In Re Stovall
MEMORANDUM OPINION ON DEBTOR’S MOTION FOR SANCTIONS
This bankruptcy case was filed by Willie Stovall (“Debtor”) under Chapter 13 of the Bankruptcy Code, Title 11 U.S.C. § 101 et seq. on October 26, 1992. On December 16, 1992, an order was entered confirming Debtor’s plan. On September 24, 1996, Debtor received his discharge, and on September 30, 1996, Debtor’s bankruptcy case was closed.
Despite the order granting Dеbtor a discharge, Advanta Mortgage Corporation (“Advanta”), a secured creditor, attempted to foreclose on Debtor’s residence arguing that Advanta had not been paid in full under the plan. Debtor brought this motion to reopen his bankruptcy and for sanctions to be entered against Advanta for violation of the discharge injunction under 11 U.S.C. § 524(a)(2). After a review of the pleadings, oral argument and consideration of research, it is determined that Advanta’s lien was not released by Debt- or’s discharge. Thus, Advanta did not violate the discharge injunction by attempting to foreclose on the property and the request for sanctions will be denied by separate order.
As in many of the Chapter 13 case plans reviewed in this Court annually, the plan here was somewhat cryptic and must be interpreted.
FINDINGS OF FACT
The following facts are undisputed: Debtor is the owner of a single-family residence located at 8604 South Justine in Chicago, Illinois. Advantа holds the first mortgage against that residence. Prior to Debtor filing in bankruptcy, Advanta obtained a judgment of foreclosure against Debtor and in favor of Advanta.
Debtor caused this Chapter 13 case to be filed on October 26, 1992. A plan was confirmed by the court on December 16, 1992. Debtor’s plan provided for 100% pаyment to all creditors over a term of 60 months, with payments to the trustee scheduled to be made in the amount of $930 each month.
1
Debtor’s plan did not specifically list the amount to be paid to Advanta or any other identified creditor. However, Schedule D, which was attached to the plan as an exhibit, listed thе balance due Advanta at $42,600 and listed the value of property securing Advanta’s claim at
Debtor’s confirmed plan provided that some secured creditors would be paid 100% of the value of their security, but as to Advanta’s claim there would be a “total payoff of first mortgage lien on real estate whеre plan specifically provides for said payoff.” No other part of Debtor’s Chapter 13 plan itself referred to such payoff, but that plan did provide that “the attached Schedule of Debts is hereby incorporated in and shall be considered a part of the Debtor’s plan.” As noted, Schedule D listing the Advanta debt was attached to Debtor’s plan. In addition, the penultimate paragraph of Debtor’s plan stated:
The holder of each allowed claim who has not accepted the plan, shall retain the Hen securing such claim and the value as of the effective date of the plan of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim or the debtor surrenders the property securing such claim to such holder.
That was the only part of the plan which discussed retention or release of a lien.
Advanta filed its original сlaim in bankruptcy on January 14, 1993, for $19,870.41. This claim was limited to the mortgage arrears. Debtor, however, wished to pay the entire balance due Advanta during the course of the plan and asked Advanta to file an amended claim which would reflect the entire amount due Advanta. Advanta, after having received aрproximately $12,900 paid through the plan on its original claim, filed an amended “payoff’ claim reflecting the total amount due as of August 31, 1994, and then required to pay off the mortgage was $30,212.28. This “payoff’ claim did not include the $12,900 already paid by the Chapter 13 Trustee on the original claim. Rather, the amended “payoff’ claim took into account and gave Debtor full credit for eleven payments made by the Chapter 13 Trustee on the original Advanta claim through August 31, 1994. The Chapter 13 Trustee, not recognizing that the amended “payoff’ claim had already taken into account those earlier payments totaling $12,900, misread it. Thеrefore, the Trustee only paid Advanta an additional $18,000 and then concluded erroneously that the entire amended Ad-vanta claim had been paid. Therefore, payments from the Trustee to Advanta totaled only $30,392.07, whereas the true balance due at the outset of bankruptcy was about $12,900 more than was paid.
On August 28, 1996, the Chapter 13 Trustee issued a final report and account in connection with this case. Notice of the discharge was mailed on that same date. The Trustee’s final report stated that the plan was paid in full, a report in error since Advanta had not been fully paid on its claim as amended. On September 24, 1996, a discharge was entered which discharged Debtor from all debts provided for by the plan. The discharge order included a provision (really a reflection of the Bankruptcy Code) that all creditors are prohibited from attempting to collect any debt that has been discharged. On that same date, the Chapter 13 Trustee was discharged and Debtor’s bankruptcy case was closed.
On July 1, 1997, Advanta filed a motion to vacate the order of discharge and reinstate the Chapter 13 plan. On July 21,1997, Advanta’s motion was stricken without prejudice pursuant to Fed. R.Bankr.P. 7001(4) for failure to file an Adversary Complaint seeking to revoke the discharge. 2 On July 2, 1998, Debtor filed a motion to reopen the bankruptcy, to enforce the discharge injunction, and impose sanctions on Advanta for attempting to proceed with a foreclosure sale.
JURISDICTION
The issues are properly before this Court pursuant to 28 U.S.C. § 157 and Local General Rule 2.33(A) of the Northern District of Illinois. Subject matter jurisdiction lies under 28 U.S.C. § 1334(b). Venue lies properly under 28 U.S.C. § 1409. This matter constitutes a core proceeding under 28 U.S.C. §§ 157(b)(2)(A), (B), and (K).
CONCLUSIONS OF LAW
Upon completion by the debtor of all payments due under a confirmed plan the court is to grant a chapter 13 debtor discharge from all debts with certain exceptions specified in section 1328(a) of Title 11 U.S.C. Such a discharge operates as an injunction against the commencement or continuation of any action to collect, recover, or offset аny discharged debt as a personal liability of the debtor. 11 U.S.C. § 524(a)(2).
“The 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 rejectеd the plan.”
In re Duke,
The crux of the issue is thus whether Advanta’s debt was provided for in the confirmed plan and if so, whether its claim was paid in full according to that plan. As stated above, Advanta filed an original claim for $19,870.41. After receiving payments on that claim of approximately $12,-900, Advanta filed an amended claim stating that it was owed an additional $30,212.28 needed to pay off the loan balance. Thus, Advanta’s claim actually totalled about $43,000. Debtor’s plan expressly stated that secured creditors would be paid in full. Moreover, Schedule D, attached to Debtor’s plan, listed the secured dеbt to Advanta at $42,600. Thus, the debt to Advanta was certainly provided for by Debtor’s plan to be paid in full through the Trustee payments, and if that had been done the lien would have been extinguished.
Despite Debtor’s arguments to the contrary, Advanta’s claim was not paid in full. Due to the Chapter 13 Trustee’s misreading of the amended claim, Advanta received payments totaling only $30,212.28. Thus, Advanta only received about two-thirds of its claim. As Advanta’s claim was not paid in full, Advanta’s lien has
While Advanta’s amended proоf of claim was not properly read by the Chapter 13 Trustee as to the total amount claimed still due, the claimant nevertheless complied with the bankruptcy code and was entitled to benefit by it. Section 501 of Title 11 U.S.C. provides that a creditor may file a proof of claim. The only specifics as tо the format a creditor must use when filing a secured proof of claim in a chapter 13 case are found in Fed.R.Bankr.P. 3001. Rule 3001(a) provides that a “proof of claim is a written statement setting forth a creditor’s claim. A proof of claim shall conform substantially to the appropriate Official Form.” Herе, Advanta’s amended proof of claim was filed on the official form. While it deviated slightly from the form (as it listed the amount due at the time the amended claim was filed rather than at the time Debtor’s bankruptcy was filed), Ad-vanta still substantially followed the form.
Debtor argues under
Matter of Chap
pell,
Debtor also cites to
In re Duke,
Debtor further argues that Debtor’s “Chapter 13 plan specifically provided for full payment of Advanta’s claim; it proposed to deal with the debt solely through the plan and to extinguish the lien upon discharge.” Debtor’s Brief at 2. Debtor is incorrect. While the plan provided for full payment of Advanta’s claim, the plan did not expressly provide for extinguishment of Advanta’s lien upon discharge. If debt- or had intended extinguishment of lien upon entry of the discharge order, a specific requirement could have been added to provide that. There is room in Chapter 13 practice as in other fields of law for increased use of declaratory sentences to provide expressly for such things.
Debtor argues that Advanta was asleep at the wheel, that each check from the trustee to Advanta reflectеd the mistaken remaining balance due, and had Advanta been paying attention it would have realized prior to the entry of the order of discharge that it’s claim was not being paid in full. However, the same argument could equally be made of Debtor. Debtor clearly knew that he owed Advanta $42,-600, as evidenced by Sсhedule D attached
Debtor also cites to
In re Price,
CONCLUSION
Debtor’s basic argument is that an approximately $42,600 claim was fully paid off by the Chapter 13 Trustee paying Ad-vanta only about $30,000. The plan provides no room for the windfall that Debtor seeks because the Trustee closed the case prematurely.
Debtor did not pay Advanta’s amended proof of claim in full, and therefore Advan-ta stills holds a valid lien against Debtor’s property. For reasons set forth above and pursuant to order to be entered, Debtor’s motion for sanctions will be denied. Pursuant to that order, Debtor’s bankruptcy case will again be closed.
Notes
. Debtor’s plan actually provided for payments of $816 per month, but in Debtor’s motion to reopen the case, Debtor states that monthly plan payments were made in the amount of $930. Advanta does not dispute this.
. That ruling may have been improvident. Discharge orders entered through clerical error or through mistake such as the Chapter 13 Trustee's mistake described here can be corrected by motions under Rule 9024 F.R.Bankr.P. (Rule 60(a) and (b)(1) F.R.Civ. P.)
. Debtor's emergency motion was to reopen the case and for sanctions to be entered against Advanta for violating the discharge injunction. However, there has been no attempt to find Advanta in civil contempt. Section 524 has no рrovision comparable to section 362(h) (which authorizes sanctions for a violation of the automatic stay). A violation of section 524 is remedied by a motion for civil contempt under Bankruptcy Rule 9020. Debtor has not made such a motion. However, as no violation of the discharge injunction has been found, any such motion would be moot.