§ 121.4     Other Limitations
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 121.4, at ¶ ____, LundinOnChapter13.com (last visited __________).

For reasons not founded in lack of notice or due process and without regard to the clarity of the plan, reported decisions recognize a few other limitations on the effects of confirmation.


For example, one court held that confirmation does not preclude a postconfirmation motion to dismiss the Chapter 13 case under § 1307 on the ground of prepetition and preconfirmation misconduct in a case that fit the “new debtor syndrome.”1 The court reasoned that the motion to dismiss did not question any provisions of the plan but challenged the debtor’s good faith with respect to the filing of the petition in the first instance.


This is a curious outcome. One of the conditions for confirmation in § 1325(a)(1) is that the plan “complies with the provisions of this chapter.”2 Confirmation is preclusive of relitigation of the question whether the plan satisfies § 1325(a)(1). Dismissal of a Chapter 13 case is controlled by § 1307—a “provision of this chapter” for purposes of § 1325(a)(1). Permitting a creditor to base dismissal under § 1307 on facts and circumstances that antedated confirmation of the plan is inconsistent with the many cases holding that confirmation is preclusive of all issues that could have been asserted as objections at confirmation.3


Along these same lines, an especially disquieting use of dismissal under § 1307 as a limitation on the effects of confirmation under § 1327 is the U.S. Court of Appeals for the Seventh Circuit’s decision in In re Escobedo.4 The plan in Escobedo proposed to pay $25 a month for 36 months. Notice was given to all creditors and no one objected to confirmation. Administrative and priority tax claims were filed and allowed in the case, totaling $24,158. For reasons not explained, the debtor never modified the plan but continued to make $25-per-month payments. Nearly five years after confirmation, the Chapter 13 trustee sought dismissal of the case based on the obvious mathematical impossibility of the plan. The case found its way to the Seventh Circuit.


The court of appeals first noted the requirements for confirmation that the plan provide for full payment of all priority claims and that the plan provide sufficient funding to pay priority claims during the life of the plan: “Any plan lacking the requirements of § 1322(a)(2) . . . cannot be confirmed without the claim holder’s consent.”5 But then the court leaped to the conclusion that the failure of the confirmed plan to comply with § 1322(a)(2) defeated the finality of the confirmation order and overcame the effects of confirmation:

A bankruptcy court lacks the authority to confirm any plan unless it “complies with the provision of this chapter and with the other applicable provisions of this title.” . . . Debtor’s proposed plan did not comply with § 1322(a)(2). As a result of this failure, any supposed confirmation was nugatory and properly dismissed. . . . Mandatory requirements such as § 1322(a)(2), by definition, cannot be absent from a confirmable Chapter 13 plan. . . . We conclude that this Plan was invalid for failing to include the mandatory provisions of § 1322(a)(2), and has no res judicata effect as to the omitted priority claims.6

Of course, the failure to comply with § 1322(a)(2) would have been fatal to confirmation had it been raised as a timely objection to the plan. But it wasn’t. Neither the holder of the priority tax claims nor the Chapter 13 trustee objected to confirmation. As amply demonstrated above,7 many courts recognize that a confirmation order in a Chapter 13 case is binding even with respect to provisions that are inconsistent with the Bankruptcy Code. As explained by the Bankruptcy Appellate Panel for the Ninth Circuit in Great Lakes Higher Education Corp. v. Pardee (In re Pardee):8

We respectfully disagree with the holding in [In re Escobedo, 28 F.3d 34 (7th Cir. 1994)] because it is contrary to overwhelming Ninth Circuit authority and the general principle upholding the preclusive effect of final orders. While the Plan should not have been confirmed with the Discharge Provision, once confirmed, the Plan was not “nugatory” but was binding on the parties pursuant to § 1327(a) and the well-established principle that a party that fails to appeal a final order cannot collaterally attack that order.9

There is thus logic and authority for the proposition that Escobedo is wrongly decided.10 But Escobedo is not alone. In Fawcett v. United States,11 the U.S. Court of Appeals for the Eleventh Circuit held that a Chapter 13 debtor must pay postpetition interest to an oversecured tax claimant notwithstanding § 1327(a) when the plan contained no provision for interest, the IRS had notice of the plan and the IRS did not object to confirmation. The Eleventh Circuit offers no particular explanation why the IRS was not bound by the clear provisions of the plan and by its failure to object to confirmation.


Fawcett is not easily reconciled with better reasoned cases from many other jurisdictions holding that secured claim holders are bound by the limits on the payment of interest contained in a confirmed plan if the secured claim holder had notice and failed to object to confirmation.12 Ironically, one of the leading reported decisions holding that a secured claim holder’s failure to object to confirmation of a plan that does not provide for interest precludes the recovery of interest is Homebanc v. Chappell (In re Chappell),13 a decision by the U.S. Court of Appeals for the Seventh Circuit—the same court that delivered Escobedo one year later. The payment of present value interest clearly is a statutory entitlement of a secured claim holder at confirmation in a Chapter 13 case.14 It is just as clear that this right to interest can be forfeited if the secured claim holder is informed that the plan does not provide for the payment of interest and the creditor fails to object to and appeal the contrary confirmation order.


Had the Seventh Circuit in Escobedo simply found “cause” for dismissal under § 1307—perhaps in the debtor’s failure to schedule the huge priority tax claims or in the debtor’s conduct of the (endless) Chapter 13 case—no injury would be done to larger principles. For example, in In re Elstien,15 a bankruptcy court in the Seventh Circuit faced facts not dissimilar to Escobedo: more than two years after confirmation, the IRS moved to dismiss a Chapter 13 case in which the debtor had failed to schedule a priority tax claim of $553,427.50; but the IRS was aware of the Chapter 13 case in ample time to have objected to confirmation or to have moved to dismiss the ineligible debtor before confirmation. In contrast to Escobedo, the bankruptcy court found cause to dismiss in the debtor’s misconduct without disparaging the effects of confirmation under § 1327:

The Debtor filed false schedules, when accurate schedules would have disclosed that he was ineligible for chapter 13 relief . . . . The IRS, on the other hand, had actual knowledge of the bankruptcy case in ample time to file a proof of claim, move to dismiss the case, and object to confirmation of the plan, yet it did nothing for two years. . . . Applying § 1327(a) here, the confirmation of the Debtor’s plan precludes the IRS from asserting its arguments that the case should be dismissed because the Debtor is ineligible for chapter 13 relief. . . . Confirmation requires a finding that the plan was proposed in good faith (§ 1325(a)(3)) and that issue is barred. But the present facts raise a broader question concerning the Debtor’s conduct of the case, not merely proposal of the plan. . . . Although the IRS may now be barred from challenging the Debtor’s eligibility, there is no compelling authority that precludes it from asserting that the Debtor’s conduct constitutes cause for dismissal.16

In this same vein, in In re Stevens,17 the first modified plan contained a provision that excepting the debtor’s student loans from discharge would be an undue hardship for purposes of § 523(a)(8).18 The student loan creditor did not object, and the plan was confirmed.


Soon after confirmation, the debtor filed a second modified plan. The reported decision is not clear what provisions of the plan were changed, but it is clear that the student loan discharge provision was not changed. The student loan creditor filed an untimely objection to the second modified plan that the bankruptcy court chose to consider anyway. The court denied confirmation of the second modified plan but more importantly found that confirmation of the first modified plan did not have the usual binding effect under § 1327(a):

[I]t does not matter that debtor’s earlier plan, which sought to discharge the educational loan as an undue hardship, has been confirmed. The provision cannot have the effect sought for it. When the debtor completes payment of the plan, then an appropriate adversary proceeding may be filed on the undue hardship claim. . . . The court considers this a due process requirement and will not permit the discharge of an otherwise nondischargeable debt by a provision of a chapter 13 plan.19

Stevens surely proves too much. That the student loan creditor had a valid objection to the plan provisions for discharge of student loans does not invalidate the effect of the confirmed plan when the creditor failed to object to confirmation. Stevens erects a limit on the effect of confirmation under § 1327 as broad as the exceptions to discharge in bankruptcy. If by “due process” the court in Stevens meant that notice to the student loan creditor was inadequate, the reported decision does not say so. Stevens is either an Escobedo-like case, fundamentally hostile to the ordinary effects of confirmation or the case might be molded to fit the Hanson20 pattern from the Fourth Circuit—cases holding that an adversary proceeding is necessary before confirmation has some effects described in § 1327. By any reading, Stevens finds a limit on the effects of confirmation that is directly contrary to well reasoned authority from other circuits.21 But Stevens is hardly alone— on various theories, other reported decisions limit the effects of confirmed plans that discharge or control the application of payments to student loan creditors.22


In Pacana v. Pacana-Siler (In re Pacana),23 the Bankruptcy Appellate Panel for the Ninth Circuit, based on a finding of “manifest . . . legislative intent,” concluded that a child support obligation was excepted from the “binding effect” of § 1327, notwithstanding that the confirmed plan provided for payment of part of the support debt.24 This blanket “exception” for support claims to the plain language of § 1327(a) is not founded on any careful analysis of the Code. The holders of support claims are creditors bound by confirmation just as any other creditors.25 Courts may disagree whether a particular proposed treatment of an alimony or support claim is fair discrimination for purpose of classification of claims under § 1322(b)(1)26 or whether the proposed treatment of a support claim is in good faith for purposes of § 1325(a)(3);27 however, once the plan is confirmed, a support claim holder provided for by the plan is bound by the plan under § 1327(a). There is no contrary statutory intent, “manifest” or otherwise. That Congress elevated debts for alimony, maintenance or support to seventh priority in 1994,28 thus entitling such claims to full payment in Chapter 13 cases under § 1322(a)(2),29 confirms that Chapter 13 plans can provide for support obligations and bind support creditors upon confirmation. Bankruptcy courts within the Ninth Circuit have questioned the continuing vitality of Pacana as a limit on the effects of confirmation.30


One effect of confirmation that was heavily litigated in the Ninth Circuit is whether confirmation of a plan that cures default under § 1322(b)(5) is effective immediately or whether the curing effect is delayed until the arrearage is actually paid through the plan. A Chapter 13 debtor has broad powers to cure default with respect to secured claims and unsecured claims under § 1322(b)(3) and (b)(5).31 In Mason-McDuffie Mortgage Corp. v. Peters (In re Peters),32 the debtor filed Chapter 13 immediately before a nonjudicial foreclosure sale. The plan proposed to cure default in the underlying home mortgage. The mortgage holder, with knowledge of the Chapter 13 case, appeared at the time and place of the foreclosure sale and announced postponements of the sale several times, even after confirmation. The Bankruptcy Appellate Panel for the Ninth Circuit held that the mortgage holder violated the automatic stay, reasoning that confirmation of the plan effected an immediate cure of all prepetition defaults:

The res judicata effect eliminated Mason’s right to sell the property based on prepetition (and preconfirmation) defaults. . . . After confirmation, the debtor is not in default unless and until he fails to make the required payments. The confirmation of a chapter 13 plan immediately acts to cure any defaults that are provided for under the plan. . . . Continued postponement of the foreclosure sale gave [the mortgage holder] an advantage to which it is not entitled: the right to immediately foreclose for a prepetition default. . . . [The mortgage holder’s] attempt to regain the position in violation of the confirmed plan is a violation of the automatic stay.33

On further appeal, the Ninth Circuit rejected the BAP’s view that confirmation of a Chapter 13 plan immediately cures default under § 1322(b)(5):

[T]he theory that confirmation of a Chapter 13 plan immediately cures defaults is wrong. Section 1322(b)(5) of the Code states that a plan may “provide for the curing of any default within a reasonable time” . . . . Language allowing a plan to provide for a cure of default “within a reasonable time” is not consistent with the holding that a cure occurs when the bankruptcy court confirms the plan. . . . [F]ull payment of arrearages is the cure, . . . confirmation of the plan is not. . . . The fact that the provisions of the plan bind [debtor] and [creditor] does not show that the confirmation is the cure. . . . The gist of [§ 1327(c)] is that a creditor must be satisfied with the claims and interests that the plan explicitly gives it. . . . Under section 1322, a debtor may cure a default by paying the arrearage, not by convincing a bankruptcy court to confirm its plan. Section 1327(c) merely acts as the enabling provision for section 1322. . . . Because confirmation of the reorganization plan does not effect a cure . . . [t]he debtor continues to be in default until it pays the arrearage.34

A few reported decisions have acknowledged that Eleventh Amendment immunity and sovereign immunity can limit the effects of confirmation under § 1327. For example, in In re Perez,35 the confirmed plan provided 10 percent payment of parking fines that had precipitated suspension of the debtor’s driving privileges before the petition. After confirmation, the debtor sought an order from the bankruptcy court requiring the state of New Jersey to conditionally reinstate the debtor’s driving privileges based on the confirmed plan. The bankruptcy court concluded it lacked jurisdiction to do so:

[T]he Court lacks subject matter jurisdiction to order rescission of municipal court orders which suspend a debtor’s driving privileges for pre-petition municipal parking [violations] in accordance with confirmation and a repayment of a percentage of the fines under a debtor’s Chapter 13 Plan, since a ruling concerning restoration of debtor’s driving privileges would, of necessity, impact the State.36

On somewhat similar facts, a different judge of the same bankruptcy court found a slightly different limit on the effects of confirmation in In re Perrin.37 The debtor in Perrin scheduled a $350 prepetition traffic fine for driving on a suspended license. The plan proposed to pay the traffic fine in full over a period of time in excess of that permitted by New Jersey law. Notice was given to the municipal court, and the plan was confirmed without objection. After confirmation, the municipal court noticed the debtor for a hearing on further sanctions in light of the inconsistency between the confirmed plan and the prepetition municipal court orders. The municipal court vacated its fine and substituted an order incarcerating the debtor for 19 days or requiring 200 hours of community service. The debtor asked the bankruptcy court to find that the municipal court was bound by the confirmed plan to accept payment of the fines and thus was precluded from imposing incarceration or community service. The bankruptcy court held that the effects of confirmation under § 1327 do not reach as far as the debtor hoped:

There is no question that if the municipal court attempted to compel the debtor to remit his fine in a manner other than as provided for under his confirmed plan, the municipal court would be prohibited from doing so. Despite the municipal court’s concern regarding state law provisions governing installment plans for payment of fines, the manner of payment of the debtor’s fine is no longer a question of state law once a petition in bankruptcy is filed. . . . However, the Vineland Municipal Court is not restructuring the debtor’s repayment plan, but has actually vacated the debtor’s fine. The court elected to waive its monetary claim. While section 1327 and [In re Szostek, 886 F.2d 1405 (3d Cir. 1989)] would bind the municipal court to the treatment of its “claim”, the Bankruptcy Code does not limit the court’s authority to resentence the debtor, where the municipal court is not attempting to collect its debt, but is imposing punitive sanctions of incarceration or community service. . . . The confirmation of debtor’s Chapter 13 plan did not preclude the continuation of [the municipal court judge’s] discretionary authority to fashion appropriate punitive and deterrence measures as a consequence of the quasi-criminal motor vehicle violations committed by the debtor.38

Although the binding effect of a confirmed plan that fixes attorney fees is well recognized,39 it has also been held that the bankruptcy court always retains discretion to allow or disallow attorney fees notwithstanding confirmation of a plan that provides for fees.40 It has been said that the absence of a debtor-creditor relationship is a limit on the effect of confirmation—third parties who are not creditors have escaped the binding effect of confirmation even when the plan specifies a treatment as if the party was a creditor.41


Mentioned elsewhere for their effect on interest rates,42 the Soldiers’ and Sailors’ Civil Relief Act43 and the Servicemembers’ Civil Relief Act of 200344 limit the effects of confirmation with respect to debtors who are on active duty in the uniformed services. For example, notwithstanding a confirmed Chapter 13 plan that provided 12 percent interest to allowed secured claim holders, when the debtor in In re Watson45 was called to active duty in the U.S. Army, the Soldiers’ and Sailors’ Civil Relief Act automatically reduced the interest rate in the plan to 6 percent.


Limitations on the effects of confirmation are sometimes found when Chapter 13 debtors are in litigation with creditors after confirmation. For example, although it has been held that confirmation of a plan that treats a lienholder as a secured creditor precludes the debtor’s lawsuit for rescission under the Truth-in-Lending Act,46 on various theories, other reported decisions find that confirmation does not bar adversary proceedings by the debtor or the Chapter 13 trustee attacking liens or challenging prepetition creditor behavior when the defendant is provided for by the plan.47


The effects of confirmation of a plan may be limited by postconfirmation events. For example, conversion,48 dismissal49 or postconfirmation relief from the stay50 may limit or undo some of the effects of the confirmed plan. The failure of a plan to realize confirmation has no preclusive effect on the debtor under § 1327(a).51


1  In re Powers, 135 B.R. 980 (Bankr. C.D. Cal. 1991).


2  11 U.S.C. § 1325(a)(1). See § 203.1 [ Plan Complies with Bankruptcy Code ] § 113.1  Plan Complies with Bankruptcy Code.


3  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.


4  28 F.3d 34 (7th Cir. 1994).


5  28 F.3d at 35.


6  28 F.3d at 36.


7  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.


8  218 B.R. 916 (B.A.P. 9th Cir. 1998), aff’d, 193 F.3d 1083 (9th Cir. 1999).


9  218 B.R. at 926. Accord Andersen v. UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253, 1258 (10th Cir. 1999) (“[T]he BAP decision merely recognizes the need for a creditor to protect its interests by timely objecting to a proposed plan or appealing the confirmation order. If a creditor fails to do so, it cannot later complain about a certain provision contained in a confirmed plan, even if such a provision is inconsistent with the Code. . . . [T]he strong policy of finality also justifies the result reached by the BAP. . . . [W]e agree with the Third Circuit that, ‘after the plan is confirmed the policy favoring the finality of confirmation is stronger than the bankruptcy court’s and the trustee’s obligations to verify a plan’s compliance with the Code.’ In re Szostek, [886 F.2d 1405, 1406 (3d Cir. 1989)].”); Meyer v. Pagano, No. C 01-0848 MMC, 2002 WL 31159110, at *3–*5 (N.D. Cal. Sept. 25, 2002) (unpublished) (Confirmed “pot” plan that called for 36 monthly payments of $100 is binding on priority claim holder that filed a proof of claim for $157,910; balance of the priority claim will be discharged when debtor pays $3,600 to the trustee. Citing Great Lakes Higher Education Corp. v. Pardee (In re Pardee), 193 F.3d 1083 (9th Cir. 1999), “Debtor’s proposed plan which neither the Trustee nor the [priority claim holder] opposed prior to confirmation, did not include a provision for the full payment of priority claims. . . . Neither the Trustee nor the [priority claim holder] sought revocation or moved to dismiss. Having failed to take those steps, and having failed to object to the terms of the Plan prior to confirmation, the Trustee is now bound by the provisions of the Plan and may not attack the Plan on the ground that its provisions are contrary to law. . . . In [In re Escobedo, 28 F.3d 34 (7th Cir. 1994)], the Seventh Circuit held that an order confirming a Chapter 13 plan, where the plan did not include a provision requiring full payment of priority claims, was ‘nugatory,’ and had ‘no res judicata effect as to the omitted priority claims.’ . . . In Pardee, however, the Ninth Circuit rejected the holding of Escobedo.”).


10  The Seventh Circuit itself has retreated somewhat from the holding in In re Escobedo, 28 F.3d 34 (7th Cir. 1994). See In re Harvey, 213 F.3d 318, 322–323 (7th Cir. 2000) (Confirmation of plan that lien-stripped undersecured car lender precludes objection to same provision in modified plan notwithstanding some ambiguity at confirmation of the original plan. “Nor is this a situation like that presented in In re Escobedo, 28 F.3d 34 (7th Cir. 1994). As the Escobedo court made clear, its refusal to apply res judicata principles in that case resulted from the fact that the debtor’s original plan failed to comply with the mandatory provisions of 11 U.S.C. § 1322(a)(2). The modification of a secured creditors’s rights—the issue here—is allowed but not required under § 1322(b).”).


11  758 F.2d 588 (11th Cir. 1985).


12  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.


13  984 F.2d 775 (7th Cir. 1993).


14  11 U.S.C. § 1325(a)(5)(B)(ii). 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.


15  238 B.R. 747 (Bankr. N.D. Ill. 1999).


16  238 B.R. at 753–57.


17  236 B.R. 350 (Bankr. E.D. Va. 1999).


18  See § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors for discussion of the binding effect of such a provision; see also § 158.2  Student Loans and § 159.6  Student Loans: § 523(a)(8).


19  236 B.R. at 351–52.


20  Cen-Pen v. Hanson, 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.


21  See, e.g., Great Lakes Higher Educ. Corp. v. Pardee (In re Pardee), 193 F.3d 1083 (9th Cir. 1999); Andersen v. UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253 (10th Cir. 1999).


22  See § 88.6  Student Loans, § 113.7  Order of Payments to Creditors before BAPCPA§ 113.8  Order of Payments to Creditors after BAPCPA, § 158.2  Student Loans and § 159.6  Student Loans: § 523(a)(8). See, e.g., Kielisch v. Educational Credit Mgmt. Corp. (In re Kielisch), 258 F.3d 315, 324 (4th Cir. 2001) (Confirmed plan that provided for payment of only the principal portion of student loan did not preclude ECMC from applying payments first to postpetition interest. “Because § 523(a)(8) explicitly precludes the discharge of the Debtors’ student loan debts absent a showing of undue hardship, because § 502 does not address ECMC’s ability to apply estate payments to post-petition interest debts, and because ECMC’s application of payments is consistent with the standard accounting practices set forth in 34 C.F.R. § 684.404(f), we cannot agree that ECMC was barred from applying the Debtor’s estate payments to postpetition interest on their student loans.”); SallieMae Servicing Corp. v. Banks, 271 B.R. 249, 254–56 (W.D. Va. 2001) (“[T]he language in Mr. Bank’s Chapter 13 Plan purporting to discharge post-petition interest was improper. . . . [A]n order may not operate as res judicata should it result in the denial of a creditors’ due process rights. . . . In analogous contexts, the Fourth Circuit has held that confirmed Chapter 13 plans operate as res judicata only with respect to issues arising out of mere ‘contested matters.’ . . . [C]onfirmation does not have preclusive effect over those issues which must be resolved in adversary proceedings . . . . Like the validity of a lien in [Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995),] or the valuation of a secured interest in [Piedmont Trust Bank v. Linkous (In re Linkous), 990 F.2d 160 (4th Cir. 1993)], the question of whether the post-petition interest on a student loan debt is dischargeable must be determined following a proper notice to and hearing with the concerned creditors—in this case, an adversary proceeding. . . . Although ECMC and its predecessors in interest concede that they had received Mr. Banks’ initial and amended Chapter 13 Plans, neither ECMC nor its predecessors were ever served formally with them, nor did Mr. Banks file an adversary proceeding to discharge his student loan debts prior to the confirmation of his Chapter 13 Plan. . . . [S]ophisticated lenders such as ECMC . . . should not turn a blind eye to the confirmation process . . . neither should they fall victim to a Chapter 13 plan that flouts both bankruptcy law and the Constitution. . . . For the reasons cited in Linkous and Cen-Pen, this Court believes that were the Fourth Circuit to have considered the issue in [Great Lakes Higher Education Corp. v. Pardee (In re Pardee),193 F.3d 1083 (9th Cir. 1999)], it would not have ignored the Constitutional aspects of Great Lakes’ res judicata argument, and would have reached the opposite conclusion. . . . [W]hen a Chapter 13 plan contains language which not only attempts to achieve an improper goal, but does so in the absence of a proper statutory showing or adversary proceeding, the plan should not operate as res judicata.”), aff’d by Banks v. Sallie Mae Servicing Corp. (In re Banks), 299 F.3d 296, 300–03 (4th Cir. 2002) (Declining to follow Andersen v. UNIPAC NEBHELP (In re Andersen), 179 F.3d 1253 (10th Cir. 1999), and Great Lakes Higher Education Corp. v. Pardee (In re Pardee), 193 F.3d 1083 (9th Cir. 1999), “[t]he Bankruptcy Court and Rules require Debtors to bring an adversary proceeding to determine the dischargeability of their student loans. . . . Debtors also must bring an adversary proceeding to discharge post-petition interest on student loan debt. . . . Mailing the proposed plans, the hearing notice, and the confirmation order satisfies the ‘notice’ requirement under Rule 2002, but not the service and summons requirements of Rule 7004. . . . [A] bankruptcy court confirmation order generally is afforded a preclusive effect. But we cannot defer to such an order if it would result in a denial of due process in violation of the Fifth Amendment to the United States Constitution. . . . [D]ue process entitles a student loan creditor to specific notice of the Debtor’s intent to discharge any portion of the debt. . . . For lack of adequate notice, the confirmation and discharge orders discharging the interest are not entitled to preclusive effect.”); In re Little, No. 03-17506-WHD, 2003 WL 21656215, at *1 (Bankr. N.D. Ga. June 16, 2003) (unpublished), and In re Ransier, No. 03-17596-WHD, 2003 WL 21656319 (Bankr. N.D. Ga. June 16, 2003) (unpublished) (On court’s initiative, confirmation order is “modified and amended” to delete provision that discharged postpetition student loan interest. The student loan interest provision “contravenes § 523(a)(8) of the Bankruptcy Code and should not have been included in the Debtor’s Chapter 13 Plan.”); In re Loving, 269 B.R. 655, 661 (Bankr. S.D. Ind. 2001) (Distinguishing Great Lakes Higher Education Corp. v. Pardee (In re Pardee), 193 F.3d 1083 (9th Cir. 1999), and Andersen v. UNIPAC-HEBHELP (In re Andersen), 179 F.3d 1253 (10th Cir. 1999), plan that “merely provided for the payment of $12,500 in claims to [ECMC] without explicit reference to whether this treatment was intended to discharge the debt” did not discharge the balance of student loans at the completion of payments.); In re Hensley, 249 B.R. 318 (Bankr. W.D. Okla. 2000) (Citing In re Evans, 242 B.R. 407 (Bankr. S.D. Ohio 1999), inclusion of undue hardship finding in confirmed Chapter 13 plans violates Bankruptcy Rule 9011 notwithstanding Andersen v. UNIPAC-NEBHELP (In re Andersen), 179 F.3d 1253 (10th Cir. 1999), and notwithstanding the absence of timely objection to confirmation; to avoid sanctions, debtors’ attorneys must modify the confirmed plans to delete the offending provision, dismiss or convert the cases to Chapter 7.). See also § 136.2  Taxes before BAPCPA and § 136.3  Taxes after BAPCPA.


23  125 B.R. 19 (B.A.P. 9th Cir. 1991).


24  Pacana v. Pacana-Siler (In re Pacana), 125 B.R. 19 (B.A.P. 9th Cir. 1991).


25  See § 136.20  Alimony, Maintenance and Support in Cases Filed after October 22, 1994§ 136.21  Domestic Support Obligations after BAPCPA and § 138.1  Alimony, Maintenance and Support in Cases Filed before October 22, 1994.


26  See § 85.5  Debts Discharged in Prior Bankruptcy and Nonrecourse Debts, § 87.4  Priority Claims, § 88.4  Alimony, Maintenance and Support and § 88.5  Domestic Support Obligations Assigned or Payable to Government: § 1322(a)(4) after BAPCPA.


27  See § 185.1 [ Alimony, Maintenance and Support ] § 106.3  Alimony, Maintenance and Support.


28  See 11 U.S.C. § 507(a)(7), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 304, 108 Stat. 4106 (1994). See also § 73.2  What Claims Are Priority Claims?§ 73.3  Priority Claims Added or Changed by BAPCPA, § 136.20  Alimony, Maintenance and Support in Cases Filed after October 22, 1994 and § 136.21  Domestic Support Obligations after BAPCPA.


29  See §§ 98.1 [ Plan Must Provide Full Payment ] § 73.1  Plan Must Provide Full Payment and 291.1 [ Treatment of Priority Claims ] § 136.1  Treatment of Priority Claims.


30  See, e.g., Mudd v. Jacobson (In re Jacobson), 231 B.R. 763, 765 (Bankr. D. Ariz. 1999) (“Reading [§§ 507(a)(7), 1322(a)(2) and 1328] together, the conclusion is undeniable that Congress intended in 1994 to change the law such that maintenance and support obligations not only may, but must, be treated specially and paid in full under a Chapter 13 plan. This conclusion undercuts the fundamental reasoning of [Pacana v. Pacana-Siler (In re Pacana), 125 B.R. 19 (B.A.P. 9th Cir. 1991)].”).


31  See § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations and § 101.4  Curing Default and Maintaining Payments on Unsecured Debt and discussions on curing defaults beginning at § 81.1  Overview: General Rules for Saving Debtor’s Home§ 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?§ 83.1  In General: Rake and Contracts before October 22, 1994 and § 84.1  In General.


32101 F.3d 618 (9th Cir. 1996).


33Peters v. Mason-McDuffie Mortgage Corp. (In re Peters), 184 B.R. 799, 802–03 (B.A.P. 9th Cir. 1995).


34Mason-McDuffie Mortgage Corp. v. Peters (In re Peters), 101 F.3d 618, 618–19 (9th Cir. 1996) (adopting In re Barry, 201 B.R. 820 (C.D. Cal. 1996)). See also discussions on curing defaults beginning at § 81.1  Overview: General Rules for Saving Debtor’s Home, § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?, § 83.1  In General: Rake and Contracts before October 22, 1994 and § 84.1  In General.


35  220 B.R. 216 (Bankr. D.N.J. 1998). See also In re Burkhardt, 220 B.R. 837, 849 (Bankr. D.N.J. 1998) (Sovereign immunity is not a bar to confirmation of a Chapter 13 plan that will discharge claims for motor vehicle fines and surcharges notwithstanding that sovereign immunity does bar the debtor’s motion to require the Department of Motor Vehicles to reinstate a driver’s license. “[T]his Court finds that it does in fact have subject matter jurisdiction to discharge motor vehicle fines and surcharges in the context of confirmation of and payment under a Chapter 13 Plan, since such confirmation and resulting discharge of a State debt is not a ‘suit in law or equity’ against the State of New Jersey in contravention of the Eleventh Amendment.”).


36  220 B.R. at 225.


37  233 B.R. 71 (Bankr. D.N.J. 1999).


38  233 B.R. at 78–79.


39  See § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors, § 136.6  Debtors’ Attorneys’ Fees before BAPCPA and § 136.7  Debtors’ Attorneys’ Fees after BAPCPA.


40  See § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors, § 136.6  Debtors’ Attorneys’ Fees before BAPCPA and § 136.7  Debtors’ Attorneys’ Fees after BAPCPASee, e.g., Clark v. LaBarge (In re Clark), 223 F.3d 859 (8th Cir. 2000) (Confirmation of plans that provided flat fee of $1,250 for debtors’ attorney did not preclude bankruptcy court from inquiring into the reasonableness of the fees. Bankruptcy court did not abuse its discretion in denying fees, ordering disgorgement of fees and sanctioning debtors’ attorney for claiming flat fees when paralegal prepared and filed the Chapter 13 papers and the attorney met with the debtors for the first time at the meeting of creditors.).


41  See, e.g., Blue v. Town of Lake Bldg. Corp. (In re Blue), 247 B.R. 748, 751 (Bankr. N.D. Ill. 2000) (Purchaser at Illinois delinquent tax sale is not a creditor of the debtor and is not bound by confirmation of plan that provided for payment of the taxes. Prior to the petition, purchaser paid delinquent taxes on the debtor’s house and received a certificate of purchase from Cook County. The debtor filed Chapter 13 on the last day of the redemption period. Plan was confirmed, and consistent with the plan, the trustee tendered payment of the delinquent taxes to the purchaser. The purchaser refused the payment. Debtor filed a complaint for declaratory relief. With respect to whether the purchaser was bound by the confirmed plan: “As construed by the Illinois Supreme Court, the Illinois Property Tax Code establishes a debtor/creditor relationship between the tax purchaser and the county . . . and a debtor/creditor relationship between the county and the landowner . . . . The Tax Code does not, however, establish a debtor/creditor relationship between the landowner and the tax purchaser.” Accordingly, the purchaser was not bound by confirmation and was entitled to relief from the stay.). See also §§ 146.1 [ Debts Discharged in Prior Bankruptcy and Nonrecourse Debts ] § 85.5  Debts Discharged in Prior Bankruptcy and Nonrecourse Debts and 305.1 [ Nonrecourse Claims and Claims Discharged in Prior Bankruptcy Case ] § 138.4  Nonrecourse Claims and Claims Discharged in Prior Bankruptcy Case.


42  See § 112.1 [ Interest Rate Anarchy: Present Value Before Till ] § 77.2  Interest Rate Anarchy: Present Value before Till.


43  50 U.S.C. App. §§ 501–594 (2002).


44  Pub. L. No. 108-189, 117 Stat. 2835 (2003), codified at 50 U.S.C. App. §§ 501–596 (restated and clarified Soldiers’ and Sailors’ Civil Relief Act of 1940).


45  292 B.R. 441 (Bankr. S.D. Ga. 2003).


46  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. See, e.g., Mourer v. Equicredit Corp. of Am. (In re Mourer), 287 B.R. 889 (Bankr. W.D. Mich. 2003) (Confirmed plan that treated Equicredit as a secured creditor precludes remedy of rescission in debtors’ postconfirmation adversary proceeding under Truth-in-Lending Act and Home Ownership and Equity Protection Act.).


47  See, e.g., 1st Franklin Fin. Corp. v. Barkley (In re Anthony), 302 B.R. 843, 853–55 (Bankr. N.D. Miss. 2003) (Confirmation order does not bar Chapter 13 trustee’s suit alleging that 1st Franklin engaged in deceptive credit insurance transactions. Chapter 13 trustee sued 1st Franklin in 21 separate cases alleging that the debtors were overcharged premiums for credit life and credit disability insurance. 1st Franklin separately sued the Chapter 13 trustee to enjoin her lawsuit. With respect to 1st Franklin’s argument: “[T]his court must accept the Trustee’s position that she did not have knowledge of any potential causes of action against 1st Franklin prior to the orders being entered confirming the debtors’ Chapter 13 plans or sustaining her motions to allow 1st Franklin’s claims. . . . [A] party must have had an opportunity to raise the issue. . . . [P]recluding the Trustee’s proposed causes of action against 1st Franklin because of the entry of the confirmation orders and the orders allowing 1st Franklin’s claims would exact an extraordinarily inequitable result.” With respect to judicial estoppel, equitable estoppel and waiver: “The Trustee’s complete lack of knowledge of the potential causes of action against 1st Franklin at the time of the entry of the confirmation orders and the orders allowing 1st Franklin’s claims evidences that the Trustee is not intentionally taking an inconsistent position insofar as this court or 1st Franklin are concerned. Likewise, she did not knowingly waive the causes of action against 1st Franklin.”); McGlockling v. Chrysler Fin. Co. (In re McGlockling), 296 B.R. 884, 888 (Bankr. S.D. Ga. 2003) (Res judicata effect of confirmed plan is not implicated in postconfirmation adversary proceeding to compel Chrysler to allow the debtor to take his car to Germany. Bankruptcy court cites §§ 363(b) and 1303 for the proposition that the debtor is “merely attempting to use the vehicle pursuant to § 363. Debtor is not attempting to modify the plan pursuant to 11 U.S.C. § 1329. Thus, the res judicata effect of the plan is not implicated in this case.”); Smith v. Elzey (In re Smith), 280 B.R. 436, 440 (Bankr. N.D. Ill. 2002) (Although property of the Chapter 13 estate vested in the debtor at confirmation, bankruptcy court had continuing jurisdiction over debtor’s complaint for fraud and violation of consumer protection statutes in connection with a prepetition mortgage foreclosure. “In a Chapter 13 bankruptcy, property of the debtor’s estate including any pre-bankruptcy cause of action owned by the debtor revests in the debtor upon confirmation of a Chapter 13 Plan. 11 U.S.C. § 1327(b); [Black v. United States Postal Service (In re Heath), 115 F.3d 521, 524 (7th Cir. 1997)] . . . . However, such revesting does not obviate related jurisdiction over the instant adversary. Related jurisdiction still lies here because any recovery obtained by Smith can be reached after confirmation by the Chapter 13 trustee to pay creditors more than the confirmed Plan provides. 11 U.S.C. § 1329.”).


48  See discussions beginning at § 142.1  New Schedules, Statement, Meeting of Creditors and Deadlines, § 143.1  In Cases Filed before October 22, 1994, § 144.1  Exemptions at Conversion and § 145.1  In Cases Filed before October 22, 1994But see 11 U.S.C. § 348(f)(1)(B) (“Valuations of property and of allowed secured claims in the Chapter 13 case shall apply in the converted case.”), discussed in § 145.2  In Cases Filed after October 22, 1994 and  § 145.3  Lienholders’ Rights at Conversion under § 348(f) after BAPCPASee, e.g., Holway v. United States (In re Holway), 237 B.R. 217, 220 (Bankr. M.D. Fla. 1999) (Confirmation of plan that provided full payment of priority tax claim did not discharge penalties and interest that accrued before conversion to Chapter 7 because the debtor never received a discharge in the Chapter 13 case. “[T]he Chapter 13 confirmed plan did not eliminate the postpetition interest on the IRS claim, but merely suspended it during the pendency of the plan. Had the plan been completed and the Chapter 13 discharge obtained, the interest and penalties on the debt would remain unmatured and discharged. However, the conversion to Chapter 7 ended the suspension of the ‘interest-bearing quality’ of the priority tax debt.”); In re Shaffer, 48 B.R. 952 (Bankr. N.D. Ohio 1985) (Notwithstanding § 1327(a), upon conversion to Chapter 7, res judicata does not bar creditor’s lien avoided in the abandoned plan.).


49  See § 139.2  BAPCPA: More Grounds; Changed Consequences, § 153.1  In General, § 153.2  Consequences of Dismissal Added or Changed by BAPCPA and§ 153.3  Court-Imposed Conditions and Restrictions on Dismissal. See, e.g., In re Groves, 27 B.R. 866 (Bankr. D. Kan. 1983) (Although confirmation vests property in the debtor free and clear of a creditor’s interest, when case is dismissed, § 349(b)(3) revests property in the entity in which such property was vested immediately before commencement.).


50  See discussions beginning at § 124.1  Procedure. See, e.g., In re Miano, 261 B.R. 391, 392–93 (Bankr. D.N.J. 2001) (Mortgage holders not bound by value of property or amount of allowed secured claim stated in confirmed plan when relief from the stay is granted after confirmation based on defaults under the plan. Confirmed plan stated the amount due to mortgage holder. Modified plan required the debtor to pay the mortgage holder directly. Debtor made no payments, and the mortgage holder was granted relief from the stay. Before the mortgage holder could foreclose, the debtor sold the property and the parties disputed the payoff due the mortgage holder. Bankruptcy court concluded that mortgage holder was entitled to the full amount of its debt not limited by the amount stated in the confirmation order. “Under Code section 1327(a) debtors and their creditors are bound by a confirmed plan. If, however, the debtor subsequently defaults on payments inside or outside the plan, the creditor can obtain relief from the automatic stay and the plan will no longer bind the creditor. . . . The controlling principle is ultimately one of equity: if a debtor fails to fulfill his obligations under a plan, he cannot reasonably expect his creditors to remain bound by it. Moreover, confirmation . . . could no longer bind [the mortgage holder] because Code section 363(d) provides that the trustee, and therefore the debtor under Code section 1303, may only use, sell or lease property to the extent not inconsistent with stay relief under Code section 362(d).”); Ford v. Fidelity Consumer Discount Co. (In re Young), 76 B.R. 504 (Bankr. E.D. Pa. 1987) (Although confirmation binds creditors provided for under the plan, upon postconfirmation default, a creditor that obtains relief from the automatic stay is no longer bound by plan and can seek damages and attorneys’ fees that are in excess of claims allowed in the Chapter 13 case.).


51  See Marshall v. Security State Bank of Hamilton (In re Marshall), 121 B.R. 814 (Bankr. C.D. Ill. 1990) (Even if Truth-in-Lending Act violation is a “compulsory counterclaim,” failure of confirmation of Chapter 13 plan does not bar debtor from asserting Truth-in-Lending Act claim.).