§ 124.2     Confirmation as a Defense to Relief from the Stay
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 124.2, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

It is often stated in reported decisions that a postconfirmation request for relief from the stay must be based on postconfirmation facts, events or defaults: confirmation is an adjudication of the rights of all parties, and a creditor cannot use a postconfirmation request for relief from the stay as a collateral attack on the confirmation order.1

[2]

This preclusive effect of the confirmation order on postconfirmation relief from the stay is sometimes founded on principles of res judicata2or described as an effect of confirmation under § 1327.3 Absent proof of postconfirmation default under the plan, relief from the stay is not available after confirmation merely because a creditor is dissatisfied with the plan or could have defeated confirmation with a timely objection. The arguments that might have been made by the creditor prior to confirmation—for example, lack of adequate protection4—are precluded by the order of confirmation.5 Confirmation even constrains a creditor that was granted relief from the stay after the petition but before confirmation.6 A change in the law after confirmation does not warrant relief from the stay when there has been no material default under the confirmed plan.7

[3]

A few reported decisions recognize limitations on the preclusive effect of confirmation on postconfirmation relief from the stay. Foremost, when notice fails to inform a creditor of its treatment under the plan, confirmation raises a fragile bar to relief from the stay.8

[4]

Less logically, the Bankruptcy Appellate Panel for the Ninth Circuit held that a child support creditor was entitled to postconfirmation relief from the stay notwithstanding adequate notice of a plan that provided for payment of the support claim.9 The BAP seemed to find a generic limitation on the effect of confirmation on the entitlement of a support creditor to postconfirmation relief from the stay that is not supported by careful statutory analysis.10

[5]

Several courts in the Ninth Circuit struggled with the question whether confirmation of a plan that cures default on a home mortgage precludes postconfirmation relief from the stay to complete a foreclosure sale that was postponed by announcement during the Chapter 13 case. Discussed in more detail elsewhere,11 in Peters v. Mason-McDuffie Mortgage Corp. (In re Peters),12 the debtor filed Chapter 13 to stop a foreclosure sale. The plan proposed to cure prepetition default and maintain payments on the mortgage consistent with § 1322(b)(5).13 The mortgage holder, with knowledge of the Chapter 13 case, postponed the foreclosure sale by announcement and eventually filed a motion for relief from the stay based on postconfirmation defaults.14

[6]

The debtor defended against stay relief by arguing that the mortgage holder violated the stay by continuing its foreclosure sale after the petition and after confirmation of a plan that cured default. The bankruptcy court found no stay violation and ordered the debtor to provide adequate protection to the mortgage holder.

[7]

On intermediate appeal, the Bankruptcy Appellate Panel held that the mortgage holder violated the stay by continuing its foreclosure sale after confirmation because the confirmed plan eliminated the underlying default. The BAP found this outcome in the preclusive effect of confirmation:

[A] secured creditor cannot obtain postconfirmation stay relief based on preconfirmation events or issues; the confirmed plan renders such matters res judicata, and only postconfirmation events, such as a default on the plan, will support postconfirmation stay relief. . . . 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 Mason an advantage to which it is not entitled: the right to immediately foreclose for a prepetition default. . . . Mason’s attempt to regain the position in violation of the confirmed plan is a violation of the automatic stay.15
[8]

On further appeal, the Ninth Circuit reversed, finding that confirmation did not immediately cure default and the mortgage holder did not violate the stay by postponing its foreclosure sale after confirmation:

The Ninth Circuit has held that a creditor may postpone a foreclosure sale after a debtor files a bankruptcy petition without violating the automatic stay. [In re Roach, 660 F.2d 1316 (9th Cir. 1981).] . . . The rationale supporting this decision is that postponement maintains the status quo and does not affect the debtor’s substantive rights. . . . [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.16
[9]

Although there is much discussion at every level in Peters of the effect of confirmation on entitlement to relief from the stay, it is hard to draw firm conclusions from the final disposition. It is probably still true even in the Ninth Circuit that postconfirmation relief from the stay must be based on postconfirmation facts, events or defaults. That the confirmed plan cures default under § 1322(b)(3) or (b)(5) remains a defense to postconfirmation relief from the stay based on prepetition defaults; but confirmation does not stop a mortgage holder in the Ninth Circuit from continuing its prepetition foreclosure sale by announcement during the Chapter 13 case, at least until completion of the payments necessary to actually cure default. If the mortgage holder is granted relief from the stay after confirmation (presumably still requiring a ground in postconfirmation facts), it can complete its (continued) prepetition foreclosure sale unless full payment of arrearages through the plan requires restarting the foreclosure process.

[10]

Notwithstanding the plain language of § 1327(a) that “a confirmed plan binds the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan,” some courts have found that confirmation precludes relief from the stay only when the plan provides for the creditor’s claim—a few going even further to require actual payment through the plan. An extreme example is Southtrust Bank of Alabama v. Thomas (In re Thomas).17

[11]

In Thomas, the U.S. Court of Appeals for the Eleventh Circuit tortured §§ 1327 and 362 to conclude that a secured claim holder is entitled to postconfirmation relief from the stay notwithstanding confirmation of a plan that provided full payment of “allowed secured claims” when the claim holder disabled itself from receiving payments under the plan by failing to timely file a proof of claim.18 The Eleventh Circuit found that the creditor was not provided for by the plan even though the plan called for full payment had the creditor timely filed a proof of claim.19 The court suggested that relief from the stay could be avoided if the debtor filed a proof of claim on behalf of the creditor to cause payment of the claim. Other courts have directly or indirectly linked postconfirmation relief from the stay to the extent to which the plan provided for actual payment of the creditor’s claim.20

[12]

These decisions are misguided for at least two reasons. Nothing in § 362 or § 1327 overcomes the preclusive effects of confirmation on relief from the stay even with respect to a creditor that is not provided for by the plan. In fact, the language of the Code is positively just the opposite—every creditor is bound by the confirmed plan without regard to whether that creditor is provided for by the plan.21

[13]

This construction of the Code in reorganization cases22 is quite purposeful: otherwise there is no finality to confirmation and no compulsion to participate in confirmation by objecting to an adverse plan. Thomas demonstrates that without the binding effect, creditors that are not provided for to their liking can ignore the Chapter 13 case and sabotage the rearrangement effort by relief from the stay after confirmation. Binding even creditors that are not provided for by the plan forces all creditors to raise their objections before confirmation, else they will be bound by the plan whether it provides appropriately or not. Thomas has the whole scheme backwards.

[14]

Every creditor is entitled to notice of the proposed Chapter 13 plan.23 Every creditor receiving notice has concrete statutory rights at confirmation that are abundantly protected by timely objection to confirmation.24 The failure of a Chapter 13 plan to provide for a creditor typically constitutes a very effective objection to confirmation. For example, the holder of a secured claim that is not provided for by the plan will successfully defeat confirmation because every secured claim holder is entitled to one or more of the treatments described in §§ 1322(b) and 1325(a)(5).25 The secured claim holder with notice that the plan does not provide for its claim and that fails to object to confirmation is bound by the order of confirmation exactly like every other creditor, “provided for” or not, under § 1327(a).26 This outcome is not a ground for postconfirmation relief from the stay. Creditors that sleep on their rights wake up chained to the confirmed plan.

[15]

Notice that a lienholder that is not provided for by the plan does not lose its lien at confirmation because the free and clear effect in § 1327(c) extends only to claims provided for by the plan.27 And a lien that is not provided for by the plan is not discharged at the completion of payments under the plan.28 But § 1327(a) is worded otherwise: confirmation binds all creditors without regard to whether the claim is provided for by the plan. Respect for § 1327(a) precludes stay relief after confirmation for creditors that are and that are not provided for by the plan.

[16]

The second defect in the logic of Thomas and similar cases is that provided for in § 1327 cannot be interpreted to require that the creditor actually be paid through the plan. Getting paid through a Chapter 13 plan is a multistep process. First, of course, the plan must provide for payment of the claim. However, a creditor will not actually receive payment unless the claim holder has an allowed claim.29 To have an allowed claim, a proof of claim must be filed by the creditor or on behalf of the creditor.30 Even if the confirmed plan provides for payment, the creditor that fails or refuses to file a proof of claim will not be paid through the plan. Linking actual payment of a claim to the question whether a claim is provided for by the plan is a crucial misinterpretation of the Code. The further step of linking entitlement to postconfirmation relief from the stay to the question whether a creditor is actually paid through the plan defeats the binding effect of confirmation under § 1327(a).

[17]

“Provided for” has been broadly defined by the Supreme Court to mean that a Chapter 13 plan “makes a provision” for, “deals with” or even “refers to” a claim.31 The Chapter 13 plan in Thomas unmistakably provided for the bank’s claim by stating that “allowed secured claims” would be paid in full. Had the bank filed a proof of claim, it would have been actually paid the allowed amount of its secured claim. That the bank disabled itself from receiving payments under the plan is irrelevant to whether the plan provided for its claim.

[18]

Granting postconfirmation relief from the stay based on a creditor’s choice to forgo distributions under the plan is a dangerous distortion of the Code. Thomas means that a creditor can control the effect of confirmation on relief from the stay by simply declining to file a proof of claim. This permits claim holders to avoid the statutory mandate in § 1327(a) by the simple expedient of neglecting to file a proof of claim.

[19]

The Bankruptcy Code is constructed quite the other way around: the claim holder that neither objects to confirmation nor avails itself of distributions under the plan is without cause for relief from the stay after confirmation. Relief from the stay after confirmation is not a remedy for either the creditor’s failure to object to confirmation or the creditor’s failure to file an allowable proof of claim. The reported decisions to the contrary are unsound.

[20]

The preclusive effect of confirmation on a postconfirmation request for relief from the stay should not be misinterpreted as a statement with respect to the rights of creditors at discharge. In contrast to § 1327(a), the discharge of claims under § 1328(a) is limited that, after completion of all payments under the plan, only claims that are provided for by the plan (or disallowed) are discharged.32 Congress has clearly stated that providing for claims is a predicate to discharge. The opposite is just as clearly true with respect to the binding effect of confirmation under § 1327(a). The outcome is complete and logical: a claim holder that fails to object to confirmation is bound by the plan and precluded from postconfirmation relief from the stay without regard to whether the plan provides for payment of the claim; however, upon completion of payments under the plan, a claim that is not provided for by the plan is not discharged. Creditors realize full protection of their rights within this structure by objecting to confirmation and by filing proofs of claim.

[21]

The preclusive effect of confirmation on relief from the stay applies equally to priority, secured and unsecured claim holders. A secured creditor protects its lien rights by objecting to confirmation of any plan that does not provide for those rights consistent with §§ 1322(b) and 1325(a)(5).33 If the plan is confirmed, the lienholder must appeal the confirmation order34 and file a timely proof of claim. A postconfirmation request for relief from the stay is not an effective alternative.


 

1  Lomas Mortgage USA v. Wiese (In re Wiese), 980 F.2d 1279 (9th Cir. 1992) (Because all of the creditor’s arguments for relief from the stay were properly rejected as objections to confirmation of the plan, the confirmed plan binds the creditor and relief from the stay is inappropriate.); In re Pence, 905 F.2d 1107, 1110 (7th Cir. 1990) (Section 1327 precludes challenge to the plan by motion for relief from the stay after confirmation. Plan proposed to surrender business property valued by the debtor at $58,500 in full satisfaction of a $47,000 debt on condition that creditor release its lien on the debtor’s personal residence. Creditor failed to object to confirmation and failed to object to $58,500 valuation of the business property. “The appraisal turned out to be an inflated estimate of the collateral value, and instead of attacking the valuation head on at the confirmation hearing [the creditor] has chosen a collateral attack on the confirmation order where valuation may not be contested. . . . [The creditor] must live with its procedural choice.”); In re Szostek, 886 F.2d 1405 (3d Cir. 1989) (Confirmed plan is binding on creditor that failed to object to confirmation, notwithstanding fact that the plan failed to provide present value under § 1325(a)(5). Creditor cannot use a postconfirmation motion for relief from the stay to collaterally attack confirmed plan. Acceptance of a plan “is inferred from the absence of a timely objection.”); Anaheim Sav. & Loan Ass’n v. Evans, 30 B.R. 530, 531 (B.A.P. 9th Cir. 1983) (Confirmation order is res judicata “as to all justiciable issues which were or could have been decided at the confirmation hearing.” In the absence of default, after confirmation a secured claim holder is barred from seeking relief from stay.); Chevy Chase Bank v. Locke (In re Locke), 227 B.R. 68, 70 (E.D. Va. 1998) (Failure to object to confirmation precludes postconfirmation motion for relief from the stay based on claim that plan does not adequately protect security interest in car. Notice of plan treated bank as secured with claim of $8,200 and informed bank to file objections within 45 days else plan would be confirmed as proposed. Bank filed a timely proof of claim for $12,004.25 but did not object to confirmation. “When a party claims that is interest is not adequately protected in a confirmed plan, it is limited to discussing circumstances that arose after the confirmation of the plan.”); Lester Mobile Home Sales, Inc. v. Woods (In re Woods), 130 B.R. 204, 208 (W.D. Va. 1990) (Section 1327(a) requires that the confirmation order be given res judicata effect as to all issues that were or could have been decided at the time of confirmation. Six months after confirmation, creditor moved for relief from the stay, alleging that the plan improperly valued creditor’s collateral and improperly modified the creditor’s rights in violation of § 1322(b)(2), and that these issues were “jurisdictional” and could be raised collaterally on a motion for relief from the stay. District court determined that a confirmation order is res judicata with respect to subject matter jurisdiction and finality of the confirmation order. “A Chapter 13 bankruptcy case, unlike the typical civil case, can involve several discrete disputes within it which are disposed of sometimes over the course of several years. It is important for the orderly and efficient administration of the case and for the securing of the rights of the parties to the case that the issues, including the issue of subject matter jurisdiction resolved by the order confirming a Chapter 13 plan, not be subject to reconsideration (except in the case of fraud) after the direct appeals process for the order has ended.”); In re Jones, No. 02-15197DWS, 2003 WL 22843162, at *5 (Bankr. E.D. Pa. Nov. 14, 2003) (unpublished) (Mortgage holder is bound by confirmed plan to accept payments directly from the debtor in the amount of its allowed secured claim, and relief from the stay is not appropriate notwithstanding that confirmed plan did not void prepetition foreclosure sale. “That Plan, confirmed without objection by LaSalle, provides for monthly payments to LaSalle equal to its secured claim. Thus, so long as Debtor makes the payments contemplated by the Plan, the stay should remain in plan.”); In re Clark, No. 4:02-BK-10963E, 2002 WL 32114480, at *1 (Bankr. E.D. Ark. Sept. 3, 2002) (unpublished) (Confirmation defeats motion for relief from the stay based on lack of equity and absence of necessity to reorganization; postconfirmation defaults “are not considered in the confirmation process and therefore not subject to res judicata flowing from the confirmation order.”); In re Mitchell, 281 B.R. 90, 94 (Bankr. S.D. Ala. 2001) (Confirmation of plan that treated mortgage holder as unsecured bars relief from the stay notwithstanding that prepetition judgment on the note did not merge and eliminate the lien. “The binding effect of a confirmation order precludes relief from the stay on grounds of lack of adequate protection absent a default in carrying out the plan.”); In re Crowley, 258 B.R. 587, 592 (Bankr. D. Vt. 2000) (Confirmation of plan that provided for 20-year payout of mortgage on commercial property precludes relief from the stay based on a change in the law with respect to redemption rights in bankruptcy cases when there is no evidence of material default under the confirmed plan. After confirmation, the District Court for the District of Vermont determined that debtors in bankruptcy must exercise a right of redemption within 60 days of the petition. Mortgage holder provided for by confirmed Chapter 13 plan moved for relief from the stay after confirmation based on this change in the law. “This Court rejects the Movants’ argument that a post-confirmation change in longstanding applicable bankruptcy law is sufficient to warrant a revocation or modification of the terms of a confirmed and operating Chapter 13 plan. . . . It is true that a debtor’s material failure to comply with the terms of a confirmed plan may warrant relief from stay. . . . However, the facts presented here do not prove a material failure to comply with the confirmed plan . . . . [T]he Movants are adequately protected by the undisputed equity in the subject property. . . . [T]he subject property is necessary to the debtor’s effective reorganization.”); In re Matthews, 229 B.R. 324, 328 (Bankr. E.D. Pa. 1999) (Confirmed plan that provides for car lender precludes postconfirmation stay relief on ground that insurance provided by the debtor’s sister is inadequate protection. Car was titled in debtor’s name, but debtor did not have a driver’s license. Car was driven and insured by debtor’s sister. Under Pennsylvania law, sister had sufficient insurable interest that policy would cover loss to car. “The Plan provides for the liquidation of CFC’s claim. The Plan has been confirmed and, as such, binds CFC to accept its terms to effect the liquidation of its debt. . . . While of course CFC could obtain relief from the automatic stay against the Debtor for cause, in light of the confirmation of the Plan it could do so only on the ground that the Debtor failed to conform to the terms of its treatment under the Plan as written . . . . Confirmation of a plan basically eliminates any argument that relief is appropriate under § 362(d)(2).”); In re Gordon, 217 B.R. 973 (Bankr. S.D. Ga. 1997) (Arguably in dicta, automatic stay prohibits IRS to exercise rights under prepetition agreement that permitted debtor to pay taxes in excess of $85,000 at $110 per month. Although agreement provided for cancellation if the debtor’s financial condition changed, once incorporated into order of confirmation, the IRS could not exercise its rights under the agreement without first filing a motion for relief from the stay.); In re Arkell, 165 B.R. 432 (Bankr. M.D. Tenn. 1994) (Confirmation and § 1327(a) preclude relief from the stay on a ground that could have been asserted as an objection to confirmation. Nissan Motor Acceptance Corporation’s security interest in a car was fixed at confirmation. That the car was destroyed after confirmation and an insurance company tendered more than the balance of Nissan’s allowed secured claim is not ground for relief from the stay. Casualty insurance proceeds are property of the Chapter 13 estate. After confirmation, the secured claim holder’s interest in insurance proceeds is limited to the balance of the allowed amount of its secured claim. Any dispute regarding the extent of Nissan’s security interest in the car or in casualty insurance had to be raised and litigated before confirmation.); In re Minzler, 158 B.R. 720, 721 (Bankr. S.D. Ohio 1993) (Confirmation precludes relief from the stay on the ground that debtor’s treatment of lessor as a secured claim holder is inappropriate. That lessor filed a motion for relief from the stay on July 9, 1993, before entry of the order of confirmation on July 26, 1993, is of no help because the deadline for filing objections to confirmation was June 22, 1993, and, even if construed as an objection to confirmation, the motion for relief from the stay on July 9, 1993, was untimely. The lessor is bound by the terms of the debtor’s plan under § 1327(a) and “the issues of section 362(d)(2) may no longer be raised. . . . [T]o have avoided being bound by the confirmation order [the creditor] had to file an objection to confirmation and not merely a motion for relief from the stay.”); Lawson v. Lackey (In re Lackey), 148 B.R. 626 (Bankr. N.D. Ala. 1992) (Confirmation of plan paying 9% of prepetition child support arrearage claim precludes relief from the stay where holder of support claim objected to confirmation on the same grounds that are asserted in support of relief from the stay but did not appeal confirmation.); Owens v. Fleet Mortgage (In re Owens), 132 B.R. 293 (Bankr. E.D. Pa. 1991) (Mortgage holder was not entitled to relief from the stay after confirmation and was bound by confirmed plan to receive $10,000 notwithstanding that its allowed secured claim was actually $15,000. Confirmed plan calling for payment of $10,000 was binding on both mortgage holder and debtor under § 1327(a). The fact that the mortgage holder had an allowed secured claim of $15,000 did not entitle it to relief from the stay; however, debtor will be subject to a “residual security interest” of $5,000 at the completion of payments under the plan.); In re Walker, 128 B.R. 465, 468 (Bankr. D. Idaho 1991) (Section 1327(a) precludes the use of a postconfirmation motion for relief from the stay to collaterally attack a confirmed plan. Creditor had a copy of the plan containing a provision for modification of its mortgage and notice of the confirmation hearing. Creditor did not object to confirmation, did not appear at the confirmation hearing, and did not appeal the order of confirmation. Notwithstanding that the plan modified the rights of the mortgage holder in violation of § 1322(b)(2), the creditor’s failure to protect itself prior to confirmation was fatal to the postconfirmation motion for relief from the stay. “[A]cceptance of the provisions of a plan by a creditor is inferred from the absence of a timely objection.”); In re Barnes, 125 B.R. 484 (Bankr. E.D. Mich. 1991) (Confirmation is binding on secured claim holder under § 1327(a). Confirmed plan clearly explained that payments to automobile secured claim holder would commence on the seventh month after confirmation. Failure to object to confirmation bound lender to accept deferred payment. However, fact that the car was not insured constituted cause for relief from the stay after confirmation.). Accord In re Randall, 98 B.R. 916 (Bankr. N.D. Ill. 1989); In re Guilbeau, 74 B.R. 13 (Bankr. W.D. La. 1987); In re Toth, 61 B.R. 160 (Bankr. N.D. Ill. 1986); In re Wright, 54 B.R. 553 (Bankr. E.D. Pa. 1985); In re Clark, 38 B.R. 683 (Bankr. E.D. Pa. 1984); Pennsylvania Sch. Employees’ Ret. Fund v. Pizzullo, 33 B.R. 740 (Bankr. E.D. Pa. 1983); Waterfield Mortgage Co. v. Clark, 31 B.R. 502 (Bankr. S.D. Ohio 1983); In re Russell, 29 B.R. 332 (Bankr. E.D.N.Y. 1983). But see Hamilton v. Lomas Mortgage, U.S.A. (In re Hamilton), 100 B.R. 385 (N.D. Ill. 1989) (Preconfirmation request for relief from the stay can be granted after entry of confirmation order. Section 1327 permits relief from the stay after confirmation notwithstanding the absence of postconfirmation default.).

 

2  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., Anaheim Sav. & Loan Ass’n v. Evans, 30 B.R. 530 (B.A.P. 9th Cir. 1983); Lester Mobile Home Sales, Inc. v. Woods (In re Woods), 130 B.R. 204 (W.D. Va. 1990).

 

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. See, e.g., In re Arkell, 165 B.R. 432 (Bankr. M.D. Tenn. 1994) (Confirmation and § 1327(a) preclude relief from the stay on a ground that could have been asserted as an objection to confirmation.); In re Minzler, 158 B.R. 720 (Bankr. S.D. Ohio 1993) (Lessor is bound by the terms of the debtor’s plan under § 1327(a), and the plan precludes relief from the stay on the ground that the debtor’s treatment of lessor as a secured claim holder is inappropriate.); In re Walker, 128 B.R. 465 (Bankr. D. Idaho 1991) (Section 1327(a) precludes the use of a postconfirmation motion for relief from the stay to collaterally attack a confirmed plan.); In re Barnes, 125 B.R. 484 (Bankr. E.D. Mich. 1991) (Confirmation is binding on secured claim holder under § 1327(a).); Rhode Island Cent. Credit Union v. Zimble, 47 B.R. 639 (Bankr. D.R.I. 1985) (Real estate secured claim holder with a demand note is not entitled to postconfirmation relief from the stay when claim holder failed to object to confirmation. § 1327 binds the claim holder to the interest rate and payments provided in the confirmed plan. Relief from the stay postconfirmation must be based on events occurring postconfirmation.).

 

4  See § 81.1 [ Lack of Adequate Protection ] § 64.1  Lack of Adequate Protection.

 

5  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., Chevy Chase Bank v. Locke (In re Locke), 227 B.R. 68 (E.D. Va. 1998) (Failure to object to confirmation precludes postconfirmation motion for relief from the stay based on claim that plan does not adequately protect security interest in car.); Lester Mobile Home Sales, Inc. v. Woods (In re Woods), 130 B.R. 204 (W.D. Va. 1990) (Confirmation precludes use of a motion for relief from the stay when the grounds for relief are that the plan improperly valued creditor’s collateral and that the plan improperly modified creditor’s rights in violation of § 1322(b)(2). The failure to object to confirmation is fatal to these arguments.); In re Clark, No. 4:02-BK-10963E, 2002 WL 32114480 (Bankr. E.D. Ark. Sept. 3, 2002) (unpublished) (Confirmation defeats motion for relief from the stay based on lack of equity and absence of necessity to reorganization.); In re Mitchell, 281 B.R. 90, 94 (Bankr. S.D. Ala. 2001) (“The binding effect of a confirmation order precludes relief from the stay on grounds of lack of adequate protection absent a default in carrying out the plan.”); In re Matthews, 229 B.R. 324 (Bankr. E.D. Pa. 1999) (Confirmed plan that provides for car lender precludes postconfirmation stay relief on ground that insurance provided by the debtor’s sister is inadequate protection.); In re Walker, 128 B.R. 465 (Bankr. D. Idaho 1991) (Notwithstanding that the plan modified the rights of the moving creditor in violation of § 1322(b)(2), the creditor’s failure to protect itself prior to confirmation defeated the postconfirmation motion for relief from the stay.); In re Barnes, 125 B.R. 484 (Bankr. E.D. Mich. 1991) (Creditor’s failure to object to confirmation binds creditor to accept payments under a plan, notwithstanding that the plan calls for payments to commence on the seventh month after confirmation. Creditor had a security interest in an automobile and probably could have challenged confirmation on the ground that deferral of payments for seven months violates its rights under § 1325(a)(5).); Chrysler Credit Corp. v. Landers, 28 B.R. 101 (Bankr. N.D. Ala. 1983) (Secured creditor who fails to file proof of claim is bound by confirmation as an unsecured creditor and cannot claim lack of adequate protection as ground for relief from stay.).

 

6  See Diviney v. NationsBank of Tex. (In re Diviney), 211 B.R. 951, 964 (Bankr. N.D. Okla. 1997) (Stay relief order before confirmation does not provide a basis for bank’s repossession and sale of the debtor’s car after confirmation when confirmation order did not incorporate stay relief and bank received full entitlement under the confirmed plan. “Under § 1327, all pre-petition agreements, unless expressly preserved in the plan and/or the order confirming the plan, are superseded by the terms and provisions of the plan. . . . Neither the Final Plan or the Confirmation Order make any mention of the Stay Order, nor are any of the provisions contained in the Stay Order upon which the Bank now relies recited in the Final Plan or the Confirmation Order by reference or otherwise. Had the parties desired that any of the provisions contained in the Stay Order survive confirmation, it would have been a very simple matter to incorporate those provisions into the Final Plan and/or the Confirmation Order, either by insertion or reference. . . . [T]hose provisions did not survive confirmation. Bank may not rely upon them.”), aff’d, 225 B.R. 762 (B.A.P. 10th Cir. 1998); Green Tree Fin. Corp. v. Garrett (In re Garrett), 185 B.R. 620, 623 (Bankr. N.D. Ala. 1995) (The general rule that confirmation precludes collection action based upon preconfirmation facts does not have an exception for relief from the stay granted before confirmation. A creditor secured by a mobile home was granted relief from the stay before confirmation. A plan was then confirmed that provided for the curing of arrearages and regular monthly payments through the plan. The creditor petitioned a state court for possession of the mobile home. On removal to the bankruptcy court: “The preconfirmation lift stay order terminated the automatic stay . . . but does not change the binding effect of an order of confirmation, or remove a claimholder from the provisions of a confirmed plan, unless the plan expressly preserves the terms of the lift stay order.”).

 

7  See, e.g., In re Crowley, 258 B.R. 587, 592 (Bankr. D. Vt. 2000) (Change in Vermont law with respect to the exercise of redemption rights does not warrant relief from the stay after confirmation to a mortgage holder that was provided for by the confirmed plan consistent with prior law. “This Court rejects the Movants’ argument that a post-confirmation change in longstanding applicable bankruptcy law is sufficient to warrant a revocation or modification of the terms of a confirmed and operating Chapter 13 plan. . . . It is true that a debtor’s material failure to comply with the terms of a confirmed plan may warrant relief from stay. . . . However, the facts presented here do not prove a material failure to comply with the confirmed plan . . . . [T]he Movants are adequately protected by the undisputed equity in the subject property. . . . [T]he subject property is necessary to the debtor’s effective reorganization.”).

 

8  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. See, e.g., Sun Finance Co. v. Howard (In re Howard), 972 F.2d 639 (5th Cir. 1992) (Confirmation of a Chapter 13 plan providing for payment of $500 in full satisfaction of a $4,590.47 secured debt does not bar claim holder from postconfirmation relief from the stay to enforce its lien when notice of plan did not include summary of the proposed treatment, creditor filed a timely preconfirmation proof of claim for $4,590.47, and debtor did not object to the proof of claim. Confirmation of the plan was not res judicata of the validity or extent of the creditor’s lien.).

 

9  Pacana v. Pacana-Siler (In re Pacana), 125 B.R. 19 (B.A.P. 9th Cir. 1991) (Sections 362(b)(2), 1328(a)(2), and 523(a)(5) “manifest a legislative intent that child support obligations be excepted from the broad reach of §§ 1322 and 1327, and therefore from the effects of a Chapter 13 plan, as well as the postconfirmation automatic stay.” Court affirms postconfirmation relief from stay to child support claim holder notwithstanding provision of plan for partial payment of child support arrearages and lack of objection to confirmation.).

 

10  See §§ 235.1 [ Other Limitations ] § 121.4  Other Limitations and 246.1 [ Alimony and Support Collection after Confirmation ] § 124.6  Alimony and Support Collection after Confirmation. Compare Mudd v. Jacobson (In re Jacobson), 231 B.R. 763, 765 (Bankr. D. Ariz. 1999) (Congress intended for Chapter 13 plans to manage child support arrearages as nondischargeable, priority claims; relief from the stay should be the exception rather than the rule, but plan must permit ex-spouse to collect postpetition interest after confirmation. “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).]”).

 

11  See §§ 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not and 235.1 [ Other Limitations ] § 121.4  Other Limitations.

 

12  184 B.R. 799 (B.A.P. 9th Cir. 1995), rev’d, 101 F.3d 618 (9th Cir. 1996).

 

13  See § 129.1 [ Overview: General Rules for Saving Debtor’s Home ] § 81.1  Overview: General Rules for Saving Debtor’s Home.

 

14  See § 244.1 [ Postconfirmation Default and Relief from the Stay ] § 124.4  Postconfirmation Default and Relief from the Stay.

 

15  184 B.R. at 802–03.

 

16  101 F.3d at 618–19 (quoting In re Barry, 201 B.R. 820 (C.D. Cal. 1996)). Accord Willman v. Pollard (In re Willman), 192 B.R. 207, 209–11 (Bankr. D. Ariz. 1996) (Applying Peters v. Mason-McDuffie Mortgage Corp. (In re Peters), 184 B.R. 799 (B.A.P. 9th Cir. 1995) [later rev’d, 101 F.3d 618 (9th Cir. 1996)], confirmation cured prepetition defaults, “thereby removing the basis for proceeding on the pre-petition trustee’s sale.” Prepetition foreclosure sale continued 17 times after the filing of Chapter 13 case, including five times after confirmation, could not be the basis for a foreclosure sale after the Chapter 13 case was dismissed for a default in payments. Under Schwartz v. United States (In re Schwartz), 954 F.2d 569 (9th Cir. 1992), “acts taken in violation of the automatic stay are void, not voidable.” Although a creditor may continue a trustee’s sale postpetition without violating the automatic stay, see In re Roach, 660 F.2d 1316 (9th Cir. 1981), once the plan was confirmed and the prepetition defaults were cured, “there would not exist an unbroken chain of valid continuances.” Trustee’s sale was conducted after an order dismissing the Chapter 13 case was entered and before the debtor cured the defaults and an order was entered reinstating the Chapter 13 case. “A holding today in favor of the [mortgagee] would cheapen the integrity of the automatic stay by allowing creditors to take a calculated risk that their violations would be cleansed by a subsequent dismissal.” Section 349 does not change this result because although the parties were returned to their respective rights prior to bankruptcy at dismissal, this effect does not mean that “acts taken in violation of the automatic stay which would have been void at the time are somehow reborn and validated by virtue of the dismissal.”).

 

17  833 F.2d 991 (11th Cir. 1989).

 

18  See § 247.1 [ Effect of Failure to File Proof of Claim on Postconfirmation Relief from the Stay ] § 124.7  Effect of Failure to File Proof of Claim on Postconfirmation Relief from the Stay for discussion of the effect of failure to file a proof of claim on entitlement to postconfirmation relief from the stay.

 

19  See § 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For for discussion of provided for in § 1327(c). See also § 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.

 

20  See, e.g., Waterfield Mortgage Co. v. Britton, 35 B.R. 373 (N.D. Ind. 1982) (Notwithstanding § 1327(a), failure to object to confirmation does not prevent relief from the stay because creditor is not “provided for” in a plan that fails to “pay the creditor the full amount owed to it.” Court defines “provided for” in § 1327 to require full payment where mortgage has been reduced to a state court judgment of foreclosure.); In re Henline, 242 B.R. 459 (Bankr. D. Minn. 1999) (Confirmed plan “could have provided” for cure of condominium association’s prepetition claim, but did not; association is entitled to relief from the stay after confirmation to foreclose.); Honesdale Nat’l Bank v. Mordenti (In re Mordenti), 164 B.R. 37 (Bankr. M.D. Pa. 1993) (Although automatic stay continues after confirmation and protects property that is subject to a second mortgage notwithstanding that the plan fails to “provide for” that second mortgage, holder of second mortgage is entitled to relief from the stay after confirmation because the plan does not “provide for” the second mortgage holder’s claim and the debtor has made no offer of adequate protection.); Sears Roebuck & Co. v. Burgess (In re Burgess), 163 B.R. 726 (Bankr. M.D. Pa. 1993) (Although automatic stay protects property that vested in the debtor at confirmation, where Sears was scheduled as an unsecured creditor and it is now stipulated that Sears was in fact a secured creditor, Sears is entitled to relief from the stay notwithstanding confirmation because the plan failed to “provide for” Sears’s secured claim within the meaning of Rake v. Wade, 508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993).).

 

21  11 U.S.C. § 1327(a). 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.

 

22  Chapters 11, 12 and 13 share this feature. See §§ 1141(a), 1227(a) and 1327(a).

 

23  See Fed. R. Bankr. P. 3015.

 

24  See discussion beginning at § 116.1  Standing to Object.

 

25  See discussion on providing for secured claims 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.

 

26  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.

 

27  11 U.S.C. § 1327(c). 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 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For. See also § 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.

 

28  11 U.S.C. § 1328(a). See§ 158.5  Claims Not Provided for by the Plan or Disallowed under § 502, § 162.3  On Liens and § 162.4  Effects of Discharge on Liens after BAPCPA.

 

29  See discussion on claims allowance and objection beginning at § 135.1  Timing, Procedure and Evidence Presumption.

 

30  11 U.S.C. §§ 501 and 502. See § 134.1  Timing, Form, Superseding and Amended Claims before 2005, § 134.2  Filing of Claims by Debtor or Trustee after 2005 Amendments to Bankruptcy Rule 3004§ 134.3  Strategic Considerations: When to File Claims for Creditors and § 135.5  Failure to File Proof of Claim.

 

31  Rake v. Wade, 508 U.S. 464, 113 S. Ct. 2187, 2193, 124 L. Ed. 2d 424 (1993). See §§ 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For 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.

 

32  11 U.S.C. § 1328(a). See § 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.

 

33  See discussion beginning at § 116.1  Standing to ObjectSee also § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

34  See § 117.4  Appeal of Grant or Denial of Confirmation and § 117.5  Appeal of Grant or Denial of Confirmation after BAPCPA.