DEBTORS                                               CASE NO. 00-30228






This matter is before the court on the Debtors’ Motion to Pay Off Chapter 13 Plan and Motion to Release Lien Filed by C & W Asset Acquisition, LLC (“C & W”) and the response thereto by C & W.  C & W is the assignee of Fifth Third Bank.  The Debtors’ Chapter 13 Plan has been paid in full.  They maintain that C & W’s claim has been paid in full out of Plan funds, and that C & W must now release its lien on their real property.  C & W contends that it is owed more than provided for in the Plan.  This matter was heard on January 11, 2005 and taken under submission.  After considering the briefs and arguments of counsel, the court finds that the Debtors’ motions should be sustained for the reasons set out below.

1.    Factual and procedural background

The Debtors filed their Chapter 13 Plan in this court on April 27, 2000.  The Debtors’ Chapter 13 petition listed Fifth Third Bank as a secured creditor on both a first and second mortgage on their real property.  As scheduled by the Debtors, the amount of the claim on the first mortgage was $6,006.00; the amount on the second mortgage was $5,823.00.  These amounts were proposed to be paid through the Plan.  The Trustee’s Report and Recommendation as to Confirmation filed on June 26, 2000, noted that proof of secured claim had not been filed as to these two claims, and that no distribution would be made until a claim was filed.  An order confirming the Debtors’ Chapter 13 Plan was entered on August 4, 2000.

On June 13, 2003, Fifth Third Bank assigned a mortgage executed by the Debtors on January 25, 1991 to C & W.  This mortgage is in regard to an Equity-Express Line Account Revolving Credit Agreement (“the Agreement”) entered into by the Debtors and Fifth Third Bank, and appears to be the second mortgage scheduled by the Debtors.  According to the Debtors, C & W also filed its lien in regard to this mortgage on June 13, 2003.  On November 6, 2003 C & W filed a proof of claim in the Debtors’ case stating that the total amount it claimed was $5,999.29.  The Chapter 13 Trustee filed her Plan Completion Report on December 30, 2004 stating that she had received enough money to “pay all claims to the fullest extent required by the confirmed plan[.]”

The Debtors’ Plan provides in pertinent part at paragraph 2:

Secured creditors who have been duly scheduled as creditors in the Plan, shall, upon payment of the amount allowed by the Court as a secured claim in the Wage Earner Plan, or creditors who have not filed a claim as provided by law be deemed to have their full secured interest satisfied and shall cancel any mortgage on debtor’s property which was in existence at the time of filing of the plan or the court may order the cancellation of same. . . . Secured creditors shall retain their security interest in their collateral until the amount of their secured claim has been fully paid or until the debtor has been discharged.


The amount to be paid to Fifth Third Bank, C & W’s predecessor in interest on the second mortgage, was set out in paragraph 3(b) as $5,823.00.  C & W’s proof of claim, filed more than three years after the Debtors’ plan was confirmed, set the amount owed as $5,999.29.

C & W states that its late-filed proof of claim is for an incorrect amount as a result of additional interest generated by a variable interest rate and attorney fees provided for in the mortgage.  C & W goes on to argue that the proof of claim, timely or not, is irrelevant to the survival of its lien in any event, since a secured creditor is not required to file a proof of claim.  The question before the court is not, however, whether C & W’s lien survives, but whether it has been satisfied per the terms of the confirmed plan. 

Pursuant to Bankruptcy Code section 1327(a), “[t]he provisions of a confirmed plan bind the debtor and each creditor, whether or not the claim of such creditor is provided for by the plan, and whether or not such creditor has objected to, has accepted, or has rejected the plan.”  When the Debtors filed their plan, they provided for the second mortgage debt to Fifth Third Bank.  Fifth Third Bank did not object to the amount proposed to be paid in the plan, nor did it file a proof of claim.  No challenge to the amount proposed was made at the confirmation hearing.  As set out above, no other amount was proposed until C & W filed its proof of claim, years after the plan had been confirmed.   

Generally speaking, a Chapter 13 plan confirmation order is res judicata as to all issues which were decided, or could have been decided at, the confirmation hearing.  See In re Whelton, 299 B.R. 306 (Bankr. D. Vt. 2003).  A creditor who fails to object to the confirmation of a proposed plan at an appropriate time is deemed to have accepted the plan and is bound by the confirmation order.  See In re Davis, 160 B.R. 577 (Bankr. E.D. Tenn. 1993); Matter of Marlow, 216 B.R. 975 (Bankr. N.D. Ala. 1998).  It is clear, therefore, that both statutory and case authority support the Debtors’ position in this matter, and the court will sustain their Motion to Pay Off Chapter 13 Plan and their Motion to Release Lien by separate order.


Copies to:


C. Ed Massey, Esq.

Mason L. Miller, Esq.