Opinion
NOT FOR PUBLICATION
MEMORANDUM DECISION
Margaret M. Mann, Judge
Debtor John C. Nickles, Jr. ("Debtor") filed a Chapter 13 bankruptcy petition on March 29, 2010. North Island Financial Credit Union ("North Island") filed a Motion for Relief from the Co-Debtor Stay and a hearing was held on August 10, 2010, in order to proceed against the co-obligor on the loan, John C. Nickles, Sr. (the "co-obligor"). North Island filed a proof of claim in this case in the amount of $20, 803.42. The Debtor's plan provides for North Island's claim as an allowed secured claim of $9, 245.00.
A hearing was held on the motion on August 10, 2010. North Island filed a supplemental brief on September 3, 2010. No supplemental briefs or responses were filed by the Debtor, nor were any responses filed by the co-obligor.
In the Debtor's Opposition to Relief from Stay, the Debtor argues that the co-obligor was not properly served, because the motion was mailed to the co-obligor at the Debtor's address. The Court agrees with North Island that service at that address was proper as to the co-obligor, because it was the address listed as the co-obligor's address in the loan application, and was mailed to him in a separate envelope.
The Court took under submission the issue of whether a creditor should be granted relief form stay to proceed against the co-debtor on a secured loan where the Debtors' plan does not provide for payment of the claim in full. The Court concludes that a stay against a co-debtor or guarantor does not apply to the extent the "plan filed by the debtor proposes not to pay such claim." 11 USCS § 1301(c)(2) provides:
(c) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided by subsection (a) of this section with respect to a creditor, to the extent that-
(2) the plan filed by the debtor proposes not to pay such claim;. . .
The Bankruptcy Appellate Panel of this circuit, relying upon the legislative history of 11 U.S.C. § 1301(c)(2) in In re Jacobsen, 20 B.R. 648 (9th Cir. BAP 1982), held that the "stay insulating a co-debtor from suit shall be inoperative to the extent that 'the plan filed by the debtor proposes not to pay such claim . . . .'" Id. at 650. The Jacobsen Court reasoned:
"(T)here is no limitation on the creditor's right to sue the co-debtor for the amount not provided for by the plan. There is no requirement that suit be deferred while the debtor pays under the plan during a period of years." (citations omitted). ...
It would make little sense to defer such relief when it is known that the creditor will never receive the unprovided-for amount, under the plan, from the debtor. To put it otherwise, the debtor has in effect stated the respective dimensions of his liability and that of the co-maker. Section 1301(a)(2) provides the creditor with freedom to pursue, to the latter extent, its claim against a co-debtor." Id.
In the instant case, the Debtor's plan does not provide for payment of North Island's entire claim. The plan provides for an allowed secured claim of $9, 245.00 with interest of 6%, and does not provide for payment of North Island's unsecured claim in full. The Court grants North Island's Motion for Relief from the Co-Debtor Stay, and waives the 14 day stay imposed in Rule 4001(a)(3).