Opinion
No. 79-01501-BKC-TCB
February 25, 1980
Bankruptcy Reform Act — Individual Repayment Plan — Modification of Plan — Claims Treated Outside the Plan
Subsequent to confirmation, a Chapter 13 debtor may not modify his plan to reclassify a secured claim as unsecured if the plan has made no provision for the claim. See Sec. 1329(a) at ¶ 13,229.
Bankruptcy Reform Act — Individual Repayment Plan — Modification of Plan — Secured Claims — Failure to File Claim
The failure of a secured creditor who has perfected its lien to file its claim in a Chapter 13 proceeding does not result in a forfeiture of the security in accordance with Bankruptcy Rule 13-302(e)(1). See Rule 13-302(e)(1) at ¶ 20,952.
[Digest of Opinion]
The debtors filed a motion to modify their confirmed Chapter 13 plan to reclassify a secured creditor's claim as unsecured. The debtors' plan had made no provision for the claim, which was referred to only with the notation: "Payments to be made outside of plan, creditor to retain secured lien."A plan may be modified after confirmation with respect to "payments on claims of a particular class provided for by the plan" pursuant to Section 1329(a) of the Bankruptcy Code. However, since the plan failed to provide for this claim, the court would not permit reclassification of the claim.
The secured claim was perfected under state law, but the creditor had failed to file a claim in the Chapter 13 proceeding. The debtors contended that the failure to file the claim constituted a forfeiture of the security.
The court found that the secured creditor had relied on Bankruptcy Rule 13-302(e)(1), applicable to cases filed under the Bankruptcy Code, which provides that while secured claims not timely filed are not to be treated as secured for purposes of voting and distribution in the Chapter XIII case, "the court may permit the later filing of a secured claim for the purpose of distribution by the debtor, the trustee, of a co-debtor." Therefore, the debtors are estopped from seeking a reduction in the debt and denial of security for the creditor's failure to file its claim. "Any other conclusion would encourage use of the quoted provision in B.R. 13-302(e)(1) for the deliberate purpose of depriving a creditor of his security and reducing his claim." Accordingly, the motion for modification was denied.