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In re Crawford

United States Court of Appeals for the Seventh Circuit
324 F.3d 539 (2003)


Facts

At the time that Crawford (defendant) filed a Chapter 13 bankruptcy petition, he owed the following debt to nonpriority unsecured creditors (plaintiffs): $19,000 to the IRS, $18,000 to the county on account of Crawford’s delinquency in paying child support, and $500 to two trade creditors. By law, the county debt was nondischargeable. Crawford submitted a repayment plan that designated the creditors into two classes: contingent upon Crawford’s successful settlement of a dispute with the IRS, he would (1) pay the county debt first, in its entirety, over three years and then (2) pay three to six percent of his remaining debts. When Crawford failed to prevail in his IRS dispute, he amended his plan, proposing to pay two-thirds of the county debt and none of his other debts. If Crawford had submitted a plan that did not give preferential treatment to the county debt, all creditors would receive approximately 32 cents on the dollar. The bankruptcy court rejected Crawford’s plan on the grounds that it discriminated unfairly in its classification of creditors. The district court affirmed. Crawford appealed.

Rule of Law

Issue

Holding and Reasoning (Posner, J.)

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