§ 124.5     Postpetition Claims and Relief from the Stay
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 124.5, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Section 1305 of the Code admits the possibility of postpetition claims in a Chapter 13 case.1 But the interaction of § 1305 and the automatic stay after confirmation is anything but clear because of the lack of consensus about the vesting effect of § 1327(b) on property of the Chapter 13 estate.

[2]

Section 362(a)(3) imposes an automatic stay against “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.”2 Section 362(a)(4) prohibits “any act to create, perfect, or enforce any lien against property of the estate.”3 These two subsections are not limited to prepetition debts. A postpetition claim holder is prohibited by the automatic stay from obtaining possession of property of the estate, exercising control over property of the estate, perfecting or enforcing a lien against property of the estate and so forth, absent relief from the stay—even after confirmation.

[3]

But, as explained above,4 at confirmation § 1327(b) vests all property of the estate in the debtor, unless the plan or order of confirmation provides otherwise. In contrast to prepetition creditors, postpetition claim holders are not restrained by § 362(a) from collection action against property of the debtor.5 It thus becomes critically important for a postpetition claim holder to know whether and to what extent confirmation changed the composition of the Chapter 13 estate. Unfortunately, this question leads postpetition creditors into the thicket of uncertainty surrounding the vesting effect of confirmation under § 1327(b).

[4]

As detailed elsewhere,6 there are four views how § 1327(b) affects property of the estate at confirmation. The view applied by a court directly determines whether the automatic stay precludes action by a postpetition creditor.

[5]

In the clearest case, the Chapter 13 plan or order of confirmation overcomes the vesting effect in § 1327(b): all property remains in the estate and the estate continues to accumulate property after confirmation consistent with § 1306. In these circumstances, a postpetition claim holder needs relief from the automatic stay to collect its debt from the debtor’s income or other property whether acquired before or after confirmation.7

[6]

If neither the plan nor the order of confirmation preserves the estate, but the court interprets § 1327(b) to leave the estate intact, then all property remains property of the estate whether acquired before or after confirmation and a postpetition claim holder is prohibited by the automatic stay from collection action. This outcome is the same for postpetition claim holders as if the plan or order of confirmation neutralized the vesting effect in § 1327(b).

[7]

If the plan and confirmation order are silent with respect to preserving the estate and the court interprets § 1327(b) to vest all property of the estate in the debtor, whether acquired before or after confirmation, then a postpetition creditor is free to collect its claim from any property without fear of the stay. This is the opposite outcome of the first two examples—if the vesting effect in § 1327(b) permanently terminates the Chapter 13 estate, then postpetition claim holders are in the strongest position to risk proceeding against property of the debtor without requesting relief from the stay.

[8]

If the plan and confirmation order are silent and the court interprets § 1327(b) to terminate the estate except with respect to property necessary to the debtor’s performance under the plan, then the postpetition claim holder must study the situation further. Without precisely defining what property is necessary to the debtor’s performance under the plan, several courts have interpreted § 1327(b) to interact with the automatic stay in this way: property of the estate revests in the debtor at confirmation and is not protected by the automatic stay from collection action by a postpetition claim holder; postconfirmation property remains protected by the automatic stay from collection action by a postpetition claim holder to the extent necessary to support the debtor’s performance under the plan.8 It is easy to see that the portion of a debtor’s postconfirmation income actually paid to the Chapter 13 trustee would be necessary to the debtor’s performance under the plan. It is less clear whether the debtor’s house or the debtor’s second car or the debtor’s personal computer would remain protected by the stay from a postpetition creditor under these circumstances. Is the income the debtor uses to pay the water bill necessary to the debtor’s performance under the plan? Would a postpetition claim holder be safe to levy on the dollar-per-hour raise the debtor received after confirmation?

[9]

If the plan and order of confirmation are silent with respect to preserving the estate and the court interprets § 1327(b) to empty the estate at confirmation, but the estate refills with property acquired by the debtor after confirmation, then a postpetition creditor faces no automatic stay to collect from preconfirmation property that vested in the debtor but is subject to the stay with respect to wages and other property acquired after confirmation.9 This interpretation of § 1327(b) offers a slightly clearer dividing line than the view immediately above, but there are still plenty of uncertainties to worry the postpetition claim holder wary of violating the stay. Under this approach, the debtor’s prepetition residence would vest in the debtor at confirmation. Can the same be said of appreciation in the value of that residence after confirmation? Could a postpetition creditor attach postconfirmation rental income from property that vested in the debtor, or would the rental income be proceeds for § 1306 purposes that would refill the Chapter 13 estate and be protected by the stay?

[10]

Using various views of § 1327(b) and in the context of many different kinds of property, a substantial number of reported decisions have allowed the collection of postpetition debts after confirmation, sometimes declaring that no stay applies, other times by granting relief from the stay to the postpetition creditor.10 A few courts have said that a postpetition claim holder must seek relief from the stay before proceeding against a debtor’s wages or other property after confirmation, without regard to whether that property vested in the debtor.11

[11]

There is recognition in these decisions of the potential for abuse by the debtor. As explained by one court, the postpetition claim holder “‘should have a relatively slight burden to overcome to obtain relief from the automatic stay . . . otherwise . . . a post-petition creditor . . . would be unfairly frozen in place until the Debtor in a leisurely fashion, completes his Plan payments and is discharged.’”12

[12]

A colorful illustration of how complicated all this is for a postpetition claim holder is Chicago v. Fisher (In re Fisher).13 In Fisher, the confirmed plan did not overcome the vesting of property in the debtor under § 1327(b). After confirmation, the debtor incurred and ignored 10 parking tickets issued by the city of Chicago. The city eventually found the debtor’s car and disabled it by booting the wheels. After giving notice, the city towed the car, crushed it and sold it for scrap.

[13]

The debtor took umbrage and sought sanctions for the city’s violating the automatic stay. The city defended that the car vested in the debtor at confirmation under § 1327(b) and was not protected by the automatic stay from the city’s postpetition claim for parking tickets. The bankruptcy court agreed with the debtor, reasoning as follows:

“[V]esting” . . . should be read, consistent with the rest of Chapter 13, as fixing the debtor’s right to possess and deal with estate property after confirmation. . . . The estate, however, remains intact after confirmation. . . . [The debtor’s] car continued to be property of the estate after her Chapter 13 case was confirmed, and by taking action to obtain possession of the car, the city violated the automatic stay as defined by Section 362(a)(3).14
[14]

On appeal, the district court adopted a different view of the interaction of §§ 362, 1306 and 1327(b):

First, § 1306(a) defines “property of the estate” to include property and earnings acquired by the debtor after the case’s commencement. While the case is pending, the post-petition property and earnings are added to the estate until confirmation, the event that triggers § 1327(b) and “vests” the property of the estate in the debtor. That is, the property interests comprising the pre-confirmation estate property are transferred to the debtor at confirmation, and this “vesting” is free and clear of the claims or interests of creditors provided for by the plan, § 1327(b), (c). Finally, the property of the estate once again accumulates property by operation of § 1306(a) until the case is “closed, dismissed, or converted.” . . . Applying our interpretation in the instant case, we hold that the City did not violate § 362(a)(3) of the automatic stay. Section 362(a)(3) prohibits only actions to obtain possession of, or exercise control over, “property of the estate.” Fisher’s car was property of the estate at the time of the plan’s confirmation, but under § 1327(b) vested in her when the plan was confirmed; the plan did not provide otherwise. Thus, at the time the City took the actions at issue here, the car was no longer property of the estate protected by § 362(a)(3).15
[15]

As if there isn’t enough uncertainty in this area, the holder of a postpetition claim can exacerbate the problematic interaction of §§ 362, 1305, 1306 and 1327(b) by choosing to file a proof of claim. Section § 1305(b) provides that a postpetition claim, proof of which is filed by the claim holder, shall be allowed or disallowed “the same as if such claim had arisen before the date of the filing of the petition.”16 This language was interpreted in one reported decision to mean that once a proof of claim is filed, a postpetition claim is treated as if it were a prepetition claim for purposes of the automatic stay in § 362(a).17 By this logic, a filed postpetition claim is subject to all provisions of the automatic stay that apply to claims that arose before the commencement of the case. The vesting of property in the debtor at confirmation under § 1327(b) would not dissolve the automatic stay with respect to a postpetition claim holder that is treated as if it had a prepetition claim. And the creditor would need relief from the stay before proceeding against property of the estate or against property of the debtor.18

[16]

This interpretation of § 1305 imposes a sort of penalty on the postpetition claim holder that participates in distributions by filing a proof of claim: The automatic stay prohibits collection of a filed postpetition claim even from property of the estate that vested in the debtor under § 1327(b). If the postpetition claim holder did not file a proof of claim in many jurisdictions, the postpetition claim holder would be freed from the automatic stay to proceed against property that vested in the debtor at confirmation. Maybe the quid pro quo for distributions under the plan—possible only if the postpetition claim holder files a proof of claim under § 130519—is broader protection of the debtor by the stay after confirmation.

[17]

Relief from the stay after confirmation for the postpetition claim holder becomes further twisted when the postpetition claim is not allowed under § 1305 and is not to be paid through the plan. These circumstances come about in Chapter 13 cases in several ways. If the claim holder fails or refuses to file a proof of claim, the postpetition claim will not be allowed, will not be paid through the plan and will not be discharged.20 If the plan does not provide for payment of postpetition claims and is not modified to do so, then postpetition claims will not be paid through the plan and will not be discharged.21 With respect to most consumer debts, if neither the Chapter 13 debtor nor the creditor had permission from the Chapter 13 trustee prior to incurring the postpetition debt, then the claim “shall be disallowed,” will not be paid through the plan and will not be discharged.22

[18]

Is the holder of a postpetition claim that will not be paid through the plan and/or that is not dischargeable entitled to postconfirmation relief from the stay? Should it make a difference for stay relief purposes that the postpetition claim will not be allowed because the claim holder failed or refused to file a proof of claim? If the creditor disables itself to receive payment through the plan, should the creditor be rewarded with relief from the stay for cause? It can be argued the Code gives the postpetition claim holder the option to participate through the plan by filing a claim or to seek relief from the stay to collect from the debtor.

[19]

If the plan provides for full payment of postpetition claims, the debtor is in the strongest position to argue that the postpetition claim holder should not be allowed relief from the stay. The debtor’s conduct in incurring the postpetition debt should be considered together with the likely effect of a collection effort by the postpetition claim holder on the debtor’s ability to consummate the plan. The decisions that assign the postpetition claim holder a relatively slight burden to prove cause for relief from the stay23 reflect the Code’s ambivalent treatment of postpetition claim holders and the lack of symmetry among §§ 1305, 1306, 1327 and 362.

[20]

The entitlement of a postpetition claim holder to postconfirmation relief from the stay becomes truly mysterious when the debtor grants the claim holder a postpetition lien. Suppose the debtor signs the equity check that came in the mail, borrowing money after the petition and giving your favorite TV-lender a second mortgage on the debtor’s home. The loan was arranged without the consent of the Chapter 13 trustee (as is too often the case), and the claim will almost assuredly not be allowable under § 1305(c).24 Most courts hold that a Chapter 13 debtor is prohibited from providing for the payment of a postpetition claim that is disallowed under § 1305(c);25 thus, the debtor cannot pay the disallowed postpetition lienholder through the plan or by postconfirmation modification of the plan.26 The claim will not be discharged under § 1328(d).27

[21]

Is it cause for relief from the stay that the debtor incurred a postpetition debt and granted a postpetition lien but cannot provide for payment of the lienholder through the Chapter 13 plan? Does the trustee have an obligation to seek to avoid the unauthorized postpetition lien under § 550?28 If the debtor has income with which to pay the lienholder, are prepetition creditors entitled to capture that extra income by modification after confirmation,29 and with what effect on the postpetition claim holder’s entitlement to relief from the stay? There is nothing good to be said for borrowing money after the petition except with the permission of the Chapter 13 trustee and then only when really necessary as contemplated in § 1305(a)(2).

[22]

Dealing with a stay relief request from a postpetition claim holder should not be confused with postconfirmation default under the plan as a ground for relief from the stay.30 Postpetition claims are narrowly defined in § 1305 as some tax claims and consumer debts that arise after the petition.31 It is sometimes asserted, especially by prepetition mortgage holders, that a postpetition default in payments gives rise to a postpetition claim. Characterizing a postpetition default in payments as a postpetition claim under § 1305 affords the (prepetition) claim holder some strategic advantages, including the right to control whether the postpetition portion of the claim is allowed and discharged in the Chapter 13 case.

[23]

Most courts have correctly concluded that postpetition defaults on prepetition debts are prepetition claims.32 If the debtor fails to make a home mortgage payment that comes due after the petition, the postpetition default is curable under § 1322(b)(5)33 and is not a postpetition claim under §§ 1305 and 1322(b)(6). Default in payments under a confirmed plan does not give rise to a postpetition claim; rather, the postconfirmation default may be cause for relief from the stay34 or may be curable by modification under § 1329.35

[24]

Postpetition condominium or cooperative fees or assessments may be postpetition claims under § 1305(a)(2) or may be characterized as postpetition defaults with respect to prepetition debts.36 Under either characterization, chances are the Chapter 13 debtor will want to pay the fees or assessments because the debtor wants to remain in the property. The Bankruptcy Reform Act of 1994 added a new exception to discharge in § 523(a)(16) for a condominium or cooperative fee or assessment “that becomes due and payable after the order for relief.”37 This new exception to discharge is applicable in Chapter 13 cases if the debtor seeks a discharge in advance of completion of payments under the plan,38 and in the event of conversion to Chapter 7.

[25]

If the debtor is not paying a postconfirmation condominium or cooperative fee or assessment, the creditor can usually show cause for relief from the stay, including that the debtor is living “rent free” while using the common property. But counsel should also take a good look at the plan provision with respect to the vesting of property at confirmation under § 1327(b).39 In In re Henline,40 the plan did not provide for the payment of postpetition claims, and confirmation vested property of the estate in the debtor. The court held that a condominium association did not need relief from the stay under these circumstances to collect its postpetition dues and expenses by foreclosure, if necessary, because the property vested in the debtor at confirmation. In contrast, in Montclair Property Owners Ass’n, Inc. v. Reynard (In re Reynard),41 the bankruptcy court concluded that a homeowner’s association did not need relief from the stay to demand payment of postpetition association fees or to file suit; however, because the plan did not alter the rule in the district that the Chapter 13 estate continued to receive all § 1306 property acquired after confirmation, the association did need relief from the stay to collect postconfirmation fees from postconfirmation earnings. The message here for debtors is twofold: preserving the estate through the plan with a provision overcoming § 1327(b) has the advantage of extending the automatic stay into the postconfirmation period with respect to estate property; always providing in the plan for the payment of postpetition claims gives the debtor a vehicle for managing debts that arise after confirmation.

[26]

The Bankruptcy Reform Act of 1994 enacted a new exception to the automatic stay for the “creation or perfection of a statutory lien for an ad valorem property tax . . . if such tax comes due after the filing of the petition.”42 In cases filed after October 22, 1994, a taxing authority does not need relief from the stay to create or perfect a statutory lien for ad valorem property taxes that become due after the petition. The enforcement of such a postpetition statutory lien is another story.

[27]

Postpetition claims under § 1305 of the Code include “taxes that become payable to a governmental unit while the case is pending.”43 If the taxing authority does not file a proof of its postpetition claim and if property of the estate vests in the debtor at confirmation under § 1327(b), there is no automatic stay after confirmation to prohibit collection or enforcement of the tax lien from property of the debtor. If the plan or order of confirmation contains a provision neutralizing § 1327(b), or if the court interprets § 1327(b) to preserve some or all of the estate, then new § 362(b)(18) permits the creation and perfection of a statutory lien for postpetition property taxes, but the automatic stay in § 362(a)(4) would prevent enforcement of that lien against whatever property remains in the estate. If the taxing authority files proof of its postpetition claim, it is arguable that § 1305(b) treats that claim as if it arose before the commencement of the case, and enforcement of the lien (but not creation or perfection) would be stayed after confirmation without regard to whether property remained in the estate or vested in the debtor under § 1327(b).


 

1  See § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

2  11 U.S.C. § 362(a)(3).

 

3  11 U.S.C. § 362(a)(4).

 

4  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.

 

5  See § 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?.

 

6  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 and 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?.

 

7  See, e.g., Clark v. United States (In re Clark), 207 B.R. 559 (Bankr. S.D. Ohio 1997) (Where confirmation order overcomes the vesting effect in § 1327(b), IRS violated automatic stay by levying on postpetition wages to collect postpetition tax.).

 

8  See, e.g., EconoLube N’ Tune, Inc. v. Frausto (In re Frausto), 259 B.R. 201, 217 (Bankr. N.D. Ala. 2000) (Applying “estate transformation approach” in Telfair v. First Union Mortgage Corp., 216 F.3d 1333 (11th Cir. 2000), cert. denied, 531 U.S. 1073, 121 S. Ct. 765, 148 L. Ed. 2d 666 (2001), $100,000 settlement of prepetition lawsuit vested in debtor at confirmation and is not property of Chapter 13 estate; postpetition creditor can garnish the proceeds to collect its postpetition judgment without violating stay. “Section 362(c) provides that the automatic stay of an act against property of the estate continues only until such property is no longer property of the estate. Once property of the estate is transferred back to the debtor pursuant to 1327(b), only pre-petition creditors, who are bound by the plan pursuant to 1327(a) and have been specifically divested of any interest in that property pursuant to 1327(c), are precluded from pursuing that property. On the other hand, post-petition creditors who were not required to participate in the plan or permitted to participate in the confirmation process; who will receive nothing under the plan; who are not bound by the plan; and whose rights in the property vesting in the debtor were not extinguished pursuant to 1327(c); are not specifically forbidden by any section of the Code from pursuing that property.”); In re Leavell, 190 B.R. 536, 539–41 (Bankr. E.D. Va. 1995) (Postpetition creditor did not violate automatic stay by taking judgment and garnishing debtor’s postconfirmation earnings. Six days after filing a Chapter 13 case, debtor purchased a ring and a videocassette recorder on credit. Confirmed plan provided that all property of the estate revested in the debtor. Postpetition creditor did not file a proof of claim, and the plan did not provide for postpetition debts. “Upon confirmation of the plan, the estate continues to exist. . . . [T]here must be some property of the estate remaining after confirmation for the Chapter 13 Trustee to administer . . . . [T]o determine that § 1327(b) to mean that there is no property of the estate after confirmation would render § 1306(a) superfluous. . . earnings acquired post-confirmation and necessary to implement the Chapter 13 plan remains [sic] property of the estate after the plan is confirmed unless the plan states otherwise. . . . Only that portion that is necessary to make the plan payments becomes property of the estate and protected by the automatic stay. . . . The balance of such post-confirmation earnings belongs to the debtor as her individual property and is not insulated from post-petition claims nor protected by the automatic stay. . . . [O]nly $75.00 of the debtor’s monthly earnings is protected by the automatic stay. This meant that Littmans could garnish up to $1,475.00 per month from the debtor’s net monthly income . . . . The prejudice the debtor raises was her own doing and the Court will not allow her to use the bankruptcy process as a sword against the unwary creditor who extended credit to her without knowledge of her bankruptcy. . . . [W]e find the prejudice to Littmans more equitably compelling. . . . [I]t would have no remedy to enforce its claims until case is closed, dismissed or converted. . . . Littmans could not share in the distribution of this plan. It would not qualify to file a post-petition claim under § 1305(a) and § 1305(c) because the items purchased by the debtor were not necessary for the debtor’s performance under the plan. . . . Littmans does not have standing to modify the plan to include his claims under § 1329.”); In re Thompson, 142 B.R. 961 (Bankr. D. Colo. 1992) (IRS does not need relief from the stay to collect postpetition tax claim from the portion of Chapter 13 debtor’s postconfirmation earnings that revested in the debtor at confirmation. Only that portion of the debtor’s postconfirmation earnings paid to the Chapter 13 trustee did not vest in the debtor at confirmation and only that portion remains property of the estate after confirmation. The future earnings of the debtor that revested in the debtor at confirmation are not protected by the automatic stay from the postconfirmation collection efforts of a postpetition claim holder.); American Gen. Fin., Inc. v. McKnight (In re McKnight), 136 B.R. 891, 894 (Bankr. S.D. Ga. 1992) (Plan and order of confirmation provided that property of the estate revested in the debtor upon confirmation. “The bankruptcy estate did not disappear upon confirmation. . . . [T]he bankruptcy estate continues and consists of the postpetition earnings of the debtor devoted to plan payments. . . . [O]nly postpetition earnings devoted to plan payments constitute postconfirmation property of the estate and are protected under the stay of § 362(a). . . . [T]he stay of § 362(a) does not apply to the collection efforts of . . . a postpetition creditor, to enforce payment of its debt by continuing garnishment under applicable state law to the exclusion of postpetition earnings devoted to plan payments, which remain property of the estate.”); In re Ziegler, 136 B.R. 497, 502 (Bankr. N.D. Ill. 1992) (“The court respectfully disagrees with the position taken in [Mason v. Williams, 51 B.R. 548 (D. Or. 1985),] and its progeny that all property of the estate vests in the debtor upon confirmation and thereafter no estate subsequently exists. In this court’s view, vesting, like confirmation, is a temporal event which occurs once in a case and does not preclude the coming into existence of property of the bankruptcy estate in futuro. . . . [E]arnings from a debtor’s services created post-confirmation needed or committed to fund the confirmed plan become property of the estate when they come into being to be later paid to the trustee, and are protected by the stay of § 362(a)(3) and (a)(4) against postpetition claims. The remainder of the earnings are more properly characterized as the debtor’s property and not automatically protected by the automatic stay from postpetition claims. To hold otherwise could have the unfair and inequitable polar results in a plan such as this to either fully insulate such future acquired interests in property from legitimate postpetition claims not provided for in the plan, or allow postconfirmation claimants to proceed against the property needed to consummate the plan for the benefit of the debtors’ other prepetition creditors.” Plan proposed to pay 28% of allowed unsecured claims and contained no provision undoing the revesting effect of § 1327(b). Plan made no provision for postpetition claims under § 1322(b)(6). Creditor holding a claim for postconfirmation medical expenses did not violate the automatic stay by filing suit, taking judgment and garnishing the debtor’s wages when the collection effort did not disrupt plan payments.).

 

9  See, e.g., Annese v. Kolenda (In re Kolenda), 212 B.R. 851, 853–55 (W.D. Mich. 1997) (Postconfirmation lender that retitled, repossessed and sold a car that the debtors acquired after confirmation violated the automatic stay because estate continued to exist notwithstanding § 1327(b) and car became property of that estate. A year after confirmation, debtors acquired a car and borrowed $1,316 using the car as collateral. The debtors “signed what purported to be a lease agreement by which debtors retained possession of the car and paid [the creditor] $133.56 every two weeks for six months. At the end of the lease, debtors could purchase the car back for $1,500.” After default and after discussions between the creditor and debtors’ counsel, creditor retitled, repossessed and sold the car. Bankruptcy court found that the creditor willfully violated the automatic stay and awarded damages of $7,316. The district court reviewed the three approaches to reconciling §§ 1327(b) and 1306(a) and concluded that “the third approach, the estate preservation approach, makes the most sense . . . . Here, the car at issue was not acquired until after the confirmation of a plan. Accordingly, section 1327(b) does not appear to say anything about this particular property. Section 1306(a), in contrast, clearly provides that post-petition earnings and acquisitions are part of the estate. . . . I therefore conclude that even if the property in the estate at the time of confirmation is transferred to the debtor under § 1327(b), the estate continues to exist, and property acquired post-confirmation is added to the estate.”); Montclair Property Owners Ass’n, Inc. v. Reynard (In re Reynard), 250 B.R. 241, 244–45, 249–50 (Bankr. E.D. Va. 2000) (Postpetition homeowner association debts are not subject to the stay with respect to a suit against the debtor; association will need relief from the stay to collect from property that remains property of the estate. “Homeowner association fees assessed after the filing of a voluntary petition in bankruptcy are post-petition debts, not pre-petition debts. River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833, 837 (4th Cir. 1994), cert. denied, 513 U.S. 874, 115 S. Ct. 200, 130 L. Ed. 2d 131 (1994), reh’g denied, 513 U.S. 1035, 115 S. Ct. 622, 130 L. Ed. 2d 530 (1994). Montclair does not need relief from the automatic stay to demand payment of post-petition Association fees for which the debtors are liable or to file suit to collect those fees. . . . [A] post-petition creditor who has the right to initiate a suit against a debtor and obtain a judgment for a post-petition debt without violating the automatic stay may not have recourse to execute on all assets that would have been, but for the filing of a chapter 13 petition, property of the debtor. Recourse is limited to property that is not property of the estate.” Section 1327(b) vests property of the estate in the debtor at confirmation, but the estate continues to receive all § 1306 property acquired after confirmation. “All post-confirmation earnings—not just the amount of the plan payment—are necessary for the success of a chapter 13 plan and must be property of the post-confirmation chapter 13 estate. They are protected by the automatic stay. . . . The Association does not have a judgment upon which it can execute at this time. The amount of the prospective judgment is unknown. . . . The appropriate time to seek relief from the stay is after a final judgment has been obtained in state court and relief is necessary to execute against property of the estate.”).

 

10  See §§ 238.2 [ Effects of Confirmation on Postpetition Claims ] § 122.4  Effects of Confirmation on Postpetition Claims, 240.1 [ Representing a Postpetition Claim Holder ] § 123.4  Representing a Postpetition Claim Holder and 243.1 [ Does Confirmation Dissolve the Stay? ] § 124.3  Does Confirmation Dissolve the Stay?. See, e.g., Chicago v. Fisher (In re Fisher), 203 B.R. 958, 964 (N.D. Ill. 1997) (City did not violate automatic stay by booting, towing and crushing the debtor’s car after confirmation on account of postpetition parking tickets because the car vested in the debtor at confirmation under § 1327(b) and is not protected by the stay from the collection of a postpetition claim. “Section 362(a)(3) prohibits only actions to obtain possession of, or exercise control over, ‘property of the estate.’ Fisher’s car was property of the estate at the time of the plan’s confirmation, but under § 1327(b) vested in her when the plan was confirmed; the plan did not provide otherwise. Thus, at the time the City took the actions at issue here, the car was no longer property of the estate protected by § 362(a)(3).”); Shell Oil Co. v. Capital Fin. Servs., 170 B.R. 903 (S.D. Tex. 1994) (Claims and liens for 1988 and 1989 taxes and penalties are postpetition claims in a Chapter 13 case filed on February 11, 1988. Stay does not prohibit the IRS assessment and lien in August of 1989.); Mason v. Williams, 51 B.R. 548 (D. Or. 1985) (Absent contrary plan provision, § 1327 vests title and possession of all estate property in the debtor. Because estate ceases to exist, § 362 does not protect postconfirmation debtor from collection efforts of a postconfirmation creditor.); In re Wilkoff, No. 98-34354DWS, 2001 WL 91624 (Bankr. E.D. Pa. Jan. 24, 2001) (unpublished) (IRS is entitled to relief from the stay after confirmation to collect postpetition taxes from the debtor or from property of the debtor. Income taxes for 1998 are postpetition claims in a Chapter 13 case filed on November 6, 1998. The IRS did not file a proof of claim and moved for relief from the stay after confirmation of a plan that proposed to pay priority claims in full. Income taxes for 1998 are not allowable or dischargeable when the IRS declines to file a proof of claim. The 1998 taxes are not a priority claim under § 507(a)(8)(A)(i) because the taxable year 1998 ended after the filing of the petition. Court reserves question whether IRS can collect its postpetition claim from property of the estate.); In re Henline, 242 B.R. 459, 466 (Bankr. D. Minn. 1999) (Automatic stay did not prohibit condominium association from collecting postpetition dues and expenses because plan did not provide for postpetition claim, confirmation vested the real property in the debtors and no claim had been filed for the postpetition debt. “11 U.S.C. § 362(a) does not prohibit a creditor from collecting a postpetition debt from a debtor, or from property of a debtor. The stay does prohibit the collection of a postpetition debt from property of the estate. . . . In this case, all property of the estate vested back into the Debtors upon confirmation of their plan. See, 11 U.S.C. § 1327(b). . . . The stay does not prohibit Movant from foreclosing its lien on Debtors’ homestead in collection of postpetition debt. . . . 11 U.S.C. § 1305 . . . . is permissive, not mandatory. Postpetition creditors, who do not look to a debtor’s estate to collect postpetition debt, need not file claims. They may elect to proceed elsewhere against a debtor or debtor’s property to collect the debt instead. Movant has not filed a postpetition claim, and Debtors have not filed a claim on Movant’s behalf. Movant is entitled to elect not to participate in the bankruptcy case for payment of its postpetition debt, and to seek collection from Movant’s collateral.”); Oliver v. Toth (In re Toth), 193 B.R. 992, 994–97 (Bankr. N.D. Ga. 1996) (Adopting In re Petruccelli, 113 B.R. 5 (Bankr. S.D. Cal. 1990), automatic stay does not prohibit postconfirmation foreclosure sale on real property acquired by the debtor after confirmation where there is no provision of the plan or order of confirmation that defeats the vesting effect of § 1327(b) or (c). “The most persuasive resolution of the ‘vesting’ and confirmation-effect issues is the comprehensive discussion contained in the case of Petruccelli . . . if the ‘vesting’ provided for in § 1327 does not act to end the estate, then § 1327 becomes redundant and the term ‘vest’ is deprived of any meaning separate from ‘possession.’ . . . Subjecting postpetition creditors to the automatic stay and blocking attempts to collect following postconfirmation defaults would make a debtor a credit pariah.”); In re Reamy, 169 B.R. 352, 353–54 (Bankr. D. Md. 1994) (Because real estate taxes do not become due and thus do not become a lien on property in Maryland until July 1 of each year, in a Chapter 13 case filed before July 1, 1994, real estate taxes for the years 1994–95 would not be subject to the automatic stay after confirmation. “[I]f a plan was confirmed in this case before July 1, 1994, the automatic stay would not apply to any action by the County to collect the 1994–1995 real estate tax, from the real property, should the tax go unpaid after its due date of July 1, 1994. 11 U.S.C. § 362(a) prohibits collection of prepetition claims from the Debtor or Debtor’s property. Section 362(a)(4) stays collection of any debt from property of the estate. Upon confirmation, the property in question would revest in the Debtor and no longer be property of the estate. As a result, a post-petition tax lien arising on July 1st and after a confirmation, would not have constituted a lien against property of the estate, but solely against property of the Debtor, and collection of such lien from Debtor’s property would not be stayed by 11 U.S.C. § 362(a)(5). Even where the July 1st due date passes before confirmation . . . the result would be similar. Until confirmation, the automatic stay would preclude an act by the state to collect its tax because the enforcement of lien would be against property of the estate. However, upon confirmation and the revesting of property to the Debtor, Section 362(c)(1) would automatically terminate the stay as to the tax lien foreclosure against the property.”); In re Markowicz, 150 B.R. 461, 462 (Bankr. D. Nev. 1993) (IRS did not need relief from the stay to levy on a debtor’s postpetition wages to collect postpetition taxes because § 1327(b) vested postpetition property in the debtor and the plan contained a provision that all property of the estate “shall vest in the debtor” upon confirmation. “[P]ost-confirmation earnings not committed to the funding of a plan vest in the debtor upon confirmation. . . . [T]he post-confirmation levy of the IRS to collect post-petition taxes did not violate the automatic stay.”); Lambright v. United States, 125 B.R. 733 (Bankr. N.D. Tex. 1991) (Absent provision to the contrary in the plan or the order of confirmation, § 1327(b) vests all § 1306 property of the estate in the debtor free of the protection of the automatic stay. IRS was not prohibited by the automatic stay from levying upon a debtor’s postconfirmation civil service annuity benefits to collect a postpetition tax liability); In re Petruccelli, 113 B.R. 5 (Bankr. S.D. Cal. 1990) (After exhaustive review of § 1327(b) cases, court concludes that Mason v. Williams, 51 B.R. 548 (D. Or. 1985), is persuasive. Upon confirmation, property of the estate vests in the debtor and is no longer property of the estate unless the plan or order of confirmation provides otherwise. IRS did not violate stay when it levied upon postpetition earnings to collect a postpetition tax claim where the plan did not undo the revesting effect of § 1327(b). Revesting of property in the debtor under § 1327(b) is complete unless expressly postponed by the plan or order of confirmation. IRS is entitled to entire $8,500 in the debtor’s bank account at the time of levy notwithstanding that the debtor’s plan called for payments of $1,800 per month. If the debtor intended to interrupt revesting to the extent of the $1,800-per-month-payment, the plan or order of confirmation should clearly have so stated.); In re Walker, 84 B.R. 888 (Bankr. D.D.C. 1988) (When Chapter 13 plan does not provide otherwise, residence revested in debtor upon confirmation of the plan and is no longer property of the estate. The automatic stay does not apply to effort of condominium association to collect postpetition condominium fees owed by the debtor.); In re Dickey, 64 B.R. 3 (Bankr. E.D. Va. 1985).

 

11  See In re Osei, 90 B.R. 910 (Bankr. N.D. Ill. 1988) (Although agreeing with Mason v. Williams, 51 B.R. 548 (D. Or. 1985), that wages earned after confirmation are not property of the estate because of the revesting effect of § 1327(b), court adopts “a middle ground” similar to In re Clarke, 71 B.R. 747 (Bankr. E.D. Pa. 1987): the postpetition creditor is subject to the stay but has “a relatively slight burden” to prove entitlement to relief from the stay.); In re Clarke, 71 B.R. 747 (Bankr. E.D. Pa. 1987) (Confirmation vests property of the estate in the debtor; however, the estate does not disappear, and the property that vests in the debtor at confirmation remains subject to the automatic stay. A postpetition creditor needs relief from the stay to seek collection from the debtor or from property that vested in the debtor upon confirmation.).

 

12  In re Osei, 90 B.R. 910, 911–12 (Bankr. N.D. Ill. 1988) (quoting In re Clarke, 71 B.R. 747, 750 (Bankr. E.D. Pa. 1987)).

 

13  203 B.R. 958 (N.D. Ill. 1997). See also § 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.

 

14  In re Fisher, 198 B.R. 721, 733–34 (Bankr. N.D. Ill. 1996).

 

15  203 B.R. at 962–64.

 

16  11 U.S.C. § 1305(b). See § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

17  In re Reamy, 169 B.R. 352, 354 (Bankr. D. Md. 1994) (Real estate taxes that became a lien after the filing of a Chapter 13 case ordinarily would not be subject to the automatic stay after confirmation because property of the estate would vest in the debtor and the postpetition tax claim would not be subject to any provision of § 362(a). However, because the state filed a proof of claim for its postpetition taxes, the claim became an allowed postpetition claim treated by § 1305(b) as if such claim had arisen before the petition. “[T]he transposition of this claim to a claim arising as of the petition date would apparently invoke the automatic stay of 11 U.S.C. § 362(a)(5) and prevent the enforcement of the lien against the property of the debtor, even after the confirmation.”).

 

18  See 11 U.S.C. § 362(a)(4), (a)(5).

 

19  See § 132.9  Postpetition Claims, § 135.5  Failure to File Proof of Claim, § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

20  See § 137.1  Postpetition Claims before BAPCPA§ 137.2  Postpetition Claims after BAPCPA and § 158.6  Postpetition Claims.

 

21  See § 113.6  Providing for Postpetition Claims, § 127.4  To Provide for Postpetition Claims, § 137.1  Postpetition Claims before BAPCPA§ 137.2  Postpetition Claims after BAPCPA and § 158.6  Postpetition Claims.

 

22  See 11 U.S.C. §§ 1305(c), 1328(d). See also § 137.1  Postpetition Claims before BAPCPA§ 137.2  Postpetition Claims after BAPCPA and § 158.6  Postpetition Claims.

 

23  See In re Osei, 90 B.R. 910 (Bankr. N.D. Ill. 1988); In re Clarke, 71 B.R. 747 (Bankr. E.D. Pa. 1987).

 

24  See § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

25  See § 113.6  Providing for Postpetition Claims, § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

26  See § 261.1 [ To Provide for Postpetition Claims ] § 127.4  To Provide for Postpetition Claims.

 

27  See § 350.1 [ Postpetition Claims ] § 158.6  Postpetition Claims.

 

28  See § 60.1 [ Avoidance and Recovery Powers ] § 53.12  Avoidance and Recovery Powers.

 

29  See discussion beginning at § 126.1  Standing, Timing and Procedure and § 127.1  To Suspend Payments.

 

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

 

31  See § 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA.

 

32  See § 82.2  Postpetition Defaults, § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.

 

33  See § 131.1 [ Postpetition Defaults ] § 82.2  Postpetition Defaults.

 

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

 

35  See § 259.1 [ To Cure Postconfirmation Default ] § 127.2  To Cure Postconfirmation Default.

 

36  See § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?, § 82.2  Postpetition Defaults and § 137.1  Postpetition Claims before BAPCPA. See, e.g., Montclair Property Owners Ass’n, Inc. v. Reynard (In re Reynard), 250 B.R. 241, 244 (Bankr. E.D. Va. 2000) (“Homeowner association fees assessed after the filing of a voluntary petition in bankruptcy are post-petition debts, not pre-petition debts. River Place East Housing Corp. v. Rosenfeld (In re Rosenfeld), 23 F.3d 833, 837 (4th Cir. 1994), cert. denied, 513 U.S. 874, 115 S. Ct. 200, 130 L. Ed. 2d 131 (1994), reh’g denied, 513 U.S. 1035, 115 S. Ct. 622, 130 L. Ed. 2d 530 (1994).”).

 

37  11 U.S.C. § 523(a)(16), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 309, 108 Stat. 4106 (1994).

 

38  The so-called “hardship” discharge is discussed beginning at § 160.1  In General.

 

39  See §§ 207.1 [ Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) ] § 113.11  Retention of Property of the Estate: Overcoming 11 U.S.C. § 1327(b) and 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.

 

40  242 B.R. 459 (Bankr. D. Minn. 1999).

 

41  250 B.R. 241 (Bankr. E.D. Va. 2000).

 

42  11 U.S.C. § 362(b)(18), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 401, 108 Stat. 4106 (1994).

 

43  11 U.S.C. § 1305(a)(1). See § 136.2  Taxes before BAPCPA§ 136.3  Taxes after BAPCPA, § 137.1  Postpetition Claims before BAPCPA and § 137.2  Postpetition Claims after BAPCPA.