-
tion was confirmed without objection on September 18, 2003. It
required the Goralskis to pay the Chapter 13 trustee $1,100 per month
for thirty-six months and estimated a twenty-eight percent dividend
to the unsecured creditors. The Goralskis’ confirmed plan provided
that, upon confirmation, "[a]ll property of the estate shall revest in the
debtor[s]."
4                            IN RE: MURPHY
   On October 21, 2004, approximately eighteen months after the
Chapter 13 petition was filed, the Goralskis filed a motion for permis-
sion to refinance the mortgage on their residence, which had appreci-
ated significantly in value. As part of the refinancing, the Goralskis
sought to obtain a portion of the equity in their residence in cash in
exchange for a corresponding amount of debt.2 The primary reason
given for seeking to refinance was that Stanley Goralski’s earned
income had been cut approximately in half, making it difficult for the
Goralskis to make their plan payments and, at the same time, pay their
ordinary and necessary living expenses.3 In the motion, the Goralskis
offered to pay all remaining payments required under the confirmed
plan.

   At the hearing on the motion, the Chapter 13 trustee took the posi-
tion that, to the extent the proceeds of the refinancing were sufficient
to pay all filed claims in full, the Goralskis should be required to pay
the filed claims at a rate of 100 percent. The bankruptcy court over-
ruled the Chapter 13 trustee’s objection and granted the motion to
refinance. The next day, the Chapter 13 trustee filed a motion to
reconsider, as well as a motion to modify the confirmed plan, asking
that the Goralskis’ confirmed plan be modified to require $64,365
from the refinancing be paid to the Chapter 13 trustee to allow for the
payment of all filed claims at a rate of 100 percent.

  After the bankruptcy court refused to grant the Chapter 13 trustee’s
motion for modification and motion for reconsideration, the Chapter
13 trustee appealed. Following the district court’s affirmance of the
bankruptcy court’s decision, the Chapter 13 trustee appealed to this
court.

                                    B

   On December 15, 2003, Murphy filed a voluntary Chapter 13 peti-
tion in the United States Bankruptcy Court for the Eastern District of
Virginia. On his schedules, he indicated that he owned a condomin-
    2
    The refinancing the Goralskis sought is commonly referred to as a
"cash-out" refinancing.
  3
    It also appears from the record that the interest rate on the new loan
sought by the Goralskis was lower than the rate on their existing loan.
                             IN RE: MURPHY                               5
ium located at 10125 Oakton Terrace Road, Oakton, Virginia, which
he valued at $155,000, subject to a lien of $121,000. Murphy’s sched-
ules also listed $52,374 of unsecured debt. Murphy’s plan, which was
confirmed on April 29, 2004, required him to pay the Chapter 13
trustee $700 per month for thirty-six months and projected a thirty-
seven percent dividend to the unsecured creditors. Like the Goralskis’
confirmed plan, Murphy’s confirmed plan provided that, upon confir-
mation, "[a]ll property of the estate shall revest in the debtor."

   On November 8, 2004, Murphy filed a motion for authority to sell
his condominium for $235,000, explaining that he had obtained a new
job in Pennsylvania and needed to move.4 In the motion, Murphy
indicated that he was willing to tender a sum to the Chapter 13 trustee
sufficient "to complete the payment of debtor’s chapter 13 payments."
The Chapter 13 trustee did not object to the sale, but stated at the
hearing that he needed approximately $30,000 from the sale to pay
the filed unsecured claims in full. Murphy objected to paying the
Chapter 13 trustee anything more than the approximately $12,000 still
owed under the confirmed plan. The bankruptcy court preliminarily
ruled that the sale proceeds constituted income that had to be applied
to the plan and directed that $30,000 be turned over to the Chapter
13 trustee. Because Murphy’s counsel stated that he intended to
appeal the ruling, and so that there could be a final order to allow the
contract to go to settlement, the order entered by the bankruptcy court
simply approved the sale and stated that disposition of the $30,000
would be the subject of a further order. The bankruptcy court’s ruling
allowed the Chapter 13 trustee to disburse up to $11,973 of the pro-
ceeds (the amount needed to complete the scheduled plan payments)
but required the Chapter 13 trustee to hold the balance of the $30,000
pending further order of the court.5 Although the ruling technically
favored the Chapter 13 trustee, the Chapter 13 trustee moved for
  4
    Murphy’s confirmed plan provided that he could not sell his condo-
minium without bankruptcy court approval.
  5
    The exact details concerning the sale are not in the record. It appears
that, after paying the required plan payments, Murphy stood to net over
$80,000. Of this amount, the Chapter 13 trustee sought approximately
$18,000 to pay the unsecured creditors at a rate of 100 percent. Thus,
with the unsecured creditors being paid at a rate of 100 percent, Murphy
nets over $60,000.
6                           IN RE: MURPHY
reconsideration and, contemporaneously, moved to modify the plan
payments to allow for payment of all pending unsecured claims at a
rate of 100 percent.

   In its decision, the bankruptcy court modified the confirmed plan
to provide for full payment of the pending unsecured claims. On
appeal to the district court, the district court affirmed the bankruptcy
court’s ruling. Murphy now appeals to this court.

                                   II

   In contrast to a Chapter 7 bankruptcy, which involves the liquida-
tion of a debtor’s assets, a Chapter 13 bankruptcy allows the debtor
to keep his assets. In a typical Chapter 13 bankruptcy, the debtor sub-
mits for bankruptcy court approval a plan to pay the debtor’s creditors
his disposable income over a period of three years. 11 U.S.C.
§§ 1321, 1322, and 1325. In exchange for the debtor’s commitment
to part with all of his disposable income, the debtor is given a dis-
charge of his remaining dischargeable debts if he successfully com-
plies with the terms of the plan. In re Crawford, 324 F.3d 539, 541
(7th Cir. 2003). Although secured claims in a Chapter 13 bankruptcy
must be paid in full, unsecured creditors need not be paid in full, pro-
vided, among other things, the plan is proposed in good faith and the
present value of what the unsecured creditors receive under the plan
is at least as much as they would receive in a Chapter 7 liquidation.
11 U.S.C. §§ 1325(a)(3), (a)(4).

   Generally, there are two types of Chapter 13 plans. "Percentage"
plans designate what percentage each unsecured creditor will receive
without specifying an exact amount the debtor must pay into the plan.
In re Golek, 308 B.R. 332, 335 (Bankr. N.D. Ill. 2004). In contrast,
"pot" plans set the exact amount the debtor must pay into the plan,
leaving in question the percentage each unsecured creditor will
receive until all claims are approved. Id. Both of the plans in this case
are pot plans.

   A confirmed Chapter 13 plan is "a new and binding contract, sanc-
tioned by the court, between the debtors and their pre-confirmation
creditor[s]." Matter of Penrod, 169 B.R. 910, 916 (Bankr. N.D. Ind.
1994); see also 11 U.S.C. § 1327(a) ("The provisions of a confirmed
                               IN RE: MURPHY                                7
plan bind the debtor and each creditor, whether or not the claim of
such creditor is provided for by the plan, and whether or not such
creditor has objected to, had accepted, or has rejected the plan."). Like
other contracts, a confirmed Chapter 13 plan is subject to modifica-
tion. In re Arnold, 869 F.2d 240, 241 (4th Cir. 1989).

   Under § 1329 of the Bankruptcy Code,6 a confirmed plan may be
modified at "any time after confirmation of the plan but before the
completion of payments" at the request of the debtor, the Chapter 13
trustee, or an allowed unsecured creditor in order to, among other
things, "increase or reduce the amount of payments on claims of a
particular class provided for by the plan; [or to] extend or reduce the
time for such payments." 11 U.S.C. §§ 1329(a), (a)(1), and (a)(2).7
Under § 1329(b)(1), any post-confirmation modification must comply
with §§ 1322(a) and (b),8 § 1323(c),9 and § 1325(a)10 of the Bank-
  6
   Section 1329 of the Bankruptcy Code provides in relevant part:
      (a) At any time after confirmation of the plan but before the
      completion of payments under such plan, the plan may be modi-
      fied, upon request of the debtor, the trustee, or the holder of an
      allowed unsecured claim, 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; [or]
          (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 any payment of such claim other than under
          the plan.
                                    ***
      (b)(1) Sections 1322(a), 1322(b), and 1323(c) of this title and the
      requirements of section 1325(a) of this title apply to any modifi-
      cation under subsection (a) of this section.
11 U.S.C. § 1329.
  7
    We note that § 1329(a) allows for slight plan modification in two
additional circumstances: (1) to alter the amount of the distribution to a
creditor who has received a payment outside of the confirmed plan; and
(2) to reduce the debtor’s plan payments due to a debtor’s need to pur-
chase health insurance. 11 U.S.C. §§ 1329(a)(3), (a)(4).
  8
    Section 1322(a) of the Bankruptcy Code sets forth the requirements
that must be met by a Chapter 13 plan in order to be approved by the
8                            IN RE: MURPHY
ruptcy Code. Id. § 1329(b)(1). Moreover, we review the bankruptcy
court’s decision whether to grant or deny a motion to modify a con-
firmed plan for an abuse of discretion. In re Arnold, 869 F.2d at 244.

   We have not set forth a thorough analysis on how a bankruptcy
court should analyze a motion for modification pursuant to
§§ 1329(a)(1) or (a)(2). In In re Arnold, after rejecting several argu-
ments of the debtor, we held that the bankruptcy court did not abuse
its discretion by increasing the debtor’s monthly payment from $800
to $1,500. Id. at 244-45. In reaching this decision, we held that the
doctrine of res judicata prevents modification of a confirmed plan
pursuant to §§ 1329(a)(1) or (a)(2) unless the party seeking modifica-
tion demonstrates that the debtor experienced a "substantial" and "un-
anticipated" post-confirmation change in his financial condition. Id.
at 243. This doctrine, which is applied in this circuit per In re Arnold,
ensures that confirmation orders will be accorded the necessary
degree of finality, preventing parties from seeking to modify plans
when minor and anticipated changes in the debtor’s financial condi-
tion take place. See In re Butler, 174 B.R. 44, 47 (Bankr. M.D. N.C.
1994) ("As a matter of sound public policy, as well as appropriate
judicial economy, there is no reason why either a creditor or a debtor
should be permitted to relitigate issues which were decided in the

bankruptcy court. Section 1322(b) sets forth all permissible provisions
which can be included in a Chapter 13 plan.
   9
     Section 1323(c) provides that any "holder of a secured claim that has
accepted or rejected the plan is deemed to have accepted or rejected, as
the case may be, the plan as modified, unless the modification provides
for a change in the rights of such holder from what such rights were
under the plan before modification, and such holder changes such hold-
er’s previous acceptance or rejection." 11 U.S.C. § 1323(c).
   10
      Section 1325(a) of the Bankruptcy Code provides, in the pertinent
part, that a bankruptcy court shall confirm a plan if: (1) it complies with
all applicable provisions of the Bankruptcy Code; (2) it has been pro-
posed in good faith and not by any means forbidden by law; (3) the value
of property to be distributed under the plan on account of all allowed
unsecured creditors is not less than what would be paid under a Chapter
7 liquidation; and (4) the debtor is able to comply with the terms of the
modified plan. 11 U.S.C. §§ 1325(a)(1), (a)(3), (a)(4), and (a)(6).
                            IN RE: MURPHY                              9
confirmation order or which were available at the time of confirma-
tion but not raised by the parties. Absent this salutary policy, there is
no readily available brake on the filing of motions under § 1329 by
creditors and debtors simply hoping to produce a more favorable plan
based on the same facts presented at the original confirmation hear-
ing."); but see Barbosa v. Soloman, 235 F.3d 31, 38-41 (1st Cir.
2000) (rejecting doctrine of res judicata as inconsistent with the lan-
guage of § 1329); Matter of Witkowski, 16 F.3d 739, 744-46 (7th Cir.
1994) (same).

   Although we did not define the term "substantial" in In re Arnold,
we held that an increase in the debtor’s salary from $80,000 per year
to $200,000 per year was a substantial change in the debtor’s financial
condition. 869 F.2d at 243. A change is unanticipated if the debtor’s
present financial condition could not have been reasonably anticipated
at the time the plan was confirmed. Id.

   Because the doctrine of res judicata did not prevent modification
of the debtor’s confirmed plan in In re Arnold, we proceeded to dis-
cuss and reject the one argument the debtor had concerning the
requirements of § 1329(b)(1)—that he did not have the ability to pay
$1,500 per month under the modified plan. Id. at 243-44.

   Simply stated, per In re Arnold, when a bankruptcy court is faced
with a motion for modification pursuant to §§ 1329(a)(1) or (a)(2), the
bankruptcy court must first determine if the debtor experienced a sub-
stantial and unanticipated change in his post-confirmation financial
condition. This inquiry will inform the bankruptcy court on the ques-
tion of whether the doctrine of res judicata prevents modification of
the confirmed plan. If the change in the debtor’s financial condition
was either insubstantial or anticipated, or both, the doctrine of res
judicata will prevent the modification of the confirmed plan. How-
ever, if the debtor experienced both a substantial and unanticipated
change in his post-confirmation financial condition, then the bank-
ruptcy court can proceed to inquire whether the proposed modifica-
tion is limited to the circumstances provided by § 1329(a). If the
proposed modification meets one of the circumstances listed in
§ 1329(a), then the bankruptcy court can turn to the question of
whether the proposed modification complies with § 1329(b)(1).
10                           IN RE: MURPHY
                                    A

   In the case of the Goralskis, we agree with the bankruptcy court
and the district court that, through the cash-out refinancing, the Goral-
skis did not experience a substantial change in their financial condi-
tion. The record reflects that, although the Goralskis’ residence
appreciated in value post-confirmation, Stanley Goralski’s earned
income had been reduced by approximately one-half. To meet their
obligations under the confirmed plan, the Goralskis refinanced their
existing mortgage, taking a sizeable amount of the equity (over
$64,000) in their residence to allow them to continue to meet their
financial obligations under the confirmed plan (through a lump sum
payment or continued periodic payments) and to pay their every day
living expenses.

   All the Goralskis did was to eliminate a portion of their equity in
the property for cash in exchange for a corresponding amount of debt.
Thus, even when one considers that the Goralskis’ residence appreci-
ated in value post-confirmation,11 at most, they simply received a
large loan in place of a small one. By any stretch, a loan, regardless
of the size, is not income. The apparent increase in their balance sheet
was offset by the amount of the loan, resulting in virtually no change
to their financial condition. To be sure, although the Goralskis
obtained a lower interest rate on their new loan, this fact alone did not
substantially improve their financial condition, especially when one
considers the primary reason for the refinancing—Stanley Goralski’s
reduced income. Under the doctrine of res judicata, there being no
substantial change to the Goralskis’ financial condition, the cash-out
refinancing cannot provide a basis for modifying the Goralskis’ con-
firmed plan pursuant to §§ 1329(a)(1) or (a)(2).

   We note that there is considerable disagreement in the courts con-
cerning whether a debtor’s proposal for an early payoff through the
refinancing of a mortgage amounts to a motion for modification of a
confirmed plan, thus, requiring an inquiry into the requirements of
§ 1329(b)(1) before the modification can be granted. See In re
  11
   At the time they filed their Chapter 13 petition, the Goralskis had
$30,600 in equity in their residence. At the time of the refinancing, they
had over $64,000 in such equity.
                            IN RE: MURPHY                            11
Brumm, 344 B.R. 795, 799-801 (Bankr. N.D. W. Va. 2006) (discuss-
ing case law). Some courts have held that a debtor’s proposal of an
early payoff through refinancing amounts to a motion for plan modifi-
cation. See, e.g., In re Keller, 329 B.R. 697, 699-700 (Bankr. E.D.
Cal. 2005); In re Drew, 325 B.R. 765, 772 (Bankr. N.D. Ill. 2005).
These courts primarily reason that an early payoff through refinanc-
ing: (1) reduces the number and the time for making payments under
§§ 1329(a)(1) and (a)(2); (2) preempts the right of the Chapter 13
trustee and the unsecured creditors to propose a modified plan during
the remaining term of the confirmed plan should the circumstances
warrant such a modification; and (3) amounts to a realization of the
value of appreciation which is akin to selling property at a substantial
gain. In re Keller, 329 B.R. at 699-700; In re Drew, 325 B.R. at 772.
In contrast to these courts, several courts have held that a debtor’s
proposal of an early payoff through refinancing does not amount to
a motion for plan modification. See, e.g., In re Miller, 325 B.R. 539,
540 (Bankr. W.D. Pa. 2005). These courts essentially reason that a
debtor’s proposal of an early payoff through refinancing does not
change the substance of the confirmed plan and actually increases the
economic worth of the plan to the creditors by paying them off early.
Id. at 542.

   If we were to write on a clean slate, we would find ourselves strug-
gling much like these other courts have struggled. However, we are
not writing on a clean slate. Under In re Arnold, a debtor must experi-
ence a substantial and unanticipated change in his post-confirmation
financial condition before his confirmed plan can be modified pursu-
ant to §§ 1329(a)(1) or (a)(2). A debtor’s proposal of an early payoff
through the refinancing of a mortgage simply does not alter the finan-
cial condition of the debtor and, therefore, cannot provide a basis for
the modification of a confirmed plan pursuant to §§ 1329(a)(1) or
(a)(2).

   We also observe that our decision clearly strikes the right balance
between debtors on the one hand and creditors on the other. Our deci-
sion encourages refinancing when the debtor is struggling "under less
advantageous loan terms, which, by implication, puts the future
stream of payments to creditors under the Chapter 13 plan at risk." In
re Brumm, 344 B.R. at 803. As noted by the court in In re Brumm,
lower payments on long term debt, which often is achieved through
12                          IN RE: MURPHY
lower interest rates on a refinancing, gives a debtor "greater short
term financial stability." Id. Moreover, our decision encourages refi-
nancing when the debtor’s income, such as in the case of Stanley Gor-
alski, goes down, thereby putting at risk the debtor’s ability to make
plan payments. The debtor’s early payoff coupled with his assumption
of long term debt works to the benefit of the unsecured creditors, as
the unsecured creditors receive their benefit of the bargain under the
confirmed plan and are no longer exposed to a further reduction in the
amount they will receive through a debtor’s motion to modify the
confirmed plan.

   In this case, the Goralskis unquestionably took the more noble
course of seeking to fulfill their obligations under the confirmed plan
when the reduction in Stanley Goralski’s income could have moti-
vated them to file their own motion to modify, seeking to pay less.
For taking the high road, the Goralskis should not be penalized.
Accordingly, we affirm the district court’s affirmance of the bank-
ruptcy court’s decision in the Goralskis’ case because the doctrine of
res judicata prevents modification of the Goralskis’ confirmed plan
pursuant to §§ 1329(a)(1) or (a)(2).

                                  B

   Unlike the Goralskis’ case, in Murphy’s case, we conclude that
Murphy did experience a substantial and unanticipated change in his
post-confirmation financial condition, and, thus, the doctrine of res
judicata does not prevent the modification of Murphy’s confirmed
plan pursuant to §§ 1329(a)(1) or (a)(2). To be sure, Murphy listed the
value of his condominium as of December 15, 2003, the date his
bankruptcy petition was filed, at $155,000, subject to a lien of
$121,000. In November 2004, he sold it for $235,000, a 51.6 percent
increase in only eleven months. Unquestionably, the money received
by Murphy on the sale of his condominium represents a "substantial"
improvement in Murphy’s financial condition. Unlike the Goralskis’
refinancing, Murphy, by selling his condominium, received a substan-
tial amount of readily available cash without any debt. Thus, his
financial condition substantially changed with the receipt of this
income, while the Goralskis’ condition did not improve in light of the
new debt they assumed.
                            IN RE: MURPHY                            13
   Turning to the question of whether this change in Murphy’s finan-
cial condition could have been reasonably anticipated at the time the
plan was confirmed, on the one hand, the Chapter 13 trustee should
have general knowledge of real estate market trends in his district. In
this case, the parties apparently concede that, in the two years preced-
ing plan confirmation, the increase in the Housing Price Index for the
Washington, D.C.-Alexandria-Arlington area ranged from ten to thir-
teen percent per year. Thus, Murphy’s position would be stronger if
his house appreciated, say, twenty-five percent in eleven months.
However, a 51.6 percent increase certainly is an unanticipated change
given the current market trends. Accordingly, because there has been
a substantial and unanticipated change in Murphy’s financial condi-
tion, we can turn to the question of whether the bankruptcy court
abused its discretion when it ordered Murphy to share part of his new-
found financial gains with his unsecured creditors.

   In assessing whether to grant or deny the Chapter 13 trustee’s
motion for modification, the bankruptcy court was required to deter-
mine whether the Chapter 13 trustee’s motion for modification sought
one of the circumstances for modification set forth in § 1329(a). The
Chapter 13 trustee’s motion meets this requirement, as he sought to,
among other things, increase the amount paid to the unsecured credi-
tors. See 11 U.S.C. § 1329(a)(1). Next, the bankruptcy court was
required to determine if the Chapter 13 trustee’s proposed modifica-
tion complied with § 1329(b)(1). As noted above, under § 1329(b)(1),
any post-confirmation modification of a confirmed plan must comply
with §§ 1322(a) and (b), § 1323(c), and § 1325(a) of the Bankruptcy
Code. Id. § 1329(b)(1).

   Sections 1322(a) and (b) set forth the mandatory and permissive
provisions of a Chapter 13 plan. The Chapter 13 trustee’s motion for
modification implicates § 1322(a)(1) in the sense that the modifica-
tion is seeking to ensure that a portion of Murphy’s new-found
income is paid to ensure the execution of the modified plan. Section
1323(c) provides that if a secured creditor has accepted a plan, it is
deemed to accept the modified plan unless the modified plan changes
the treatment of the secured creditor’s claim. The Chapter 13 trustee’s
motion does not implicate this section. Section 1325(a) contains the
standards for confirmation of a plan—including the "good faith" test
in § (a)(3), the "best interests of creditors" test in § (a)(4), and the
14                           IN RE: MURPHY
"ability to pay" test in § (a)(6). These sections are implicated in this
case.

   First, it is obvious that the Chapter 13 trustee’s proposal to modify
the plan to pay the unsecured creditors at a rate of 100 percent is fea-
sible insofar as Murphy unquestionably has the ability to pay the
unsecured creditors at a rate of 100 percent. Indeed, even with a 100
percent payout, Murphy still is netting in excess of $60,000 on the
sale of his condominium without any corresponding debt. Next, we
agree with the lower courts and the Chapter 13 trustee that a 100 per-
cent payment to the creditors meets the best interest of the creditors
under the circumstances of this case. Finally, the Chapter 13 trustee’s
proposal to modify was made in good faith. Our decision in In re
Arnold recognizes that a debtor who experiences a substantial and
unanticipated improvement in his financial condition after confirma-
tion should not be able to avoid paying more to his creditors. 869 F.2d
at 242. In contravention to In re Arnold, Murphy is seeking to do just
that. He is seeking to pocket over $80,000 by selling his residence
less than a year after his plan was confirmed, without paying a portion
of that money to his unsecured creditors, who are receiving under the
current confirmed plan only about thirty-seven cents on the dollar. In
exercising his fiduciary duty, the Chapter 13 trustee proposed the
modification in good faith to prevent Murphy from receiving such a
substantial windfall. Accordingly, the bankruptcy court did not abuse
its discretion when it modified Murphy’s confirmed plan to provide
for full payment of the pending unsecured claims.

                                    C

   Finally, we need to address one other argument raised by Murphy.
He argues that the bankruptcy court was not at liberty to modify his
confirmed plan because his plan, in accordance with § 1327(b), vested
all property of the estate in him at the time of confirmation. Accord-
ing to Murphy, once his plan was confirmed, the Chapter 13 trustee
forfeited any claim to the proceeds of the sale.

   Section 1327(b) of the Bankruptcy Code states that "the confirma-
tion of a plan vests all of the property of the estate in the debtor." Id.
§ 1327(b). Section 1327(c) states that such vesting "is free and clear
of any claim or interest of any creditor provided for by the plan." Id.
                            IN RE: MURPHY                             15
§ 1327(c). Section 1306(a) of the Bankruptcy Code, which defines the
concept "property of the estate" for purposes of Chapter 13, states:

    (a) Property of the estate includes, in addition to the prop-
    erty specified in section 541 of this title—

         (1) all property of the kind specified in such sec-
         tion that the debtor acquires after the commence-
         ment of the case but before the case is closed,
         dismissed, or converted to a case under chapter 7,
         11, or 12 of this title, whichever occurs first; and

         (2) earnings from services performed by the
         debtor after the commencement of the case but
         before the case is closed, dismissed, or converted
         to a case under chapter 7, 11, or 12 of this title,
         whichever occurs first.

Id. § 1306(a). By providing that the bankruptcy estate continues to be
replenished by post-petition property until the case is closed, dis-
missed, or converted under Chapter 7, 11, or 12 of the Bankruptcy
Code, § 1306(a) provides for the continued existence of the bank-
ruptcy estate until the earliest of any of the above-mentioned events
occur.

   Given the language of §§ 1306(a) and 1327(b), it is understandable
that the interplay of these two sections of the Bankruptcy Code has
troubled courts and commentators. See, e.g., Barbosa, 235 F.3d at 36-
37; David B. Wheeler, Whose Property Is It Anyway?, 18-Nov Am.
Bankr. Inst. J. 14 (1999). Indeed, on the one hand, § 1306(a) expands
the definition of property of the estate to all property obtained by the
debtor through the end of his case, but, on the other hand, § 1327(b)
states that all property of the estate vests in the debtor upon confirma-
tion of the plan.

   Five interpretations of the interplay between §§ 1306(a) and
1327(b) have developed. See Woodward v. Taco Bueno Rest., Inc.,
2006 WL 3542693 (N.D. Tex. December 8, 2006) (discussing four
interpretations and offering a fifth). To resolve Murphy’s argument,
16                          IN RE: MURPHY
we need not discuss these varying interpretations or select one as the
most preferable. Under In re Arnold, a debtor cannot use plan confir-
mation as a license to shield himself from the reach of his creditors
when he experiences a substantial and unanticipated change in his
income. 869 F.2d at 241-43. To be sure, through §§ 1329(a)(1) and
(a)(2), Congress gave a debtor an out when his financial condition
substantially deteriorates and, concomitantly, gave the Chapter 13
trustee and the unsecured creditors an avenue to recoup when the
debtor’s financial condition substantially improves, provided the
change in financial condition is unanticipated. In In re Arnold, we
permitted a modification of a confirmed plan where the debtor’s sal-
ary went from $80,000 to $200,000. Id. at 241. If a substantial, unan-
ticipated salary increase warrants a modification, we see no reason
why substantial, unanticipated income realized from the sale of prop-
erty would not also warrant a modification of a confirmed plan. Thus,
even though property vested in Murphy upon confirmation, this fact
did not prevent the Chapter 13 trustee from seeking to modify Mur-
phy’s plan.

                                   III

   For the reasons stated herein, the judgments of the district court are
affirmed.

                                                            AFFIRMED
