§ 121.3     Failure to Provide For
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 121.3, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Mentioned above,1 11 U.S.C. § 1327(c) imposes a statutory precondition to the free and clear effect of confirmation on liens: Property vesting in the debtor at confirmation under § 1327(b)2 is “free and clear of any claim or interest of any creditor provided for by the plan.”3 The phrase of art, “provided for,” appears in several other important places in Chapter 13.4 In one of those other contexts, it has been thoughtfully interpreted by the Supreme Court.5

[2]

As if in a race to see how much baggage “provided for” in § 1327(c) can carry, some courts have inflated the function of this phrase into a broad limitation on the effects of confirmation. Along the way, some of the courts have confused the statutory requirement that a plan provide for a claim to enable the free and clear effect in § 1327(c) with the broader notion that notice and due process considerations limit the effects of confirmation.6 The result is that the phrase “provided for” sometimes addresses whether the plan contains within its four corners the right words to satisfy the precondition in § 1327(c), and other times it is a broader test of the entire Chapter 13 process, including whether the notice given was adequate and whether the actions taken by others—for example, the filing of a proof of claim—are sufficient to support the free and clear effect of confirmation.

[3]

“Provided for” is a statutory element of the effect of confirmation described in § 1327(c). This phrase should have a defined meaning that is different from the notice and due process limits on the effects of confirmation found outside the statute.7 The Code itself is not ambiguous that “provided for” is a four-corners test of the plan and the Supreme Court has already signaled that the focus of “provided for” is the content of the plan.

[4]

“Provided for by the plan” is not an uncertain description. We know exactly what “the plan” is in a Chapter 13 case—it is the document that can only be filed by the debtor that contains the mandatory and permissive instructions contained in 11 U.S.C. § 1322.8 The phrase “provide for” is used in almost every sentence of § 1322 to describe an instruction that the debtor either must or is permitted to include within the document that is the plan.

[5]

In Rake v. Wade,9 the Supreme Court defined the identical phrase, provided for by the plan, in § 1325(a)(5) as follows:

The most natural reading of the phrase to “provid[e] for by the plan” is to “make a provision for” or “stipulate to” something in a plan. . . . [T]hat phrase is commonly understood to mean that a plan “makes a provision” for, “deals with,” or even “refers to” a claim.10
[6]

The Supreme Court’s definition of provided for in § 1325(a)(5) is consistent with the view that provided for in § 1327(c) tests whether the plan “deals with” or “refers to” a claim. Many reported decisions set much higher standards for the meaning of provided for in § 1327(c), including requirements altogether outside the plan itself.

[7]

For example, in Southtrust Bank of Alabama, N.A. v. Thomas (In re Thomas),11 the debtor scheduled Southtrust Bank as a secured creditor with a perfected lien in a mobile home valued at $8,000. The plan provided “to pay in full all allowed claims, from future income, through the Chapter 13 trustee.”12 With respect to secured claims, the plan stated, “The holder of each filed and allowed secured claim shall retain the lien securing such claim until the claim is satisfied under the plan or the debt is otherwise satisfied,” and the plan provided for “an interest factor of 11%” to be added “to secured claims.” There was no dispute that Southtrust received notice, including a copy of the portion of the plan stating the above provisions. Southtrust elected not to file a proof of claim and made no objection to confirmation, and the plan was confirmed. Southtrust did not appeal the order of confirmation.

[8]

A week after confirmation, Southtrust moved for relief from the stay to foreclose its security interest in the mobile home. After some procedural mistakes,13 the bankruptcy court ruled that Southtrust was bound by the confirmed plan and could not proceed against the debtor or the mobile home. Southtrust appealed. The district court reversed, “holding as a matter of law ‘that the lien of Southtrust upon the mobile home has not been invalidated by the debtors’ Chapter 13 confirmed plan, and that Southtrust is entitled to relief from the stay.’”14 The debtors appealed. The U.S. Court of Appeals for the Eleventh Circuit affirmed the district court.

[9]

The debtors argued to the Eleventh Circuit that confirmation after the claims bar date and after Southtrust failed to file a proof of claim vested the mobile home in the debtors free and clear of Southtrust’s lien pursuant to § 1327(c). The Eleventh Circuit rejected this argument by holding that Southtrust was not provided for by the plan:

SouthTrust’s title and lien are not, contrary to the debtors’ argument, extinguished upon confirmation of the plan. SouthTrust is not a “creditor provided for by the plan.” Section 1327(c). The debtors’ confirmed plan makes no provision for SouthTrust.15

In a footnote, the Eleventh Circuit explained:

The debtors will make zero payments to SouthTrust on the debt owed to SouthTrust, and the debtors have not and do not intend to turn over the collateral to SouthTrust. Several courts have held, although none above the bankruptcy level, that a chapter 13 plan that “contemplat[es] ‘zero payment’ to a creditor does not provide for that creditor as the term ‘provide’ is used in the Code.”16
[10]

The confirmed plan in Thomas was specific with respect to Southtrust’s claim—the plan stated that all allowed secured claims would be paid in full with 11 percent interest. The only reason that Southtrust did not receive full payment with interest through the plan was its own choice not to file a proof of claim. Interpreting “provided for” in § 1327(c) to require that the creditor file a timely proof of claim tortures the plain language of the statute. Section 1327(c) speaks of a creditor provided for by the plan. A plan that pays the present value of all allowed secured claims provides for the secured claim of any creditor that files an allowable claim. That Southtrust disabled itself from receiving payment by failing or refusing to file a timely claim is not a failure of the plan to provide for the creditor but is simply foolishness or negligence by Southtrust.

[11]

The observation that the Eleventh Circuit’s conception of provided for in Thomas was overruled by the Supreme Court in Rake runs squarely into a host of cases decided after Rake that echo Thomas and find that provided for in § 1327(c) tests all sorts of things beyond what the plan says. For example, in Cen-Pen Corp. v. Hanson,17 after several years of litigation with a mortgage holder, the debtors proposed a Chapter 13 plan that explicitly treated the mortgage holder as an unsecured creditor. The plan was served on Cen-Pen, and the notice required creditors to file proofs of claim and to make objections to the proposed plan by a specified deadline. The plan stated, “[T]o the extent that the holder of a secured claim does not file a proof of claim, the lien of such creditor shall be voided upon the entry of the Order of Discharge.”18 Cen-Pen did not object to confirmation. Cen-Pen did not file a proof of claim. The plan was confirmed, and all allowed claims were paid. The debtors received a discharge.

[12]

After discharge, Cen-Pen filed a complaint to determine the validity of its lien. In words reminiscent of Thomas, the U.S. Court of Appeals for the Fourth Circuit concluded that Cen-Pen’s lien was valid because the confirmed plan did not provide for Cen-Pen’s lien:

[Section] 1327(c) does not permit the result [the debtors] seek. As a general matter, a plan “provides for” a claim or interest when it acknowledges the claim or interest and makes explicit provision for its treatment. . . . If a Chapter 13 plan does not address a creditor’s lien (for instance, by expressly providing for payment of an allowed secured claim and cancellation of the lien), that lien passes through the bankruptcy process intact, absent the initiation of an adversary proceeding. . . . Several courts have held that a plan “provides for” the lien held by a secured creditor only when it provides for payment to the creditor in an amount equal to its security. . . . Because listing Cen-Pen as an unsecured creditor would have entitled it only to approximately 25 percent of its claim, the plan did not “provide for” Cen-Pen’s claim and its liens survived the Chapter 13 confirmation.19
[13]

Applying the Supreme Court’s definition, the plan in Hanson clearly did provide for the lien of Cen-Pen—the plan explicitly treated Cen-Pen as the holder of an unsecured claim. Incongruously, the Fourth Circuit found that treating Cen-Pen as an unsecured creditor did not “provide for” the lien held by Cen-Pen because the plan did not require payment to Cen-Pen “in an amount equal to its security.”20 This reading of provided for makes § 1327(c) redundant of the test for confirmation in § 1325(a)(5). It limits the vesting effect of confirmation under § 1327(c) by imposing a condition that the plan does not provide for a lienholder if the treatment in the plan might have been defeated had the lienholder objected to confirmation. This reading of § 1327(c) drains of meaning the introductory phrase “except as otherwise provided in the plan or the order confirming the plan.”21

[14]

The lienholders in Thomas and Hanson shared two characteristics: both failed to timely file proofs of claim, and both asserted lien rights different from the proposed treatment through the plan. In both cases, the courts of appeals held that the liens were not provided for by the plan and thus were not affected by confirmation under § 1327(c). Ordinarily, a disagreement between the debtor and a creditor about the proposed treatment of liens by the plan would be decided by the bankruptcy court at a contested confirmation hearing commenced by the creditor’s objection to the plan. If creditors can defeat the vesting effect of § 1327(c) without objecting to confirmation by declining to file proofs of claim, the whole fabric of Chapter 13 practice is threatened with a return to the pre-Code world that Congress rejected in 1978.

[15]

The former Bankruptcy Act did not empower Chapter XIII debtors to affect the rights of secured claim holders that declined to participate in plans.22 Under former law, the holder of a lien had the option to decline participation and simply foreclose its lien before or after confirmation. By definition, “claims” in a Chapter XIII case excluded debts secured by real property.23 Confirmation of a Chapter XIII plan that purported to affect secured creditors was not possible without the consent of every secured creditor “dealt with by the plan.”24 Thus, secured creditors held a complete veto power over confirmation of any plan that dealt with the rights of a lienholder.

[16]

These shortcomings were identified by the Commission appointed by Congress in 1970 to study the former Bankruptcy Act and to recommend changes.25 The Commission concluded that the inability of Chapter XIII debtors to deal with claims secured by real property and the confirmation veto held by each secured creditor dealt with by the plan were debilitating features of Chapter XIII that needed to be corrected.26 The Commission made the following recommendations with respect to the treatment of secured claims by wage earners with regular income:

If a secured creditor is protected to the extent of the value of his collateral, there is no reason why he should be able to prevent the confirmation and consummation of a plan proposed by a debtor for the payment of his debts out of future income. Moreover, . . . there is no reason for continuing the exclusion of a debt secured by real property used as a residence from the relief available to a debtor who proposes to pay his debts out of future income. Accordingly, the Commission recommends that the new act authorize . . . provisions for the curing of defaults within a reasonable time and the maintenance of payments while the case is pending on claims secured by a lien on the debtor’s residence and claims secured by personal property on which the last payment is due after completion by the debtor of all payments under the plan. With respect to short-term debts secured by personal property, the Commission recommends that the plan be permitted to include provisions dealing with such claims. . . . The proposal does not contemplate that the creditor so secured should be entitled to insist that the plan strictly preserve all of the terms of his original contract if the value of his claim against the property of the debtor is preserved. Insofar as there is a deficiency of the collateral to cover the claim of the secured creditor, he may be and should be treated as a member of the class of unsecured creditors.27
[17]

Five years later, the Commission’s recommendations were implemented in the Bankruptcy Reform Act of 1978. All secured claims, without regard to the nature of collateral, can be provided for and are bound by a Chapter 13 plan. The treatment of long-term secured debts described by the Commission is codified in § 1322(b)(5).28 Section 1325(a)(5) fully protects “the extent of the value” of every secured claim holder’s collateral at confirmation in a Chapter 13 case.29 Absent consent,30 or the surrender of all of the creditor’s collateral,31 an allowed secured claim must be paid in full at its present value32 to confirm a Chapter 13 plan. The option of a secured claim holder to not participate in the Chapter XIII plan was purposefully and completely eliminated by the Bankruptcy Reform Act of 1978. The Code requires that a secured claim holder respond in some concrete way to a Chapter 13 debtor’s proposal that affects its lien, else the secured claim holder will be bound by the plan upon confirmation. There was no provision in former Chapter XIII33 like the “vesting” of property in the debtor “free and clear of any claim or interest of any creditor provided for by the plan.”34 If a secured claim holder can retain its lien and its contract right to foreclose by simply declining to file a proof of claim and refusing to participate in the case, then Chapter 13 reverts to practice under the former Act, and secured claim holders once again have a veto of their treatment under plans.

[18]

The Code provisions for the treatment of secured claims in Chapter 13 cases were precisely designed to prevent this outcome. The sections of the Code that empower Chapter 13 debtors to modify the rights of secured claim holders35 and to force confirmation of a plan over the objection of a secured claim holder36 are not dependent upon consent or participation of secured claim holders—these powers are exercised through provisions of plans that can only be proposed by the debtor.37 The “binding,” “vesting,” and “free and clear” effects of confirmation under § 1327(a), (b) and (c) are not dependent on whether a secured claim holder has filed a proof of claim, has an allowed claim or has otherwise participated in the Chapter 13 case, for example, by contesting confirmation. Section 1327(a), (b) and (c) are the teeth that make the whole system work—the secured claim holder that fails to contest its treatment under the plan is bound by confirmation, and its lien rights are exactly what the plan provides.

[19]

Saying doesn’t make it so. Section 1327(c) directly impacts the lien rights that once flowed unaffected through Chapter XIII cases. Some courts are not yet (25 years?) comfortable with the notion that providing for a secured claim in the plan shifts the burden to the creditor to object to confirmation if it asserts a lien right greater than or different from that described in the plan. In addition to Thomas and Hanson, there are many reported decisions creatively interpreting “provided for” in § 1327(c) to limit the effects of confirmation on secured claims and lienholders.38

[20]

Some of these cases speak almost interchangeably that a creditor was not provided for by the plan because notice of its treatment under the plan was not adequate.39 Some are plainly cases in which lack of precision in the words used in the plan disabled creditors to divine the treatment intended by the debtor.40 Other decisions burden “provided for” with content far beyond measuring the clarity of the words used in the plan.41

[21]

Some of the reported decisions seem to hold that one element of providing for a creditor for purposes of § 1327(c) is that the creditor must file a proof of claim or, at least, that a proof of claim is filed on behalf of the creditor.42 The history and resulting structure of the Code amply demonstrate that Congress did not intend that creditor action such as the filing of a proof of claim is required to trigger the effects of confirmation under § 1327(c). The filing of a proof of claim by or for a secured claim holder is the predicate to allowance of a claim under §§ 501 and 502 and to participation in distributions under the plan;43 the filing of claims has nothing whatsoever to do with the effects of confirmation under § 1327. As clearly stated in § 1327(a),44 the confirmed plan binds all claim holders without regard to whether they file proofs of claim.

[22]

Requiring debtors to file claims for creditors encourages intricate game playing.45 For example, to ensure that a secured claim holder is provided for by the plan, are debtors best advised to file untimely proofs of claim on behalf of any secured claim holder that failed to file a timely proof of its own? In bankruptcy cases filed after October 22, 1994, tardy claims are disallowed under § 502(b).46 If a secured claim is disallowed for a reason other than the failure of any entity to file a proof of claim, § 506(d) voids the lien securing the claim.47 This is a strange outcome—the debtor files an untimely proof of claim on behalf of a secured claim holder, objects to that claim, then uses the disallowance of the debtor’s proof of claim as the basis for voiding the lien. But this is certainly no more absurd than reading into § 1327(a), (b) and (c) that the effects of confirmation are dependent upon a creditor’s decision whether to file a proof of claim. A better reasoned view, one that makes sense of Chapter 13 and its related sections, is that confirmation has the binding, vesting and free and clear effects described in § 1327 without regard to whether a secured claim holder elects to also receive distributions under the plan by filing a timely proof of claim.

[23]

If providing for a secured claim at confirmation depends on participation in the claims allowance process, then the uncertainty of determining the effects of confirmation is compounded by the uncertainty whether secured claim holders must file proofs of claim and by what deadline.48 How does a Chapter 13 debtor utilize the power to manage secured claims in § 1322(b)(2) if secured claim holders can disable the effects of confirmation by refusing to file a proof of claim? If Congress intended to release secured claims from the free and clear effect in § 1327(c) when the claim holder chooses not to file a proof of claim, it is indeed curious that this substantial exception to both the claims allowance process and the confirmation process does not appear somewhere in §  501, 502, 506, 1322, 1325 or 1327.

[24]

If confirmation does not provide for a lienholder that fails or refuses to file a proof of claim, then what are the lien rights of a secured claim holder after confirmation? Is the claim holder entitled to postconfirmation relief from the stay notwithstanding that the plan would pay the claim in full but for the creditor’s neglect or choice not to receive distributions? What can counsel do to protect the debtor from extortion by secured claim holders in a jurisdiction that views “provided for” as a limit on § 1327(c) in all cases in which the lienholder does not file a proof of claim?

[25]

An important subset of these cases involves plans described as “silent” with respect to the lien of a putative secured claim holder. Most of the time these courts mean that the plan proposes to pay the creditor the same as general unsecured claim holders.49 An honest application of Rake would say that the plan provides for a secured claim when the plan treats the creditor as the holder of an unsecured claim. Courts holding otherwise are reading into “provided for by the plan” that the plan must specify a particular treatment of the lien. Specifying treatment the same as other unsecured claim holders provides for the lien when the debtor believes that the lienholder is not a secured claim holder.

[26]

Perhaps the clearest illustration of this principle is the opinion of the U.S. Court of Appeals for the Seventh Circuit in In re Penrod.50 Penrod is a Chapter 11 case that acknowledges the analogous provisions of §§ 1141(c) and 1327(c). In Penrod, the plan provided for payment in full with interest of a creditor with a lien on hogs. However, the plan was silent with respect to retention of the lien.51 The lienholder filed a proof of claim but did not object to confirmation. The debtor did not object to the claim or question the validity of the lien. After confirmation, the hogs were sold and the lienholder brought suit to enforce its lien in the proceeds from the sale. Because the plan called for payment of the creditor, and because the plan was silent with respect to retention of the creditor’s lien, the Seventh Circuit concluded that the lien was extinguished when the hogs vested “free and clear of all claims and interests of creditors” at confirmation of the plan:

[L]ike most generalizations about law, the principle that liens pass through bankruptcy unaffected cannot be taken literally. . . . We have concluded that the default rule for secured creditors who file claims for which provision is made in the plan of reorganization is extinction and is found in the Code itself. . . . [S]ection 1141(c) must cover liens, . . . and must mean, therefore, that unless the plan of reorganization, or the order confirming the plan, says that a lien is preserved, it is extinguished by the confirmation. . . . It could be argued that the plan in this case dealt with the secured creditor’s claim, but not with its lien. But this interpretation would be inconsistent with the rest of section 1141(c)—that the property dealt with by the plan is, after confirmation of the plan, to be “free and clear of all claims and interests of creditors” (and others). . . . [L]iens pass through bankruptcy unaffected. They do—unless they are brought into the bankruptcy proceeding and dealt with there.52
[27]

With respect to the effect of confirmation on liens, the language of § 1327(c) is analogous to the language of § 1141(c) discussed in Penrod. Of course, silence with respect to lien retention or any other statutory right of a secured claim holder would be an effective objection to confirmation. But if the default rule is that silence extinguishes liens, then there is no logic to the view that providing for a lienholder for purposes of § 1327(c) requires specifying a treatment that would be confirmable upon timely objection. Section 1327 is constructed exactly the opposite way around: the operative provisions of § 1327(b) and (c) begin with the phrase “except as otherwise provided in the plan or in the order confirming the plan”;53 if the plan does not preserve a lien or if the plan provides for less of a lien than the creditor believes it has, § 1327 puts the burden on the creditor to object to confirmation else the collateral vests in the debtor free and clear of any inconsistent claim by the creditor.

[28]

The contrary rule in some of the cases cited above leads to a complete nonsense. A plan that limits a lien to a stated value of collateral is not distinguishable from a plan that treats a lien as an unsecured claim when there is no value in the collateral to secure the claim. Courts holding that a plan that treats a lienholder as an unsecured creditor does not provide for the lien have to be saying that the “free and clear” effect in § 1327(c) is only available to plans that are consistent with the creditor’s view of the extent of its lien and the value of its collateral. Under this construction of § 1327(c), a plan that limits a car lender’s secured claim to $5,000 when the lender values its collateral $7,000 would not provide for the $2,000 difference, and the car would remain encumbered by a $7,000 lien even if the creditor did not object to confirmation. This view reads cram down out of the Code: the only way a debtor can realized the “free and clear” effect in § 1327(c) is to “provide for” whatever the lienholder wants.

[29]

“Silence” in the plan with respect to a lien or the status of a claim (priority, for example) is sometimes characterized as a failure of the plan to “provide for” the claim for purposes of § 1327(c). Other times, the same facts produce different analysis: when the plan does not specifically identify a creditor that asserts a lien or special status, the plan fails to have the effects described in § 1327 because of insufficient notice. Many cases finding that lack of notice limits the effects of confirmation read the same as cases holding that a silent plan fails to provide for the debt.

[30]

For example, in In re Fiore,54 the debtor listed as a general unsecured debt attorney’s fees for legal services related to a prepetition domestic support decree. The confirmed plan identified other priority debts and provided full payment for those other debts. The attorney’s fee claimant filed a preconfirmation proof of claim asserting priority under § 507(a)(7).

[31]

The bankruptcy court acknowledged that the debtor intended to treat the attorney’s fee debt as a general unsecured claim. The court found the attorney’s fee claim holder was bound by the confirmed plan to receive the same distribution as other general unsecured creditors (nothing). But the court held that the attorney’s fee claim was not discharged because it was not provided for by the plan:

[A]lthough the Claimant is bound by the terms of the confirmed plan, his allowed priority claim is not provided for by the plan, and unless otherwise determined, would not be subject to discharge here. . . . [T]he Claimant’s priority claim is not provided for in the confirmed plan, Section 1327(a) does not cancel or eliminate his right to payment. . . . [T]he claim [is] allowed in the amount filed as a priority claim . . . . [T]he priority proof of claim . . . will not receive a distribution from the Chapter 13 Trustee because the claim is not provided for in the confirmed plan.55
[32]

Similarly, in Shook v. CBIC (In re Shook),56 the debtors listed CBIC as an unsecured nonpriority creditor. CBIC filed a timely claim asserting a judgment lien. CBIC did not object to confirmation. The debtors objected to CBIC’s secured claim four and one-half years after confirmation. In language bouncing between “lack of notice” and “failure to provide for,” the Bankruptcy Appellate Panel for the Ninth Circuit held that silence with respect to CBIC’s lien did not provide for the lien and confirmation did not avoid the lien:

The phrase “provided for in the plan,” means that a plan “‘makes a provision’ for, ‘deals with,’ or even ‘refers to’ a claim.” . . . [A] plan can effectively determine value and/or avoid a lien only if the creditor receives clear notice that the plan will do so. . . . Debtors’ plan in this case did not “provide for” CBIC’s secured claim by any of the required methods. Debtors listed the CBIC debt as unsecured in their bankruptcy schedules, but did not refer to it in the plan. . . . Nothing in the plan alerted CBIC that Debtors intended simultaneously to avoid its lien and pay it nothing. . . . Simply by assuming that the CBIC claim would be classified with the other unsecured claims, Debtors in the case at bar did not “provide for” CBIC’s allowed secured claim and lien, and thus, the plan could not bind CBIC to an unsecured status.57
[33]

Shook and Fiore illustrate the fine line between lack of notice that interrupts the effects described in § 1327 and silence in a plan that is characterized as a failure to provide for the creditor. Perhaps Shook and Fiore make a simple point: if a Chapter 13 debtor wants to be sure the plan will have the effects of confirmation in § 1327, the plan should identify the creditor by name and state exactly the treatment intended. Put another way, Shook and Fiore demonstrate that many courts will not buy the Penrod rule that not providing for a lien in the confirmed plan has exactly the effect described in § 1327—the lien is lost because not preserved by the confirmed plan.

[34]

The problem remains that “provided for” in § 1327(c) is interpreted by too many courts as a limit on the effect of confirmation for no other reason than that the plan adversely affects the rights of a lienholder. In some circuits, it may be that there are no magic words that debtors can put in plans that will always provide for secured claim holders—other things have to be done, for example, filing proofs of claim or bringing adversary proceedings. Debtors can minimize the probability of a court’s finding that the plan fails to provide for a secured claim holder for purposes of § 1327(c) by doing the following:

 

  
Name each lienholder individually somewhere in the plan.
 

 

 

 

  
State the value of the collateral held by each secured claim holder in terms that unmistakably threaten fact-finding at confirmation.
 

 

 

 

  
State a specific treatment for each lienholder in the plan in terms of a monthly payment with interest to satisfy § 1325(a)(5).
 

 

 

 

  
State that only allowed secured claim holders retain liens after confirmation—any lienholder that fails to timely file a proof of claim or that otherwise fails to have an allowable claim forfeits its lien.
 

 

 

 

  
State that the lien of each allowed secured claim holder is retained only to the extent of the value of the collateral stated in the plan.
 

 

 

 

  
State that each lien is extinguished upon payment of the allowed secured claim on the terms stated in the plan.
 

 

 


 

1  See § 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

2  See § 230.1 [ 11 U.S.C. § 1327(b): Vesting Effect on Property of Estate ] § 120.3  11 U.S.C. § 1327(b): Vesting Effect on Property of Estate.

 

3  11 U.S.C. § 1327(c) (emphasis added).

 

4  See, e.g., 11 U.S.C. § 1325(a)(5) (“[w]ith respect to each allowed secured claim provided for by the plan”) (emphasis added); 11 U.S.C. § 1328(a) (“The court shall grant the debtor a discharge of all debts provided for by the plan.”) (emphasis added).

 

5  See Rake v. Wade, 508 U.S. 464, 113 S. Ct. 2187, 2192–93, 124 L. Ed. 2d 424 (1993) (interpreting “provided for by the plan” in § 1325(a)(5)). See below in this section and see §§ 231.1 [ 11 U.S.C. § 1327(c): Free and Clear Effect on Liens ] § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens and 349.1 [ Claims Not Provided for by the Plan or Disallowed under § 502 ] § 158.5  Claims Not Provided for by the Plan or Disallowed under § 502.

 

6  See § 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation.

 

7  See §§ 232.1 [ Overview ] § 121.1  Overview and 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation.

 

8  See § 36.24  Plan, § 51.2  Debtor Must File a Plan and discussion beginning at § 72.1  Overview: Designing Plans That Work

 

9  508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993).

 

10  508 U.S. at 473–74.

 

11  883 F.2d 991 (11th Cir. 1989).

 

12  883 F.2d at 991.

 

13  Not the least of which was that the debtors failed to obtain a timely order from the bankruptcy court that the stay continue in effect, thus the stay terminated automatically under § 362(e).

 

14  883 F.2d at 992 (quoting Southtrust Bank of Ala. v. Thomas (In re Thomas), 91 B.R. 117 (N.D. Ala. 1998)).

 

15  883 F.2d at 998.

 

16  883 F.2d at 998 n.13.

 

17  58 F.3d 89 (4th Cir. 1995). See § 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation for further discussion of Hanson.

 

18  58 F.3d at 91.

 

19  58 F.3d at 94. Accord General Elec. Capital Auto Lease v. Eron (In re Eron), No. 00-2343, 2001 WL 985113, at *1–*2 (4th Cir. Aug. 24, 2001) (unpublished) (Citing Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995), and Deutchman v. IRS (In re Deutchman), 192 F.3d 457 (4th Cir. 1999), confirmed plan did not provide for car lease when plan treated lease as a security interest. Confirmed plan provided “payments of $282 or more per month to GE Capital until the net balance of claim plus 8.25% interest has been paid in full.” GE Capital did not object and filed proofs of claim for the prepetition lease arrearages and remaining monthly payments under agreement, but not including the residual value of the pickup truck. Bankruptcy court denied GE Capital’s motion for relief from the stay, advising that GE amend its claim to recover the purchase option amount with interest through the plan. “[W]here the debtor has not taken affirmative action to avoid a creditor’s lien or to change an interest in property, such interests pass through bankruptcy unaffected unless the plan ‘provides for’ the interest. . . . In this case, the Erons contend that they provided for GE Capital’s claim by listing GE Capital in the plan and agreeing to pay $282 per month plus interest until GE Capital’s claim was paid in full. However, the Erons did not characterize GE Capital’s interest in the truck as a lease, did not provide notice to GE Capital that they intended to exercise their option to purchase the truck, and did not state in the plan the value of GE Capital’s claim. We conclude that the bankruptcy court erred in determining that the Erons’ plan provided for GE Capital’s claim. Contrary to the bankruptcy court’s findings, the plan did not state the total amount that was to be paid to GE Capital under the plan.”); Deutchman v. IRS (In re Deutchman), 192 F.3d 457, 460–61 (4th Cir. 1999) (Ambiguous Chapter 13 plan that “camouflaged” the treatment of IRS as a priority claim rather than a secured claim does not release IRS’s liens upon completion of payments. “Deutchman attempted to ‘provide for’ the liens and obtain a favorable result by merely camouflaging his treatment of the IRS’s liens in his plan. . . . This court, in Cen-Pen, held that, ‘[a]s a general matter, a plan “provides for” a claim or interest . . . when it acknowledges the claim or interest and makes explicit provision for its treatment.’ . . . We also held that ‘“[e]ven where confirmed without objection, a plan will not eliminate a lien simply by failing or refusing to acknowledge it or by calling the creditor unsecured.”’ . . . We . . . hold that, in order to ‘provide for’ a creditor for purposes of § 1327(c), the plan must, at a minimum, clearly and accurately characterize the creditor’s claim throughout the plan. Accordingly, Deutchman’s plan did not ‘provide for’ the allowed secured claim of the IRS because the plan did not consistently identify any IRS claim as a secured claim.”).

 

20  58 F.3d at 94.

 

21  11 U.S.C. § 1327(c).

 

22  See §§ 646 and 652, former 11 U.S.C. §§ 1406 and 1052.

 

23  Section 606(1), former 11 U.S.C. § 1006(1).

 

24  Section 652(1), former 11 U.S.C. § 1052(1).

 

25  The Bankruptcy Study Commission of 1970 was created by Act of July 24, 1970, Pub. L. No. 91-354, 84 Stat. 468. The Commission began its work in 1971 and issued its report in 1973. See H.R. Doc. No. 93-137 (1973).

 

26  See H.R. Doc. No. 93-137, at pt. I, ch. 6, § H (1973).

 

27  See H.R. Doc. No. 93-137, at pt. I, ch. 6, § H (1973).

 

28  See §§ 115.1 [ Curing Default, Waiving Default, Maintaining Payments and Combinations ] § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations and 129.1 [ Overview: General Rules for Saving Debtor’s Home ] § 81.1  Overview: General Rules for Saving Debtor’s Home.

 

29  See § 74.1  General Rules before BAPCPA, § 74.2  General Rules Changed by BAPCPA, § 76.1  Valuation, Claim Splitting and Dewsnup and § 78.1  Full Payment of Allowed Secured Claim.

 

30  See § 74.3  Acceptance of Plan before BAPCPA and § 74.4  Acceptance of Plan after BAPCPA.

 

31  See § 74.5  Surrender or Sale of Collateral before BAPCPA and § 74.6  Surrender, Sale, Vesting in Lienholder and Payment with Property after BAPCPA.

 

32  See § 111.1 [ “Value, As of the Effective Date of the Plan” Means Interest ] § 77.1  “Value, As of the Effective Date of the Plan” Means Interest.

 

33  Compare § 657 of the Bankruptcy Act, former 11 U.S.C. § 1057, which provided only that “upon confirmation of a plan, the plan and its provisions shall be binding on the debtor and upon all creditors of the debtor, whether or not they are affected by the plan or have accepted or have filed their claims, and whether or not their claims have been scheduled or allowed or are allowable.”

 

34  See 11 U.S.C. § 1327(b), (c).

 

35  11 U.S.C. § 1322(b)(2). See § 104.1 [ The Power to Modify ] § 74.11  The Power to Modify.

 

36  11 U.S.C. § 1325(a)(5). See § 74.2  General Rules Changed by BAPCPA and discussions beginning at § 74.1  General Rules before BAPCPA§ 75.1  In General: Modification Without § 506§ 76.1  Valuation, Claim Splitting and Dewsnup§ 77.1  “Value, As of the Effective Date of the Plan” Means Interest and § 78.1  Full Payment of Allowed Secured Claim.

 

37  See § 97.3 [ Who Can File Plan? ] § 72.4  Who Can File Plan?.

 

38  See, e.g., General Elec. Capital Auto Lease v. Eron (In re Eron), No. 00-2343, 2001 WL 985113, at *1–*2 (4th Cir. Aug. 24, 2001) (unpublished) (Citing Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995), and Deutchman v. IRS (In re Deutchman), 192 F.3d 457 (4th Cir. 1999), confirmed plan did not provide for car lease when plan treated lease as a security interest. Confirmed plan provided “payments of $282 or more per month to GE Capital until the net balance of claim plus 8.25% interest has been paid in full. . . . However, the Erons did not characterize GE Capital’s interest in the truck as a lease, did not provide notice to GE Capital that they intended to exercise their option to purchase the truck, and did not state in the plan the value of GE Capital’s claim. We conclude that the bankruptcy court erred in determining that the Erons’ plan provided for GE Capital’s claim.”); Deutchman v. IRS (In re Deutchman), 192 F.3d 457, 460–61 (4th Cir. 1999) (Treating IRS’s secured claim as a priority claim does not “provide for” the claim and does not release the IRS’s lien upon completion of payments. Plan ambiguously treated IRS’s secured claim as a priority claim and provided that the liens of priority claim holders would be released upon the payment of all allowed claims. “Deutchman attempted to ‘provide for’ the liens and obtain a favorable result by merely camouflaging his treatment of the IRS’s liens in his plan. . . . This court, in Cen-Pen, held that, ‘[a]s a general matter, a plan “provides for” a claim or interest . . . when it acknowledges the claim or interest and makes explicit provision for its treatment.’ . . . We also held that ‘“[e]ven where confirmed without objection, a plan will not eliminate a lien simply by failing or refusing to acknowledge it or by calling the creditor unsecured.”’ . . . We . . . hold that, in order to ‘provide for’ a creditor for purposes of § 1327(c), the plan must, at a minimum, clearly and accurately characterize the creditor’s claim throughout the plan. Accordingly, Deutchman’s plan did not ‘provide for’ the allowed secured claim of the IRS because the plan did not consistently identify any IRS claim as a secured claim. Such lack of clarity could only mislead both the secured creditor and the bankruptcy court, as well as cause improper treatment of the secured claims in the confirmed plan, and we will not condone it.”); Russo v. Seidler (In re Seidler), 44 F.3d 945, 949 n.7 (11th Cir. 1995) (Confirmation of a Chapter 13 plan that made no provision for payment of creditors did not moot the creditors’ appeal of a separate adversary proceeding in which the bankruptcy court declared that the creditors did not have a lien on the debtor’s property. “[C]onfirmation of the Plan did not moot the [creditors’] appeal from the adversary proceeding determining validity of the lien. While the Plan has been confirmed and the trustee has made payments under the Plan . . . if the [creditors] are successful on the merits of their case, then they will be able to enforce their lien.” The debtor’s argument that the property vested in the debtor free and clear of the alleged lien of the creditors under § 1327(b) and (c) is rejected because “[s]ection 1327(c) stated that the property vests free and clear in the debtor if the plan provides for the creditor. . . . Seidler’s Plan does not provide for the [creditors]; thus, section 1327(c) does not moot the [creditors’] appeal.”); Shook v. CBIC (In re Shook), 278 B.R. 815 (B.A.P. 9th Cir. 2002) (Confirmed plan that treated lienholder as an unsecured nonpriority creditor did not “provide for” the lien and does not bind the lienholder to unsecured status.); Bisch v. United States (In re Bisch), 159 B.R. 546, 549–50 (B.A.P. 9th Cir. 1993) (Confirmation of plan that treated the IRS as unsecured did not avoid the IRS’s lien notwithstanding that the IRS filed a preconfirmation proof of claim that did not assert secured status. Confirmed plan treated the entire IRS claim as unsecured. IRS did not object to confirmation and filed a preconfirmation proof of claim that failed to assert that a portion of the taxes were secured by a prepetition lien. The lien was discovered after confirmation, and the debtors moved to avoid the IRS lien as an “improper amendment” to its proof of claim. The BAP first held that the IRS’s failure to file a secured proof of claim might defeat its right to distributions but did not forfeit or waive its lien. “In [In re Junes, 99 B.R. 978 (B.A.P. 9th Cir. 1989)], this Panel maintained the validity of an IRS lien when the debtor both failed to schedule the IRS as a secured creditor, and failed to provide for payment of the claim in the Chapter 13 plan. . . . The Junes decision follows Circuit decisions holding that a lien remains valid despite failure to file a proof of claim and failure to provide treatment in a confirmed plan of reorganization. . . . [T]here is no duty on the part of the secured party to object to the confirmation of the plan, and failure to do so does not somehow constitute a waiver of the party’s secured claim. . . . We hold that the Debtors’ failure to treat the IRS’ lien in their Chapter 13 plan does not affect the lien’s validity.”); Junes v. United States (In re Junes), 99 B.R. 978 (B.A.P. 9th Cir. 1989) (IRS lien passes through Chapter 13 case unaffected by confirmation or § 1327 when the debtors did not make any provision for the secured claim.); Coffin v. Malvern Fed. Sav. Bank (In re Coffin), 189 B.R. 323 (E.D. Pa. 1995) (Distinguishing In re Penrod, 50 F.3d 459 (7th Cir. 1995), where the proof of claim filed by a mortgage holder and the confirmed plan addressed only the arrearage amount and not the entire debt secured by the mortgage holder’s liens, confirmation of the plan did not extinguish the entire lien of the mortgage holder because “the liens in question were not ‘property dealt with by the plan.’”); In re Fiore, 290 B.R. 138 (Bankr. E.D. Mo. 2003) (Plan that treated a priority claim for attorney fees as an unsecured debt did not trump preconfirmation proof of claim, and because the plan failed to provide for the priority debt, the claim was not subject to discharge.); In re Zimmerman, 276 B.R. 606 (Bankr. C.D. Ill. 2001) (The failure to mention Heights in the plan is a failure to provide for Heights, and the confirmed plan does not have the lien-avoiding effect described in § 1327(c).); In re Geiger, 260 B.R. 83, 85 (Bankr. E.D. Pa. 2001) ( “[A] confirmed plan does not provide for Movant’s secured claim or lien” notwithstanding that confirmed plan provided, “Debt owed to Associates Equity Service Co. is contingent, unliquidated and disputed, ANY LIEN ALLEGED OR EXISTING OF ANY KIND, TYPE OR NATURE TO BE CANCELED OF RECORD AT DISCHARGE OF DEBTOR AND CLOSING OF DEBTORS CASE.”); In re Henline, 242 B.R. 459, 464 (Bankr. D. Minn. 1999) (Plan that treated condominium association as unsecured did not strip the association’s lien because notice of the effect of the plan on the association’s lien was not clear. “A creditor can lose its lien if the claim is treated as unsecured in a confirmed plan, even though the treatment might otherwise be impermissible under the Code. . . . But, a lien is an interest in property protected by the due process guarantees of the Fifth Amendment to the United States Constitution. Threshold constitutional due process guaranties require the affected lienholder’s participation in a proceeding that results in the taking of the lienholder’s interest in property. Participation in the confirmation process by a lien creditor normally has at least two requisites: 1) the creditor, or another on the creditor’s behalf, has filed a claim in the case; and, 2) the plan identifies the creditor and treats the claim. Matter of Penrod, 50 F.3d 459 (7th Cir. 1995). Here, although Movant filed a prepetition claim, Movant was not identified in the plan and the claim was not treated. Debtors scheduled Movant’s claim as unsecured in their liability schedules filed with the petition, and they treated unsecured claims in the plan in an amount corresponding to the total amount of the scheduled unsecured claims. But, the plan provision for unsecured claims did not identify the claimants. . . . Lien creditors, whose prepetition claims are not provided for in a plan, are entitled to ignore the confirmation process and plan; and, to proceed to collect their debts through foreclosure of their liens after bankruptcy, or earlier upon obtaining relief from the 11 U.S.C. § 362 stay. . . . In Matter of Penrod, supra, . . . the lien creditor’s claim was separately classified in the plan and the lien creditor was identified as the holder of the claim in that class. . . . To hold that Debtors’ plan provided for Movant’s claim and lien, allowing Movant to participate in the confirmation process resulting in loss of the lien by application of § 1327(c), would be to allow lien stripping by ambush. That would violate the due process guarantees of the Fifth Amendment to the United States Constitution against the taking of property.”); In re Lee, 182 B.R. 354, 359 (Bankr. S.D. Ga. 1995) (Where plan is silent with respect to the lien of an automobile-secured creditor and the creditor does not file a proof of claim, confirmation binds the creditor to accept nothing in full satisfaction of its in personam rights against the debtor; however, the in rem lien survives, and relief from the stay is appropriate after confirmation upon a showing that the collateral will depreciate more quickly than there is equity to protect the creditor’s lien. “The effect of a secured creditor’s failure to file a proof of claim is that it may look to its lien for satisfaction of its claim. 11 U.S.C. § 506(d)(2). The effect of the failure of a debtor to ‘provide for’ a secured claim is that the property will not vest in the debtor free and clear of any liens. 11 U.S.C. § 1327(c). . . . Where the secured creditor is not provided for under a plan, its in rem rights survive confirmation of the debtor’s bankruptcy plan. In such a case, the creditor may seek to protect those rights through stay relief.”); Honesdale Nat’l Bank v. Mordenti (In re Mordenti), 164 B.R. 37, 39 (Bankr. M.D. Pa. 1993) (Citing Sears Roebuck & Co. v. Burgess (In re Burgess), 163 B.R. 726 (Bankr. M.D. Pa. 1993), plan failed to “provide for” a second mortgage where plan made provision for payment of a first mortgage held by the same creditor but made no mention of that creditor’s second mortgage. “Not being provided for, the secured interest represented by the second mortgage . . . remains against the Debtors’ real [property]. . . . [T]he failure of the Debtors to address the second mortgage . . . prevents the Debtors from arguing that its terms are now modified.” Because the plan made no provision for payment of the second mortgage and the debtors did not offer adequate protection in response to the second mortgage holder’s postconfirmation motion for relief from the stay, the stay was terminated to permit foreclosure by the second mortgage holder.); Sears Roebuck & Co. v. Burgess (In re Burgess), 163 B.R. 726, 729, 730 (Bankr. M.D. Pa. 1993) (Although Sears is bound by confirmed plan treating it as an unsecured claim holder, the plan’s failure to “provide for” the secured claim of Sears limits the effect of confirmation and leaves Sears with an entitlement to relief from the stay with respect to its lien. Applying the Rake v. Wade, 508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993), definition of “provided for,” plan that listed Sears as an unsecured creditor did not “provide for” Sears where it is now stipulated that Sears was a secured creditor. “Because Section 1327(c) has the rather harsh impact of actually dislodging a lien of a creditor who is ‘provided for by the plan’, it is imperative that this Court consider not only the wording of the plan but also the adequacy of notice and a determination of whether the due process rights of a secured creditor have been protected. A Chapter 13 plan must bear ‘constitutional and statutory muster as to the vested property rights of secured creditors’. . . . Without the measure of protection afforded by clear language in the plan and sufficient notice to the creditor, the plan can be no more binding than if it had sat, unfiled, on the lawyer’s desk.” Sears was listed in the schedules as an unsecured creditor and received notice of a plan to which it did not object. Sears filed a timely proof of claim before confirmation to which no objection was raised by the debtors. “[T]he Debtors originally scheduled Sears as an unsecured creditor. . . . Since the parties now stipulate that Sears is a secured creditor, the Debtors, understandably, did not provide for Sears as a secured creditor.”); Kuebler v. Commissioner (In re Kuebler), 156 B.R. 1012, 1017 (Bankr. E.D. Ark. 1993), aff’d, 172 B.R. 595 (E.D. Ark. 1994) (IRS’s lien survives confirmation and discharge because the debtors’ Chapter 13 plan treated the IRS’s debt as a priority unsecured claim but the IRS filed a proof of claim asserting secured status to which no objection was filed. “Where a debtors’ plan does not address a creditor’s secured claim, the lien simply passes through the bankruptcy and remains enforceable in rem after the discharge is granted and the case closed. Here, since the debtors’ confirmed plan provided no treatment for the IRS’s secured claim, the IRS will retain its tax lien on the debtors’ property.” The confirmed, modified plan characterized the IRS’s claim as an unsecured priority debt rather than as a secured claim. The IRS did not object to the modified plan. The IRS did file a timely proof of claim, the day before confirmation of the modified plan, asserting a secured claim against the debtors. Although the IRS’s proof of claim characterized its debt as secured, the trustee’s motion and order to allow claims listed the IRS’s claim as an unsecured, long-term priority debt.); In re Glow, 111 B.R. 209 (Bankr. N.D. Ind. 1990) (Section 506(d) can be invoked at cramdown in a Chapter 13 case or independently in an adversary proceeding to “strip” a lien down to the value of collateral. However, in either approach, the debtor must affirmatively request relief from the lien. When the plan fails to specifically provide for treatment of the lien, the lien survives discharge.); In re Hydorn, 94 B.R. 608, 613–14 (Bankr. W.D. Mo. 1988) (“Provided for” by the plan is not defined in the Code or in its legislative history, but the term should be given its ordinary sense: “to the extent that debtors’ plan deals with or refers to bank’s claim, it ‘provides for’ bank’s claim for purposes of confirmation as well as discharge under § 1328(a). . . . [I]f a plan does not provide for payment to the creditor in an amount equal to the creditor’s security, the lien securing the debt, i.e., the creditor’s right to the value of the security, survives the Chapter 13 discharge.”); Riley v. Wisconsin, Dep’t of Revenue (In re Riley), 88 B.R. 906 (Bankr. W.D. Wis. 1987) (A confirmed plan that fails to provide for satisfaction of allowed secured claims is not binding on the secured claim holders and will not invalidate liens, notwithstanding the absence of an objection to confirmation and without regard to whether the secured claim holder has filed a proof of claim. Tax liens must be paid first from the proceeds of the sale of the debtors’ residence even though confirmed plan calls for first payment of unsecured priority taxes.); Work v. County of Douglas, 58 B.R. 868 (Bankr. D. Or. 1986) (For purposes of § 1327(c), a plan does not “provide for” a property tax lien when the plan treats the holder of the lien as an unsecured claimant and says nothing about retention of the lien. “Provided for” means that the plan “must acknowledge the claim or interest and make explicit provision for the treatment of the claim or interest.”); Bourgeois v. Rhoades, 34 B.R. 168 (Bankr. D. Vt. 1983) (“Zero payment” does not “provide for”; therefore, § 1327(c) does not affect the creditor’s lien even though the creditor filed no proof of claim and cannot participate in distributions.).

 

39  See, e.g., Deutchman v. IRS (In re Deutchman), 192 F.3d 457, 461 (4th Cir. 1999) (Ambiguous Chapter 13 plan that “camouflaged” the treatment of IRS as a priority claim rather than a secured claim did not “provide for” the allowed secured claim of the IRS; “[a]nother fatal consequence of Deutchman’s plan was its failure to give specific notice to the IRS of Deutchman’s intent to accord the liens less than full protection. . . . Deceptive information is equivalent to no notice at all, and for lack of specific notice, Deutchman’s efforts fail.”); Sears, Roebuck & Co. v. Burgess (In re Burgess), 163 B.R. 726, 729 (Bankr. M.D. Pa. 1993) (Plan treating Sears as unsecured claim holder fails to “provide for” the secured claim. “Because Section 1327(c) has the rather harsh impact of actually dislodging a lien of a creditor who is ‘provided for by the plan,’ it is imperative that this Court consider not only the wording of the plan but also the adequacy of notice and a determination of whether the due process rights of a secured creditor have been protected. . . . Without the measure of protection afforded by clear language in the plan and sufficient notice to the creditor, the plan can be no more binding than if it had sat, unfiled, on the lawyer’s desk.”).

 

40  See, e.g., Ruxton v. City of Phila., 240 B.R. 211, 213–15 (Bankr. E.D. Pa. 1999) (Distinguishing In re Szostek, 886 F.2d 1405 (3d Cir. 1989), confirmed plan that “mischaracterized” the claim of the city of Philadelphia as a priority claim did not affect the lien rights of the city. Debtors scheduled the city twice—once as an unsecured priority claim for 1993–1998 real estate taxes and a second time as an unsecured, nonpriority claim for utility bills. Plan provided $2,700 for the city as a priority creditor. Elsewhere, the plan identified two secured creditors not including the city. The city filed a single proof of claim before confirmation for $1,030.79 of which $576.50 was identified as secured and $454.29 was listed as unsecured, nonpriority. The Chapter 13 trustee objected to confirmation because the plan provided too much payment to the city. The debtors amended the plan and “mischaracterized as priority, a payment to the city of Philadelphia in the amount set forth in its claim as secured . . . . No separate payment to the city of Philadelphia for real estate taxes was provided in the amended plan.” The amended plan was confirmed, and the debtors completed all payments. The city then informed the debtors that they still owed real estate taxes for 1993–1998 totaling $7,694.14 with interest and penalties. The debtors filed an adversary proceeding to determine the dischargeability of the real estate taxes. “There was no issue in Szostek, as there is here, over whether the Debtors’ chapter 13 plan in fact made provision for the treatment of a creditor[’]s secured claim. . . . Despite the Debtors’ desire to find ambiguity in these circumstances by virtue of the City’s failure to include outstanding real estate taxes in its filed proof of claim, the Court finds no such ambiguity. The claim, very simply, is for water and sewer charges alone, and does not include real estate taxes. By the same token, no reasonable reading of the Debtors’ amended Chapter 13 plan permits an interpretation that this amended plan covers both priority and unsecured water and sewer charges, and secured real estate taxes. . . . [E]ven if one were to agree that there is ambiguity in the plan, the doubt must be resolved against the Debtors as the architects of their plan. In re Fawcett, 758 F.2d 588 (11th Cir. 1985). . . . In re Dennis, 230 B.R. 244 (Bankr. D.N.J. 1999) . . . holds that if a Chapter 13 plan does propose to modify a creditor’s secured claim by paying that creditor less than the creditor believes is owed, then such creditor must object to that treatment by filing a timely proof of claim, or it will be bound by the terms of the confirmed plan. . . . It is another matter, however, to contend, as the Debtors do, that Paragraph 2A of the amended plan, which speaks of a distribution to the City for a priority claim only, was intended to extinguish the City’s secured claim for realty taxes in light of an alleged abandonment of such claim by the City through the filing of its proof of claim.”), aff’d, 246 B.R. 508 (E.D. Pa. 2000); In re Tucker, 231 B.R. 284, 286–87 (Bankr. E.D. Tenn. 1999) (Confirmed plan that stated the value of car as “$1” and proposed to pay the one dollar at the rate of $450 per month was ambiguous and failed to have binding effect under § 1327. “The use of the nominal $1.00 is well understood in legal circles. It is the legal equivalent of the mathematic ‘x’—it stands for something else and is not intended to be taken literally. . . . [T]he efficient working of the bifurcation process depends on a certain level of specificity in the debtor’s plan provisions. Thus, before a claim can truly be ‘provided for’ in a plan within the meaning of either 11 U.S.C. § 1327(a) or 11 U.S.C. § 1328(a), the debtor must definitively value the secured portion of the claim and propose its satisfaction under the Code. This debtor’s plan lacks the necessary specificity because it is facially ambiguous. . . . Only a ‘provision’ of a confirmed plan can bind the parties under § 1327(a), and this plan, because of its facial ambiguity, does not contain a provision that actually deals with the claim, actually bifurcates it, or actually resolves it according to law. Consequently, the confirmation of this plan cannot have the res judicata effect intended by 11 U.S.C. § 1327(a), because the bifurcation issue was not actually decided (judicata). . . . The court emphasizes that it would unhesitatingly hold a creditor to be bound by the provisions of the plan wherein the debtor had assigned a specific but incorrect value to the creditor’s security and thus to his allowed secured claim. This is because an incorrect valuation is still a specific valuation. The bifurcation, although arguably wrong, can nevertheless occur and become res judicata under § 1327(a). . . . [T]here is no provision in this plan capable of binding the parties with respect to the claim in question because there is no way of knowing what they are bound to. Does the debtor pay $1.00 or $450 per month? The creditor’s claim was filed on October 21, 1997, and shortly thereafter, on November 10, 1997, the debtor converted his chapter 13 case to a case under chapter 7. At that point the creditor’s lien had not been stripped. The allowed secured claim had not been paid because it had not been determined. It is undisputed that the creditor’s lien was not avoided in the chapter 7 case, and so it results that the creditor still has its lien on the automobile in question.”).

 

41  See, e.g., In re Geiger, 260 B.R. 83, 85 (Bankr. E.D. Pa. 2001) (“[A] confirmed plan does not provide for Movant’s secured claim or lien” notwithstanding that confirmed plan provided, “Debt owed to Associates Equity Service Co. is contingent, unliquidated and disputed, ANY LIEN ALLEGED OR EXISTING OF ANY KIND, TYPE OR NATURE TO BE CANCELED OF RECORD AT DISCHARGE OF DEBTOR AND CLOSING OF DEBTOR[’]S CASE.” Associates’ lien was not affected by confirmation because the debtor failed to take the additional “affirmative step” of filing an adversary proceeding or filing an objection to claim. Associates was granted relief from the stay after confirmation for cause.); In re Henline, 242 B.R. 459, 464 (Bankr. D. Minn. 1999) (Plan that treated condominium association as unsecured did not provide for the association’s lien in a manner that would strip the lien under § 1327(c) because to have that effect, the creditor must file a proof of claim and the plan must identify the creditor and treat the claim. Here, the association filed a claim. However, “Movant was not identified in the plan and the claim was not treated. Debtors scheduled Movant’s claim as unsecured in their liability schedules filed with the petition, and they treated unsecured claims in the plan in an amount corresponding to the total amount of the scheduled unsecured claims. But, the plan provision for unsecured claims did not identify the claimants. . . . To hold that Debtors’ plan provided for Movant’s claim and lien, allowing Movant to participate in the confirmation process resulting in loss of the lien by application of § 1327(c), would be to allow lien stripping by ambush. That would violate the due process guarantees of the Fifth Amendment to the United States Constitution against the taking of property.”).

 

42  See, e.g., In re Henline, 242 B.R. 459, 464 (Bankr. D. Minn. 1999) (Plan that treated condominium association as an unsecured creditor did not provide for the association’s lien because participation in the confirmation process is required and, in addition to identifying the creditor, participation means that “the creditor, or another on the creditor’s behalf, has filed a claim in the case.”). See also Blakey v. Pierce (In re Blakey), 78 B.R. 435 (Bankr. E.D. Pa. 1987) (The debtor’s filing of a proof of claim on behalf of the creditor “provided for” the creditor’s claim notwithstanding that the provision for payment of the creditor was “less than generous.”).

 

43  See discussion beginning at § 135.1  Timing, Procedure and Evidence Presumption.

 

44  See § 229.1 [ 11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors ] § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors.

 

45  See § 286.1 [ Strategic Considerations: When to File Claims for Creditors ] § 134.3  Strategic Considerations: When to File Claims for Creditors.

 

46  See § 290.1 [ Untimely Filed Claims in Cases Filed after October 22, 1994 ] § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994.

 

47  The use of § 506(d) to void liens in Chapter 13 cases is somewhat uncertain after the Supreme Court’s decision in Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992). See § 76.1  Valuation, Claim Splitting and Dewsnup and § 76.7  Valuation after BAPCPA.

 

48  See § 280.1 [ Secured Claim Holders ] § 132.7  Secured Claim Holders.

 

49  See, e.g., Shook v. CBIC (In re Shook), 278 B.R. 815 (B.A.P. 9th Cir. 2002) (Confirmed plan that was silent with respect to the lien of a timely filed secured claim holder does not provide for lien and does not avoid the lien.); In re Fiore, 290 B.R. 138 (Bankr. E.D. Mo. 2003) (Confirmed plan that made no provision for payment of a priority support claim does not trump preconfirmation proof of claim; claim is allowed but without distributions because the claim is not provided for by the plan.); In re Zimmerman, 276 B.R. 606, 607–09 (Bankr. C.D. Ill. 2001) (“The DEBTORS’ plan made no reference at all to HEIGHTS, to the treatment of HEIGHTS’ claim as unsecured, or the basis for such treatment. Accordingly, this Court held that the DEBTORS’ plan failed to ‘provide for’ HEIGHTS and that the DEBTORS were, therefore, not entitled to the lien avoiding effect of Section 1327(c).” Citing Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995), “[i]t is permissible for a Chapter 13 plan to bifurcate an undersecured creditors’ claim on the basis of collateral value or even eliminate the lien where the collateral is worthless or subject to a senior lien greater than its value. In order to accomplish this, the plan must specifically ‘provide for’ reduction or elimination of the lien pursuant to Section 1327(c). If, on the other hand, the debtor seeks to eliminate a lien on the basis of a challenge to its ‘validity, priority or extent,’ the debtor must file an adversary proceeding which provides a greater level of due process to the affected creditor. The DEBTORS did neither and HEIGHTS’ lien passed through bankruptcy unaffected.”); Bisch v. United States (In re Bisch), 159 B.R. 546, 550 (B.A.P. 9th Cir. 1993) (Confirmation of plan that treated the IRS as unsecured did not avoid the IRS’s lien notwithstanding that the IRS filed a preconfirmation proof of claim that did not assert secured status. “We hold that the Debtors’ failure to treat the IRS’ lien in their Chapter 13 plan does not affect the lien’s validity.”); In re Henline, 242 B.R. 459 (Bankr. D. Minn. 1999) (Plan that treated condominium association as unsecured did not provide for the association’s lien, and thus confirmation of the plan did not effect the association’s lien.); Sears Roebuck & Co. v. Burgess (In re Burgess), 163 B.R. 726 (Bankr. M.D. Pa. 1993) (Confirmed plan that identified Sears as a creditor and provided for treatment of Sears as an unsecured claim holder fails to “provide for” the secured claim of Sears and does not dislodge Sears’s lien.); Kuebler v. Commissioner (In re Kuebler), 156 B.R. 1012 (Bankr. E.D. Ark. 1993), aff’d, 172 B.R. 595 (E.D. Ark. 1994) (IRS’s lien is not affected by confirmation and discharge notwithstanding that the plan specifically treated the IRS’s debt as a priority unsecured claim because IRS filed a proof of claim asserting secured status; thus, the confirmed plan “provided no treatment for the IRS’s secured claim.”); Work v. County of Douglas, 58 B.R. 868 (Bankr. D. Or. 1986) (For purposes of § 1327(c), a plan does not “provide for” a property tax lien when the plan treats the holder of the lien as an unsecured claimant and says nothing about retention of the lien.).

 

50  50 F.3d 459 (7th Cir. 1995).

 

51  See § 74.12  Lien Retention before BAPCPA and § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases.

 

52  50 F.3d at 462–63. Accord Simon v. Tip Top Credit Union (In re Simon), Nos. 94-3304, 94-3312, 1996 WL 192977 (10th Cir. Apr. 22, 1996) (Table decision at 83 F.3d 433) (Applies In re Penrod, 50 F.3d 459 (7th Cir. 1995), in the context of a Chapter 12 case.).

 

53  11 U.S.C. § 1327(b), (c).

 

54  290 B.R. 138 (Bankr. E.D. Mo. 2003).

 

55  290 B.R. at 140–41.

 

56  278 B.R. 815 (B.A.P. 9th Cir. 2002).

 

57  278 B.R. at 823–27.