In re Rosa, 521 B.R. 337

Debtor Diana Rosa filed Chapter 13 after receiving a Chapter 7 discharge; she owned a Monterey residence subject to a first deed of trust (Aurora) and a second deed of trust (EMC).
Court previously valued the residence at $350,000, rendering EMC wholly unsecured; the valuation order stated EMC’s lien would be avoided on completion of the Chapter 13 plan.
Rosa’s Chapter 13 plan proposed payments sufficient to pay general unsecured creditors in full but explicitly excluded disbursements to EMC based on her prior Chapter 7 discharge.
EMC filed a proof of claim for the unpaid note balance; the Chapter 13 Trustee objected to confirmation, arguing EMC holds an allowed unsecured claim that must be paid, which would make the plan underfunded.
Rosa objected to EMC’s proof of claim, contending the Chapter 7 discharge eliminated her in personam liability and the valuation/strip-off left EMC with no allowable claim to be paid under Chapter 13.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a junior lienholder stripped to zero secures an allowed unsecured claim in a subsequent Chapter 13	Rosa: Prior Chapter 7 discharge eliminated in personam liability; valuation/strip-off removes in rem rights — EMC has no allowable claim	Trustee/EMC: §506 treatment converts the undersecured secured claim into an allowed unsecured claim against the Chapter 13 estate	Court: EMC’s unsecured claim is disallowed; prior discharge and valuation prevent resurrecting in personam liability as an allowed unsecured claim
Whether a Chapter 7 discharge bars a creditor from filing/holding an unsecured claim in a later Chapter 13	Rosa: §524 injunction prohibits collection or continuation of actions to collect discharged personal liability, including claims in later cases	Trustee: Discharge does not revive secured claim status; §506 and precedent permit allowance of unsecured claim for plan purposes	Court: §524 bars resurrecting in personam collection; discharge prevents allowing an unsecured claim for the debtor in Chapter 13
Effect on Chapter 13 plan confirmation if EMC’s claim is disallowed	Rosa: Plan need not pay EMC; plan funds general unsecured creditors in full and can be confirmed	Trustee: If EMC’s claim is allowed, plan would not fund and cannot be confirmed	Court: Trustee’s objection overruled; plan confirmed because EMC’s claim is disallowed

Johnson v. Home State Bank, 501 U.S. 78 (1991) (Chapter 7 discharge eliminates personal liability but leaves in rem lien rights intact)
Dewsnup v. Timm, 502 U.S. 410 (1992) (limitations on treating a voided lien as a discharge of the underlying obligation under §506 context)