(6th Cir. B.A.P. Aug. 10, 2015)
The Sixth Circuit B.A.P. reverses the bankruptcy court’s finding that the mortgagee’s claim should be reduced by the amount the mortgagee would have received under the Chapter 13 plan if it had filed a proof of claim. The plan required the filing of a proof of claim in order to receive distributions under the plan. The mortgagee did not receive payments under the plan, and the debtor did not make the loan payments outside of the plan. After completion of the plan, the bankruptcy court held that, while the mortgagee’s liens remained, the amount of the debt must be reduced by the amount that would have been paid on the claims through the plan. The B.A.P. holds that there is no justification for this result, as the debtor or the trustee could have filed a proof of claim for the mortgagee if the debtor wished to pay the claim through the plan and avoid defaulting by not making payments outside the plan. Opinion below.
Author: Matt Lindblom