§ 162.3 — On Liens

Revised: June 18, 2004

[1]

Section 1328(a) mandates that the bankruptcy court shall grant the debtor a discharge of “all debts provided for by the plan or disallowed under § 502 of this title.”1 “Debt” means liability on a claim.2 “Claim” is broadly defined to mean “right to payment, whether or not such right is . . . secured, or unsecured.”3 “Lien” is separately defined to mean “a charge against or interest in property to secure payment of a debt or performance of an obligation.”4 In 1991, in Johnson v. Home State Bank,5 the Supreme Court declared that a “lien” is a “claim” and thus is a “debt” in a Chapter 13 case, without regard to whether the debtor has personal liability to the lienholder. It follows as a matter of plain statutory construction that completion of all payments under § 1328(a) discharges liens provided for by the Chapter 13 plan.6

[2]

This plain reading of § 1328(a) is consistent with many other provisions of Chapter 13 and is consistent with the legislative history of Chapter 13. If creditors are vigilant, a Chapter 13 debtor cannot accomplish confirmation of a plan unless the plan “provides for” every lienholder in one of the manners permitted by § 1322 or § 1325. Typically, this means that the plan must either (1) surrender all of the lienholder’s collateral;7 (2) provide for curing default and maintaining the lienholder’s contract payments during the life of the plan;8 or (3) provide that the lienholder retains its lien and is paid the present value of its allowed secured claim through the plan.9 These choices fully satisfy the statutory and constitutional rights of a lienholder in a Chapter 13 case. A lienholder can defeat confirmation of any Chapter 13 plan that does not satisfy at least one of these treatments.10

[3]

Sections 1322, 1325 and 1328(a) work together to guarantee the rights of lienholders. The debts, and thus the liens, that are discharged upon completion of payments under a Chapter 13 plan are only those that are provided for by the plan.11 To accomplish confirmation, a Chapter 13 plan must provide for a lienholder in one of the manners described above. If the plan provides for a lienholder in one of the accepted manners, and if the plan is confirmed, then, upon completion of payments under that plan, the debtor is entitled to a discharge of the liens provided for by the plan.12

[4]

Under the former Bankruptcy Act, Chapter XIII debtors were disabled to require lienholders to participate in plans. Real estate-secured liens were not “claims” at all.13 Creditors with liens on personal property could simply reject the proposed plan and force the debtor to deal with them “outside” the plan.14 Section 1325(a)(5) of the Code was enacted both to protect the rights of lienholders in Chapter 13 cases and to empower debtors to provide for and manage liens through Chapter 13 plans without the consent of the lienholder.

[5]

Section 1327 complements §§ 1322, 1325 and 1328 with respect to the lien rights of secured claim holders in a Chapter 13 case. Subsections 1327(b) and (c) state that “[e]xcept as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor. . . . [T]he property vesting in the debtor is free and clear of any claim or interest of any creditor provided for by the plan.”15 These sections require that liens on property of the estate are limited as provided in the confirmed plan.16

[6]

Because §§ 1322 and 1325 require a Chapter 13 debtor to provide for a lienholder, § 1327(b) and (c) are no threat to secured claim holders that are vigilant in policing the plan. But with or without the lienholder’s participation, upon confirmation all lien rights are defined by the plan and, upon completion of payments, liens are discharged by § 1328(a).

[7]

Logical application of § 1328(a) dictates that once a secured claim is paid in full, the lien must be released.17 This is what happens, for example, when a debtor pays an automobile lender’s allowed secured claim through the Chapter 13 plan—at completion of payment of the secured claim, the debtor is entitled to release of the creditor’s lien.18 The lien-releasing effect of discharge is sometimes specifically stated in the plan—for example, with a provision that “upon completion of payment of each allowed secured claim, the lien securing the claim is extinguished.”19

[8]

It has been held that upon completion of payments under the plan, the debtor is entitled to discharge of the secured claim and to release of any lien notwithstanding that the creditor believes that its security exceeds the present value of the payments it received under the plan.20 The creditor’s remedy was to object to confirmation on the ground that its allowable secured claim was greater than the amount to be paid by the plan under § 1325(a)(5).21

[9]

Sometimes on awkward facts, a handful of reported decisions have allowed liens to survive the full-payment discharge in a Chapter 13 case. Most of these cases fall in one of three fact patterns: (1) the debtor failed to provide for payment of the allowed secured claim through the confirmed plan;22 (2) the plan provided for payment of the secured claim, but for one reason or another the amount actually paid was less than the plan required;23 or (3) the plan provided for payment of allowed secured claims, but because the creditor failed to file a claim or filed a tardy proof of claim, the claim was not paid through the plan.24

[10]

The first two situations are fully managed by the Bankruptcy Code without much controversy. If the debtor failed to provide for payment of a secured claim (and no proof of claim was filed), then no discharge of the lien is available at the completion of payments because only debts “provided for by the plan or disallowed under section 502” are discharged by § 1328(a).25 If the plan provided for payment, but the amount actually paid through the plan was less than the amount to which the secured claim holder was entitled, then either payments have not been completed under the plan and the debtor is not entitled to a discharge under § 1328(a),26 or there is a claims dispute between the debtor and the lienholder that must be resolved to determine when the allowed secured claim is paid as provided for by the plan.27 Many cases in which the plan provides for payment of a secured claim, but the amount paid through the plan is less than the value of the creditor’s collateral, are covered by the exception to discharge in § 1328(a)(1) for long-term debts provided for under § 1322(b)(5).28

[11]

When discharge collides with the lien rights of a creditor that failed or refused to (timely) file a proof of claim, history and mistakes of logic conspire to sometimes overwhelm the Code’s treatment of the discharge of liens. It has been held that a secured claim holder can fail or refuse to file a proof of claim and “ride through” the Chapter 13 case without fear of discharge of its lien at the completion of payments to other creditors.29 The debtor can sometimes preclude this outcome by filing a proof of claim on behalf of the secured claim holder, under Bankruptcy Rule 3004.30

[12]

Courts holding that the lien of a secured claim holder survives discharge, notwithstanding that the claim holder disabled itself from receiving payment under the plan by failing to file a (timely) proof of claim, typically reach this outcome by reasoning that the plan does not provide for the secured claim.31 This logic distorts the fabric of Chapter 13 under the Code. A plan that calls for payment of allowed secured claims provides for such claims without regard to whether the claim holder elects to participate in distributions by filing a proof of claim. “Provided for” as defined by the Supreme Court in Rake v. Wade32 has meaning that is not dependent on the claims allowance process. As explained by Justice Thomas, “as used in § 1328(a) that phrase [“provided for by the plan”] is commonly understood to mean that a plan ‘makes a provision’ for, ‘deals with,’ or even ‘refers to’ a claim.”33

[13]

Elsewhere in the Code, Congress has demonstrated that it knows how to link the claims allowance process to confirmation and discharge in a Chapter 13 case. For example, 11 U.S.C. § 1322(b)(6) permits a Chapter 13 debtor to provide for the payment of any postpetition claim “allowed under section 1305 of this title.”34 It is broadly recognized as a consequence of § 1322(b)(6) that a Chapter 13 plan can only provide for postpetition claims with respect to which the creditor elects to file a proof of claim.35 Congressional intent to link the allowance of a postpetition claim and the permissive power to provide for and ultimately discharge a postpetition debt is evident in the language of §§ 1322(b)(6) and 1305.

[14]

The Code treatment of ordinary prepetition secured claims is unmistakably different from the treatment of postpetition claims. Section 1322(b)(2) empowers a Chapter 13 debtor to modify the rights of secured claim holders without regard to whether the claim holder files a proof of claim or has an allowed secured claim.36 Sections 1327(b) and (c) vest property of the estate in the debtor free and clear of claims or interests of creditors provided for by the plan without regard to whether a secured claim holder files a proof of claim or has an allowed secured claim.37 The claims discharged by § 1328(a) at the completion of payments under the plan are debts provided for by the plan or disallowed under § 502 without regard to whether a secured claim holder filed a timely proof of claim or accomplished allowance of its secured claim.38 It is perverse to distort the otherwise straightforward meaning of provided for because some courts dislike that secured claim holders bear the consequences of inattention to the timely filing of proofs of claim in Chapter 13 cases.

[15]

The mistaken link between the allowance of claims and discharge is easily demonstrated by applying exactly the same Code sections to unsecured debts. Discharge is not dependent upon the creditor’s choice whether to file a proof of claim because to hold otherwise leads to the insupportable conclusion that an unsecured claim holder is not discharged by a plan that provides for payment of allowed unsecured claims if the claim holder elects not to file a proof of claim. The filing of proofs of claim does not control the discharge of claims under § 1328(a). Neither can the claims allowance process control the discharge of liens. When the plan provides for payment of the allowed secured claim and the claim holder disables itself from receiving payments under the plan by mistakes in its claim or by failing to (timely) file a proof of claim, the lien is discharged by § 1328(a).39

[16]

A flagrant example of the mismanagement of liens at discharge in a Chapter 13 case is the Fourth Circuit’s opinion in Cen-Pen Corp. v. Hanson.40 After extensive prepetition litigation with a mortgage holder, the debtor in Hanson named the mortgage holder as an unsecured creditor in the plan, gave the mortgage holder notice of its unsecured status and told the creditor that it would be paid only 25 percent through the plan. The plan explicitly required creditors to submit proofs of claim and objections to the plan within a specified time, and the plan stated, “All claims to be allowed must be filed; to the extent that the holder of a secured claim does not file a proof of claim, the lien of such creditor shall be voided upon the entry of the order of discharge.”41 Cen-Pen did not object. The plan was confirmed. Cen-Pen did not file a proof of claim. All allowable claims were paid in full, and the debtors received a discharge.

[17]

In an adversary proceeding filed after discharge, the Fourth Circuit held that Cen-Pen’s lien survived discharge. Almost unbelievably, the court found that the plan failed to provide for Cen-Pen’s claim:

As a general matter, a plan “provides for” a claim or interest when it acknowledges the claim or interest and makes explicit provision for its treatment. . . . If a Chapter 13 plan does not address a creditor’s lien (for instance, by expressly providing for payment of an allowed secured claim and cancellation of the lien), that lien passes through the bankruptcy process intact, absent the initiation of an adversary proceeding. . . . Several courts have held that a plan “provides for” the lien held by a secured creditor only when it provides for payment to the creditor in an amount equal to its security. . . . Because listing Cen-Pen as an unsecured creditor would have entitled it only to approximately 25 percent of its claim, the plan did not “provide for” Cen-Pen’s claim and its liens survived the Chapter 13 confirmation.42
[18]

The Fourth Circuit’s dissembling of “provided for” in Hanson is inconsistent with the Supreme Court’s straightforward definition of that phrase in Rake.43 The plan in Hanson identified Cen-Pen, described it as an unsecured claim holder, stated a specific percentage of payment and warned Cen-Pen that it had to object to confirmation and file a proof of claim to contest its treatment. Cen-Pen did everything possible to disable itself from receiving the treatment it desired. It failed to object to confirmation. It failed to file a proof of claim. Its lien should have been discharged by § 1328(a).44

[19]

When the failure of a secured claim holder to (timely) file a proof of claim is caused by the debtor—for example, because the debtor failed to schedule the creditor—then the underlying lien may be insulated from the effects of discharge. A lienholder precluded from participation in a Chapter 13 plan by the debtor’s fraud would be entitled to relief from the discharge order under § 1328(e).45 If the creditor’s lien is a protected property interest, then there are constitutional limits on the effects of discharge that are not defined by § 1328(a) and that extend to even a lien provided for by the plan when, for example, the lienholder is without notice or knowledge of the Chapter 13 case. Courts need not torture the words in § 1328(a) to develop a jurisprudence circumscribing the due process rights of lienholders at discharge in Chapter 13 cases.46

[20]

Some courts have found limits on the discharge of liens in Chapter 13 cases based on an unwarranted extension of the Supreme Court’s analysis of § 506(d) in Dewsnup v. Timm.47 In Dewsnup, a Chapter 7 debtor proposed to strip down the lien of an undersecured mortgage holder to the value of the collateral and then void the unsecured portion of the lien under § 506(d). Section 506(d) provides that to the extent a lien secures a claim “that is not an allowed secured claim, such lien is void.”48 The Supreme Court held that a Chapter 7 debtor cannot use § 506(d) to strip down an undersecured lien on real property. The Supreme Court cited cases holding that a bankruptcy discharge extinguishes the debtor’s personal liability, but leaves intact the lien rights of a creditor that does not participate in the bankruptcy case.49

[21]

A few courts have succumbed to the temptation to extend the (overly) broad language in Dewsnup to Chapter 13 cases.50 Neither logic nor statutory construction supports this outcome. Liens are defined at confirmation in a Chapter 13 case by the plan and § 132751 and are discharged at the completion of payments with the limitations specified in § 1328(a). It is not routine practice in any known jurisdiction for debtors to file § 506(d) actions to void liens upon the completion of payments to an undersecured claim holder in a Chapter 13 case.52 As explained by the district court in In re Hernandez,53 Dewsnup does not suggest a limit on the discharge of liens in Chapter 13 cases:

The rationale of the [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992),] Court, however, does not, on its face, apply to Chapter 13. The Court provided this important caveat to its explanation of pre-Code practice. “Apart from reorganization proceedings, no provision of the pre-Code statute permitted involuntary reduction of the amount of a creditor’s lien for any reason other than payment of the debt.” Dewsnup, . . . 112 S. Ct. at 779 (emphasis added) (citation omitted). This caveat, combined with the Court’s statement that it was deciding on the specific facts before it . . . suggests that Dewsnup may not apply to a reorganization under Chapter 13. In the pre-Code counterpart to Chapter 13, debtors could not affect the rights of secured claim holders. . . . Confirmation of a Chapter XIII plan in the pre-Code regime was impossible without the consent of every secured creditor dealt with by the plan, essentially prohibiting strip downs. See 11 U.S.C. § 1052 (1976). This pre-Code practice was changed by the Bankruptcy Reform Act of 1978, which established Chapter 13. . . . [S]ection 1327 . . . allows Chapter 13 debtors to create a plan, binding on all creditors regardless of consent, that delivers the property of the estate to the debtor free and clear of creditor’s claims and interests. A lien is a claim. Johnson v. Home State Bank, 501 U.S. 78, 82, 111 S. Ct. 2150, 2154, 115 L. Ed. 2d 66 (1991). Therefore, the language of section 1327 allows Chapter 13 debtors to provide in their plans that property may vest in the Debtor free and clear of creditor’s liens. This section provides the type of evidence of Congress’s intent to change the pre-Code practice that the Supreme Court found wanting in Dewsnup.54
[22]

Dewsnup should not be overread to affect the discharge of liens in Chapter 13 cases. In a Chapter 13 case, an undersecured claim is split into its secured and unsecured components by § 506(a).55 The confirmed plan must provide for payment of allowed secured claims consistent with §§ 1322 and 1325.56 Then, as explained by one court:

[O]nce the liability on the allowed secured claim has been paid the liability of the debtor is satisfied . . . and, the lien, to the extent that it secures the payment of the allowed secured claim, is satisfied. . . . As the holder of an allowed unsecured claim the rights of [the undersecured lienholder] are subject to modification to the extent of any charge against or interest in property which purports to secure payment of the allowed unsecured claim. Therefore, the plan may provide for the satisfaction of the lien upon completion of the plan to the extent that the lien purports to secure payment of the allowed unsecured claim. The provisions of § 506(a) and § 1322(b)(2) permitting the modification of the rights of the holder of an allowed unsecured claim authorized “lien stripping” in a Chapter 13 case, not § 506(d).57
[23]

The treatment of secured claim holders in Chapter 13 cases is complete and coherent only if liens provided for by the plan are bound and limited by confirmation.58 If provision for payment of an allowed secured claim through the plan satisfies the conditions for confirmation, it must also be sufficient to discharge the underlying lien to the extent stated in § 1328(a). Any interpretation of §§ 1322, 1325, 1327 and 1328 that protects a lienholder from the folly of its own failure to file a timely proof of claim re-creates the veto that secured claim holders had under the former Bankruptcy Act and improperly elevates the claims allowance process over the effects of confirmation and discharge in §§ 1327 and 1328.

[24]

Too often, Chapter 13 debtors are forced to act to protect themselves from lienholders that do not respect the effects of confirmation and discharge. The common fact pattern is a confirmed plan that cures default and maintains payments under § 1322(b)(5) on a home mortgage protected from modification by § 1322(b)(2).59 The mortgage holder did not object to confirmation and did not notify the debtor or the trustee of any change in payments during the Chapter 13 case. The debtor completes payments under the plan and receives a discharge. Within a few months the debtor also receives a notice of foreclosure from the mortgage holder, allegedly based on substantial “defaults” before or during the Chapter 13 case.

[25]

These facts implicate several aspects of the Chapter 13 case. The effects of confirmation on the mortgage holder’s lien provided for under § 1322(b)(5) are challenged by the mortgage holder’s assertion of defaults accumulated during the Chapter 13 case.60 Although debts provided for under § 1322(b)(5) are excepted from discharge by § 1328(a)(1),61 when the plan cures default and maintains payment, there has to be some mechanism to bind the mortgage holder to the amount of the default in order for the debtor to cure that default through the plan.

[26]

Clever debtors’ attorneys and trustees have resorted to filing motions near the completion of payments in Chapter 13 cases that manage home mortgages seeking a declaration that the mortgage is current and all defaults have been cured.62 Even if discharge at the completion of payments does not release the mortgage holder’s lien, a bankruptcy court order that the mortgage is current and that all defaults have been cured would preclude the mortgage holder from asserting a default as the basis for collection or foreclosure after discharge in the Chapter 13 case.


 

1  11 U.S.C. § 1328(a)(1). See § 344.1 [ Broadest Discharge Available ] § 157.1  Broadest Discharge Available.

 

2  11 U.S.C. § 101(12).

 

3  11 U.S.C. § 101(5)(A). Contrast the language of § 1328(c), which limits the discharge available before a debtor has completed payments under a Chapter 13 plan—the so-called “hardship discharge”—to “unsecured debts provided for by the plan” (emphasis added). See § 352.1 [ In General ] § 160.1  In General.

 

4  11 U.S.C. § 101(37).

 

5  501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991).

 

6  The meaning of “provided for” in § 1328(a) is discussed in § 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. See also § 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For.

 

7  See 11 U.S.C. §§ 1322(b)(8), 1322(b)(9), 1325(a)(5)(C). See also § 102.1 [ Surrender or Sale of Collateral ] § 74.5  Surrender or Sale of Collateral before BAPCPA. See, e.g., In re Lovato, 203 B.R. 747 (Bankr. D. Wyo. 1996) (Discharge upon completion of payments did not discharge liens on property surrendered to the IRS under the confirmed plan.).

 

8  See 11 U.S.C. § 1322(b)(3), (5). See also § 81.1  Overview: General Rules for Saving Debtor’s Home, § 82.4  Reasonable Time to Cure Defaults, § 83.3  Rate of Interest to Cure Default: Contracts before October 22, 1994§ 83.5  Undersecured Mortgage and Interest to Cure Default, § 83.6  Late Charges, Attorneys' Fees, Costs and Other Charges, § 84.1  In General, § 84.2  Calculating Plan Payments to Cure Default on Mortgages before October 22, 1994, § 84.3  Calculating Plan Payments to Cure Default on Mortgages after October 22, 1994 and § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?

 

9  See 11 U.S.C. § 1325(a)(5)(B). See also §§ 104.2 [ Lien Retention ] § 74.12  Lien Retention before BAPCPA114.1 [ Calculating Payments to Secured Claim Holders ] § 78.2  Calculating Payments to Secured Claim Holders.

 

10  The secured claim holder can, of course, accept a treatment other than those listed. See 11 U.S.C. § 1325(a)(5)(A). See § 101.2 [ Acceptance of Plan ] § 74.3  Acceptance of Plan before BAPCPA.

 

11  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. See also the discussion of “provided for” in § 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For. Debts that are “disallowed under § 502” are also subject to discharge. See § 344.1 [ Broadest Discharge Available ] § 157.1  Broadest Discharge Available.

 

12  There is a statutory exception for liens provided for under § 1322(b)(5). See 11 U.S.C. § 1328(a)(1), discussed in § 351.1 [ Long-Term Debts ] § 158.7  Long-Term Debts.

 

13  See § 606(1) of the former Bankruptcy Act, 11 U.S.C. § 1006(1) (repealed).

 

14  See § 652(1) of the former Bankruptcy Act, 11 U.S.C. § 1052(1) (repealed). See also §§ 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation and 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For.

 

15  11 U.S.C. § 1327(b), (c).

 

16  See § 120.1  11 U.S.C. § 1327: Overview, § 120.5  Effects of Confirmation after BAPCPA and § 121.1  Overview.

 

17  The legislative history to § 1325(a)(5)(B) recites: “Of course, the secured creditors’ lien only secures the value of the collateral and to the extent property is distributed of a present value equal to the allowed amount of the creditor’s secured claim, the creditor’s lien will have been satisfied in full.” 124 Cong. Rec. H11,107 (daily ed. Sept. 28, 1978) (remarks of Congressman Edwards), S17,423 (daily ed. Oct. 6, 1978) (remarks of Sen. DeConcini).

 

18  See § 104.2 [ Lien Retention ] § 74.12  Lien Retention before BAPCPA.

 

19  See § 74.1  General Rules before BAPCPA, § 74.2  General Rules Changed by BAPCPA, § 74.12  Lien Retention before BAPCPA, § 74.13  Lien Retention after BAPCPA, Including in No-Discharge Cases, § 120.1  11 U.S.C. § 1327: Overview, § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors and § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

20  See § 120.1  11 U.S.C. § 1327: Overview§ 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors§ 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens and § 120.5  Effects of Confirmation after BAPCPASee, e.g., Kitchen v. Malmstrom Fed. Credit Union, 64 B.R. 452 (Bankr. D. Mont. 1986).

 

21  See, e.g., In re Echevarria, 212 B.R. 26, 28 (Bankr. D.P.R. 1997) (Confirmation of plan that paid oversecured claim in full without interest and entry of discharge after completion of payments discharged lien. “Doral was an oversecured creditor and Doral was entitled to interest. Doral chose or at least failed to exercise this right. The proof of claim filed by Doral did not include a claim for interest. Doral did not object to confirmation of the debtor’s plan on the basis that the debtor’s plan did not provide for interest. . . . Doral is bound by the order of confirmation and the order of discharge in this case. . . . Pursuant to the discharge order and 11 U.S.C. § 1328, Doral was prohibited from attempting to collect the discharged debt. Doral will be enjoined from making any further attempts to collect the discharged debt and will be required to deliver to the debtor the mortgage note pertaining to the debt for cancellation.”).

 

22  See § 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For. See, e.g., Cen-Pen Corp. v. Hanson, 58 F.3d 89, 94 (4th Cir. 1995) (Chapter 13 plan fails to “provide for” a lienholder for purposes of discharge where the lienholder did not file a proof of claim and the plan treated the lienholder as an unsecured creditor to be paid 25% through the plan. “As a general matter, a plan ‘provides for’ a claim or interest when it acknowledges the claim or interest and makes explicit provision for its treatment. . . . If a Chapter 13 plan does not address a creditor’s lien (for instance, by expressly providing for payment of an allowed secured claim and cancellation of the lien), that lien passes through the bankruptcy process intact, absent the initiation of an adversary proceeding. . . . Several courts have held that a plan ‘provides for’ the lien held by a secured creditor only when it provides for payment to the creditor in an amount equal to its security. . . . Because listing Cen-Pen as an unsecured creditor would have entitled it only to approximately 25 percent of its claim, the plan did not ‘provide for’ Cen-Pen’s claim and its liens survived the Chapter 13 confirmation.”); McPhee v. IRS, No. Civ.A.3:00-CV-2028-D, 2002 WL 31689697, at *2 (N.D. Tex. Nov. 25, 2002) (unpublished) (Because former spouse did not provide for tax lien in her Chapter 13 case, her discharge did not affect IRS’s lien on real property awarded to the debtor in a divorce. “It is well settled that, when a debtor’s plan does not address a creditor’s secured lien, ‘the lien simply passes through the bankruptcy and remains enforceable in rem after the discharge is granted and the case closed.’ . . . Debra did not own an interest in the Residence at the time she filed for bankruptcy and therefore did not list this property in her schedules. Her interest had been divested by the divorce decree. The IRS therefore correctly asserted in her bankruptcy that it did not have a secured interest in Debra’s bankruptcy estate. . . . Debra’s chapter 13 plan provided no treatment for the IRS’ secured claim and the IRS retained its tax lien on the Residence.”); In re Algee, 142 B.R. 576 (Bankr. D.D.C. 1992) (Discharge in a Chapter 13 case has no effect on a lien that is not provided for by the plan.); In re Hydorn, 94 B.R. 608 (Bankr. W.D. Mo. 1988) (Discharge does not affect a lien unless the plan provides for full payment of the value of the collateral.); In re Schroff, 94 B.R. 279 (Bankr. E.D.N.Y. 1988) (Discharge does not affect a prepetition lien when the Chapter 13 debtor failed to list the creditor and the underlying debt was not discharged.).

 

23  See, e.g., Cole v. Cenlar Fed. Sav. Bank (In re Cole), 202 B.R. 375 (Bankr. E.D. Pa. 1996) (Escrow deficiencies for taxes and insurance that developed during the Chapter 13 plan are still due at the completion of payments and are properly added to the principal balance of the secured portion of the mortgage that survives discharge.); Cone v. Davies (In re Davies), 143 B.R. 747 (Bankr. D. Idaho 1992) (Debtor’s failure to make annual mortgage payments called for by confirmed plan precludes discharge of mortgage when confirmed plan called for retention of liens and payment of mortgage on an annual basis.); Owens v. Fleet Mortgage (In re Owens), 132 B.R. 293, 297 (Bankr. E.D. Pa. 1991) (Citing with approval the concurring opinion in Fireman’s Fund Mortgage Corp. v. Hobdy (In re Hobdy), 130 B.R. 318 (B.A.P. 9th Cir. 1991), court concludes that §§ 502(a) and 1327(a) “may be harmonized by interpreting § 1327(a) as dictating that the plan binds the parties to the amount the trustee will distribute under the plan, but is not binding as to the amount of the claim.” Confirmed plan called for payment of $10,000 as the secured portion of a mortgage holder’s undersecured claim. In an adversary proceeding filed before confirmation, but tried and decided after confirmation, it was determined that the secured portion was actually $15,000. Debtor cannot bind mortgage holder to the valuation assumed in a plan merely by obtaining confirmation. However, secured claim holder is not entitled to relief from the stay and is bound by the plan to receive only $10,000 (present value) through the confirmed plan. Debtor will be left with “a residual security interest” at the completion of payments under the plan, because the allowed amount of the mortgage holder’s secured claim exceeds the amount that debtor will pay through the confirmed plan. Debtor might wish to amend confirmed plan to liquidate entire allowed secured claim.); In re Brown, 121 B.R. 768 (Bankr. S.D. Ohio 1990) (Unpaid balance of a long-term debt survives discharge in a Chapter 13 case; however, there is no provision in § 1328(a)(1) controlling the dischargeability of arrearages on a home mortgage. When a mortgage holder with a $2,800 arrearage mistakenly filed an arrearage claim for $1,800, debtor completed payments under the plan, and a discharge was entered, the additional $1,000 of arrearage claim was not “discharged”; however, the creditor was forbidden to treat the mortgage as in default because the confirmed and completed plan paid the allowed arrearage claim in full. Instead, the creditor could only add the unpaid arrearage to the end of its mortgage and collect it after completion of the regular scheduled payments. “When debtors propose to cure a mortgage default under § 1325(a)(5) . . . pay the arrearage allowed by the court, and receive a discharge, they emerge from this court current in their mortgage payments. By curing their default, ‘the event of default is remedied and the consequences are nullified.’”).

 

24  See § 133.1  General Rules: No Enlargement or Exceptions, Except . . ., § 135.5  Failure to File Proof of Claim and § 135.7  Untimely Filed Claims in Cases Filed after October 22, 1994. See, e.g., Washington v. Nissan Motor Acceptance Corp. (In re Washington), 158 B.R. 722 (Bankr. S.D. Ohio 1993) (Discharge did not avoid the lien of automobile-secured claim holder where plan provided for full payment of creditor’s lien, but creditor failed to file a proof of claim. The general provisions of § 1327(c) are overcome by the specific exception to lien voiding in § 506(d)(2). The unsecured portion of the car lender’s claim was discharged.).

 

25  See §§ 344.1 [ Broadest Discharge Available ] § 157.1  Broadest Discharge Available 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. See also § 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For.

 

26  See § 343.1 [ Timing and Procedure for Discharge and Objecting to Discharge ] § 156.1  Timing and Procedure for Discharge and Objecting to Discharge.

 

27  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.

 

28  See § 351.1 [ Long-Term Debts ] § 158.7  Long-Term Debts.

 

29  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 and 288.1 [ Failure to File Proof of Claim ] § 135.5  Failure to File Proof of Claim. See, e.g., Universal Am. Mortgage Co. v. Bateman (In re Bateman), 331 F.3d 821, 831–32 (11th Cir. 2003) (Arguably in dicta, citing Southtrust Bank of Ala. v. Thomas (In re Thomas), 883 F.2d 991 (11th Cir. 1989), mortgage holder’s lien secures entire arrearage claim notwithstanding confirmation of plan that provides for smaller arrearage claim than asserted in preconfirmation proof of claim. “[I]f a lien on a mortgage survives the § 1327 res judicata effect of a confirmed plan, then so must any corresponding arrearage claim, such as [the] one Universal asserts here. . . . Universal’s secured claim is unaffected by the Plan and survives the bankruptcy unimpaired.”); Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995) (Discharge at completion of payments does not affect lienholder that did not file a proof of claim, notwithstanding confirmed plan that treated lienholder as an unsecured creditor and requirement in plan that secured claim holders must file a proof of claim else “the lien of such creditor shall be voided upon the entry of the Order of Discharge.” The validity of a lien can only be attacked in a Chapter 13 case by the filing of an adversary proceeding. A Chapter 13 plan fails to “provide for” a secured claim holder, absent an adversary proceeding, unless it pays the lienholder an amount equal to its security.); Southtrust Bank of Ala. v. Thomas (In re Thomas), 883 F.2d 991 (11th Cir. 1989) (Secured claim holders are free to fail or refuse to file proofs of claim and simply ride through confirmation of a Chapter 13 plan and then move for relief from the stay. Secured claim holder’s lien was not invalidated by confirmed plan notwithstanding that the claim holder failed to timely file a proof of claim and notwithstanding that plan provided for payment in full of all allowed secured claims.); McCorkle v. Scott (In re Scott), 295 B.R. 686, 687–88 (Bankr. M.D. Ga. 2003) (Applying Universal American Mortgage Co. v. Bateman (In re Bateman), 331 F.3d 821 (11th Cir. 2003), plan that provided “DEBT TO HOMES OF AMERICA IS DISPUTED AND WILL NOT BE PAID THROUGH THE PLAN. UPON COMPLETION OF THE PLAN AND DISCHARGE, THE SECURITY HELD BY HOMES OF AMER[I]CA WILL BE SATISFIED OF RECORD AND TRANSFERRED TO THE DEBTORS” was binding but did not upset the lien of Homes of America notwithstanding completion of payment and discharge. “[Homes of America’s] secured claim survives the confirmed plan and Defendants’ discharge. . . . [Homes of America] retains his rights under the second mortgage until his secured claim is satisfied in full.”).

 

30  See §§ 285.1 [ Timing, Form, Superseding and Amended Claims ] § 134.1  Timing, Form, Superseding and Amended Claims before 2005 and 286.1 [ Strategic Considerations: When to File Claims for Creditors ] § 134.3  Strategic Considerations: When to File Claims for Creditors. See, e.g., Tepper v. Burnham (In re Tepper), 279 B.R. 859, 865 (Bankr. M.D. Fla. 2002) (Statutory liens securing ad valorem taxes are discharged at the completion of payments when the debtor filed proofs of claim on behalf of the taxing authority and confirmed plan provided that payment of those claims would be “full and complete payment of all claims held by the [taxing authority]. . . . Under § 1328 a debt is ‘provided for’ when a plan makes a provision for, deals with, or even refers to a claim. . . . In this case the Second Confirmation Order . . . identified the Defendant by name and proposed to make disbursements in accordance with the proof[s] of claim[ ] filed on Defendant’s behalf. Therefore, Defendant’s debt was ‘provided for’ and was discharged by virtue of the Order Discharging Debtor after Completion of Chapter 13 Plan . . . . As such, any right, title, interest, claim, lien or demand of the Defendant with respect to the 1994 and 1995 ad valorem taxes has been discharged.”).

 

31  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  508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993).

 

33  508 U.S. at 474. 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.

 

34  See §§ 204.1 [ Providing for Postpetition Claims ] § 113.6  Providing for Postpetition Claims and 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA.

 

35  See §§ 204.1 [ Providing for Postpetition Claims ] § 113.6  Providing for Postpetition Claims, 213.1 [ To Provide for Postpetition Creditors ] § 114.5  To Provide for Postpetition Creditors, 261.1 [ To Provide for Postpetition Claims ] § 127.4  To Provide for Postpetition Claims, 281.1 [ Postpetition Claims ] § 132.9  Postpetition Claims, 302.1 [ Postpetition Claims ] § 137.1  Postpetition Claims before BAPCPA and 350.1 [ Postpetition Claims ] § 158.6  Postpetition Claims.

 

36  See § 104.1 [ The Power to Modify ] § 74.11  The Power to Modify.

 

37  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 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.

 

38  See § 344.1 [ Broadest Discharge Available ] § 157.1  Broadest Discharge Available.

 

39  See, e.g., In re Taylor, 280 B.R. 711, 716 (Bankr. S.D. Ala. 2001) (When mortgage holder mistakenly files proof of an unsecured claim and plan pays unsecured creditors in full, debtors are entitled to an order releasing the mortgage holder’s lien. “In a bankruptcy case in which the secured creditor does not file a claim, or, if a secured claim is not paid in full during the case, the lien survives the plan and discharge of the debtors. . . . If the creditor files a proof of claim or is provided for in the plan, the lien of the creditor can be affected. . . . Empire has waived its secured status as discussed above. Since it has waived its secured status, its lien based on that secured status will no longer exist upon the debtors’ completion of payments under their plan. . . . The Court will issue an order . . . upon completion of their plan, which can be filed in the appropriate recording office to release the lien of Empire from their real property.”).

 

40  58 F.3d 89 (4th Cir. 1995). See also § 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation.

 

41  58 F.3d at 91.

 

42  58 F.3d at 94.

 

43  508 U.S. 464, 113 S. Ct. 2187, 124 L. Ed. 2d 424 (1993), quoted above and discussed in §§ 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.

 

44  The Fourth Circuit may have retreated somewhat from Cen-Pen Corp. v. Hanson, 58 F.3d 89 (4th Cir. 1995). See Spartan Mills v. Bank of Am. Ill., 112 F.3d 1251, 1256 (4th Cir. 1997) (In a Chapter 11 case, a financing order and an order for sale, each stating that a bank had a first priority lien, precluded a competing lender from asserting a first lien in a declaratory action filed in another court after the bankruptcy court’s orders became final. The competing lender argued that Hanson (Cen-Pen) insulated its lien from the bankruptcy court’s orders because no adversary proceeding had been filed in the Chapter 11 case and the bankruptcy court’s “departure from established procedure for adjudicating the priority of liens denied it the due process notice necessary to bind it through principles of res judicata.” Rejecting the competing lender’s argument, the Fourth Circuit gave this restrictive reading to Hanson (Cen-Pen): “In Cen-Pen, we held that a confirmation order that treated Cen-Pen as an unsecured creditor of the debtor in bankruptcy could not have preclusive effect as to the validity of a lien that Cen-Pen claimed in the debtor’s assets. We stated, ‘confirmation generally cannot have preclusive effect as to the validity of a lien, which must be resolved in an adversary proceeding.’ . . . We think that Spartan Mills applies Cen-Pen too broadly. . . . [I]f Spartan Mills knew that proper bankruptcy procedure had not been followed, its remedy was to seek reconsideration from the bankruptcy court itself or to appeal to the district court in Florida and ultimately to the Eleventh Circuit. . . . Under the holding of [Celotex Corp. v. Edwards, 514 U.S. 300 (1995),] Spartan Mills cannot allow a final order that deprives it of a lien position to stand and then hope to attack it collaterally at another time and in another forum. . . . The lien of a creditor is void if the unappealed, final order of a bankruptcy court vested with proper jurisdiction so declares regardless of the bankruptcy court’s failure to adhere to normal bankruptcy procedures.”). But see Deutchman v. IRS (In re Deutchman), 192 F.3d 457 (4th Cir. 1999), discussed in § 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation.

 

45  See § 356.1 [ Revocation of Discharge and Relief from Discharge Order ] § 161.2  Revocation of Discharge and Relief from Discharge Order.

 

46  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 and 356.1 [ Revocation of Discharge and Relief from Discharge Order ] § 161.2  Revocation of Discharge and Relief from Discharge Order for discussion of relief from the discharge order. See also § 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation for discussion of the effects of confirmation.

 

47  502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992).

 

48  11 U.S.C. § 506(d).

 

49  See 502 U.S. at 418–19.

 

50  See, e.g., In re Hernandez, 162 B.R. 160, 166–67 (Bankr. N.D. Ill. 1993) (Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), and the long-standing principle that liens survive bankruptcy precludes stripping the lien off a car even to the extent that the underlying claim is an unsecured claim. “[A] Chapter 13 debtor is not allowed to ‘strip down’ a lien, even one secured by personal property. . . . [N]o portions of the Bankruptcy Code or the Dewsnup or [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993),] decisions preclude the creditor’s claim from being bifurcated into secured and unsecured portions, pursuant to Section 506(a), and receiving separate treatment in debtor’s Chapter 13 plan. . . . However, the reasoning of these cases only requires recognition that a lien on property passes through a bankruptcy unaffected. VCI’s lien is found here to remain on the automobile unaffected by bifurcation and modification of its claim. . . . [P]ayment on the secured claim in this Chapter 13 proceeding is limited to the fair market value of collateral securing the debt. . . . The balance of the creditor’s claim is treated as unsecured. . . . Notwithstanding the forgoing [sic], VCI’s lien remains on the automobile, and will fully survive completion of the Chapter 13 Plan. The debtor will be discharged of personal liability if the Plan completes. However, the lien will remain on the vehicle to secure a debt that will then be without personal recourse. Of course, the reality of economic value will determine what actually happens if the Plan completes. If the stipulated present value of the car is precisely accurate, it will become a pile of valueless junk on the day of the last Chapter 13 payment, collapsing in a flash like the proverbial ‘Deacon’s One-Hoss Shay’. More likely, if the Plan completes, the final day of the auto will come some time later. In that event, it will have residual value after the Plan completes, and the parties would then each be motivated to agree to something of mutual benefit should debtor want to keep the old auto.”), rev’d, 175 B.R. 962 (N.D. Ill. 1994); In re Dyer, 142 B.R. 364, 371 (Bankr. D. Ariz. 1992) (Reading Hougland v. Lomas & Nettleton Co. (In re Hougland), 886 F.2d 1182 (9th Cir. 1989), Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), and Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991), together, discharge under § 1328(a) or § 1328(b) “only vitiate[s] the ability of a creditor to pursue an in personam judgment against the debtor. An in rem claim, which is bifurcated into a secured and unsecured claim during the course of a Chapter 13 proceeding, is not affected by Section 1328. . . . The lien is only extinguished when the entire indebtedness is paid in full or foreclosure proceeding under applicable State law extinguish [sic] the indebtedness. . . . [A]t the conclusion of the Debtors’ five-year plan . . . [t]he remaining balance of the secured and unsecured claims of [the mortgage holders] will remain in rem liabilities, secured by the Debtors’ residence, which must be paid if the Debtors’ residence is subsequently sold as a result of foreclosure proceedings, or otherwise.”).

 

51  See § 120.1  11 U.S.C. § 1327: Overview, § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors and § 120.4  11 U.S.C. § 1327(c): Free and Clear Effect on Liens.

 

52  See also Lumbermen’s Inv. Corp. v. Moretti (In re Moretti), 172 B.R. 984, 987–88 (Bankr. W.D. Okla. 1994) (Confirmation of a plan that bifurcated and stripped down an undersecured home mortgage prior to the Supreme Court’s decision in Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (1993), automatically had the effect of voiding the mortgage holder’s lien to the extent its debt exceeded the value of its collateral. Nobelman does not apply retroactively under Harper v. Virginia Department of Taxation, 509 U.S. 86, 113 S. Ct. 2510, 125 L. Ed. 2d 74 (1993), because mortgage holder’s appeal of confirmation was finally decided by the Tenth Circuit before the Supreme Court decided Nobelman. “The contention of LIC, that its lien remains viable and enforceable because this court has never definitively ruled upon the issue of lien avoidance, is at best disingenuous. . . . [T]he avoidance of a lien such as LIC’s in this jurisdiction, at least until Nobelman, was accomplished by operation of law pursuant to § 506(d). No action by this court was necessary, or appropriate. It is noted that § 506(d) does not authorize the avoidance of a lien, as, for instance, may be accomplished under § 522(f). Section 506(d) simply states that a lien such as is described therein is void. LIC’s lien, to the extent that it secured LIC’s claim against debtors in excess of $36,500, the stipulated value of the property, was precisely such a lien, and was rendered void by § 506(d) when LIC’s objections were overruled and debtors’ Chapter 13 plan, calling for bifurcation and lien stripping, was confirmed by this court. . . . [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992),] is simply inapposite to the issues presented here.”).

 

53  175 B.R. 962 (N.D. Ill. 1994).

 

54  175 B.R. at 965. Accord In re Echevarria, 212 B.R. 26, 28 (Bankr. D.P.R. 1997) (“The general statement that liens pass through bankruptcy proceedings unaffected must be qualified. ‘They do—unless they are brought into the bankruptcy proceeding and dealt with there.’ . . . Matter of Penrod, 50 F.3d 459, 463 (7th Cir. 1995) . . . . [A] statement in a Chapter 13 payment plan providing for lien retention, only provides for lien retention until the debt is paid. . . . After the order of confirmation, the conclusion of payments under the plan and an order of discharge that is final, the Court concludes that any claim to interest by a previously oversecured creditor, whose claim was paid in full under the plan, is waived. . . . Doral was an oversecured creditor and Doral was entitled to interest. Doral chose or at least failed to exercise this right. The proof of claim filed by Doral did not include a claim for interest. Doral did not object to confirmation of the debtor’s plan on the basis that the debtor’s plan did not provide for interest. . . . Doral is bound by the order of confirmation and the order of discharge in this case. . . . Pursuant to the discharge order and 11 U.S.C. § 1328, Doral was prohibited from attempting to collect the discharged debt. Doral will be enjoined from making any further attempts to collect the discharged debt and will be required to deliver to the debtor the mortgage note pertaining to the debt for cancellation.”); Gibbons v. Opechee Distribs., Inc. (In re Gibbons), 164 B.R. 717, 718 (Bankr. D.N.H. 1993) (“In my view the [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992),] decision was informed largely by the unbroken decades under the prior Bankruptcy Act of almost a hundred years of settled law, that chapter 7 straight bankruptcies did not affect liens and there was no such thing as lien stripping in a chapter 7 proceeding. . . . There is no such unbroken history with regard to chapter 13 under the new Bankruptcy Code. For one thing, the new Bankruptcy Code, unlike chapter XIII of the prior Bankruptcy Act, has specific provisions dealing with secured creditors in a chapter 13 proceeding, and that I believe undercuts one of the major rationales for the Dewsnup decision . . . in chapter 13.”). See also In re Penrod, 50 F.3d 459 (7th Cir. 1995) (In a Chapter 11 case, acknowledging the analogous provisions of §§ 1141(c) and 1327(c), confirmation extinguishes a lien that is not preserved by the plan or by the order of confirmation. “[L]ike most generalizations about law, the principle that liens pass through bankruptcy unaffected cannot be taken literally.”).

 

55  See § 105.1 [ Valuation, Claim Splitting and Dewsnup ] § 76.1  Valuation, Claim Splitting and Dewsnup.

 

56  See § 74.1  General Rules before BAPCPA and § 74.2  General Rules Changed by BAPCPA.

 

57  Union Mortgage Co. v. Avret (In re Avret), 146 B.R. 47, 50–51 (Bankr. S.D. Ga. 1992). Accord In re Hernandez, 175 B.R. 962, 965–68 (N.D. Ill. 1994) (“11 U.S.C. § 1327 . . . . allows Chapter 13 debtors to create a plan, binding on all creditors regardless of consent, that delivers the property of the debtor free and clear of creditor’s claims and interests. A lien is a claim. Johnson v. Home State Bank [, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (1991)]. . . . Therefore, the language of section 1327 allows Chapter 13 debtors to provide in their plans that property may vest in the Debtor free and clear of creditor’s liens. This section provides the type of evidence of Congress’s intent to change the pre-Code practice that the Supreme Court found wanting in Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992). . . . Dewsnup is not applicable to the Chapter 13 proceeding at issue in this case. As a result, this Court also holds that the meaning of ‘allowed secured claim’ in Section 1325 is the same as the meaning of that term in Section 506(a). Therefore, Section 1325 does not prohibit Debtor from stripping down [the creditor’s] lien on Debtor’s automobile. . . . Bankruptcy Code section 1327 . . . provides the mechanism by which Chapter 13 Debtors can strip down creditor’s liens without resorting to Code section 506(d). . . . ‘[R]etain the lien securing such claim’ as used in Section 1325 is best interpreted to mean that ‘such claim’ refers to the allowed secured claim as defined in Section 506(a).”); Schultz v. Hancock Bank (In re Schultz), 153 B.R. 170 (Bankr. S.D. Miss. 1993) (Creditor is required to release lien on car where plan proposed to pay the value of the car in full with interest, proof of claim filed by the creditor was consistent with the plan, the payments were completed under the plan and a discharge was entered. Creditor’s arguments based on Sun Finance Co., Inc. v. Howard (In re Howard), 972 F.2d 639 (5th Cir. 1992), Simmons v. Savell (In re Simmons), 765 F.2d 547 (5th Cir. 1985), and Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (1992), are rejected.).

 

58  See § 120.1  11 U.S.C. § 1327: Overview.

 

59  See § 79.1  Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman, § 81.1  Overview: General Rules for Saving Debtor’s Home, § 84.1  In General, § 85.1  Demand, Matured and Balloon Loans; “Short-Term” Mortgages before October 22, 1994, § 85.2  Demand, Matured and Balloon Loans; “Short-Term” Mortgages after October 22, 1994 and § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.

 

60  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, 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, 233.1 [ Notice and Due Process Considerations, Including Claims Allowance and Valuation ] § 121.2  Notice and Due Process Considerations, Including Claims Allowance and Valuation and 234.1 [ Failure to Provide For ] § 121.3  Failure to Provide For for discussion of the effects of confirmation on a mortgage holder provided for under § 1322(b)(5).

 

61  See § 351.1 [ Long-Term Debts ] § 158.7  Long-Term Debts.

 

62  See, e.g., In re Jurist, 293 B.R. 168 (Bankr. S.D. Ohio 2003) (Trustee’s motion to deem mortgage to Washington Mutual current is denied because Washington Mutual did not file a proof of claim and Washington Mutual was not scheduled as holding a mortgage on the debtors’ residence.); In re Chess, 268 B.R. 150 (Bankr. W.D. Tenn. 2001) (On trustee’s motion, mortgage holder is bound by order declaring mortgage current at the completion of payments under plan.). See also Harris v. Washington Mut. Home Loans, Inc. (In re Harris), 297 B.R. 61, 68 (Bankr. N.D. Miss. 2003) (Chapter 13 debtors’ adversary proceeding states a cause of action when Washington Mutual assessed late charges after confirmation of plan that cured defaults under § 1322(b)(5). Citing In re Lee, 167 B.R. 417 (Bankr. S.D. Miss. 1992), aff’d, 168 B.R. 319 (S.D. Miss. 1993), aff’d, 22 F.3d 1094 (5th Cir. 1994), “[f]or purposes of deciding the motion to dismiss, the court must assume, as alleged in the complaint, that Washington Mutual’s practice of assessing late charges against the plaintiffs was improper. However, once the actual merits of the complaint are reached, the plaintiffs should not expect relief if they made their payments untimely to the trustee, which, in turn, unreasonably delayed the trustee’s remittance to Washington Mutual. On the other hand, the outcome might well be different if the plaintiffs timely made their payments to the trustee which allowed the trustee to then remit to Washington Mutual in conformity with the trustee’s standard distribution procedures.”).