Greg F. Colbourne v. Ocwen, 550 F. App'x 687

Debtor Greg F. Colbourne filed Chapter 7 in Aug. 2009 (no-asset) and received a discharge; that case closed in Dec. 2009.
Colbourne filed Chapter 13 in Jan. 2010 and listed two investment properties subject to Ocwen first-priority mortgages: Hopewell Drive ($374,000 lien; property value $125,000) and Grasmere Parkway ($226,800 lien; property value $70,000).
Colbourne moved under 11 U.S.C. §§ 506(a) and 1325(a)(5) to value (bifurcate) and cram down Ocwen’s undersecured liens to the collateral values.
The bankruptcy court denied the valuation/cram-down motions, reasoning that Colbourne was ineligible for a Chapter 13 discharge under 11 U.S.C. § 1328(f)(1) (because of the recent Chapter 7 discharge), and thus could not permanently modify Ocwen’s lien rights.
The district court affirmed the bankruptcy court. The bankruptcy court later confirmed Colbourne’s Chapter 13 plan (with conditions) but required Colbourne to reserve funds and to file a plan modification if the appeal failed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a debtor ineligible for a Chapter 13 discharge may cram down (bifurcate) an undersecured first-priority mortgage on investment property under §§ 506(a) and 1325(a)(5)	Colbourne: Ineligibility for discharge does not bar pursuit of cram-down relief; §1325(a)(5) allows valuation of secured claims regardless of discharge eligibility	Ocwen: Without a discharge, any cram-down would not be permanent; §1325(a)(5)(B)(i)(I) preserves the lien until full nonbankruptcy-law debt is paid or a discharge is granted	Court: A debtor ineligible for discharge may not permanently modify lien rights by cram down; denial affirmed
Whether a debtor ineligible for discharge is barred from filing or receiving other forms of Chapter 13 relief	Colbourne: Even if ineligible for discharge, he can file Chapter 13 and obtain some relief	Ocwen: Ineligibility for discharge limits remedies that effect permanent modification of creditor rights	Court: Court did not bar Chapter 13 filing or other relief; Colbourne obtained some Chapter 13 benefits, but cannot achieve permanent cram-down without discharge

Educ. Credit Mgmt. Corp. v. Mosley, 494 F.3d 1320 (11th Cir.) (standard of appellate review of bankruptcy court decisions)
Hemar Ins. Corp. of Am. v. Cox, 338 F.3d 1238 (11th Cir.) (de novo review of legal conclusions)
In re Paschen, 296 F.3d 1203 (11th Cir.) (§1325(a)(5) permits bifurcation and strip-down authority in Chapter 13)
In re Lilly, 378 B.R. 232 (Bankr. C.D. Ill.) (no permanent lien modification by cram-down when debtor is ineligible for discharge)
In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill.) (no-discharge Chapter 13 cannot effect permanent modifications traditionally achieved only by discharge)
In re Donovan, 532 F.3d 1134 (11th Cir.) (finality and appealability of bankruptcy orders)