Chapter 13 Debtor May Modify Confirmed Plan to Surrender Collateral and Reclassify Claim as Unsecured

Chapter 13 Debtor May Modify Confirmed Plan to Surrender Collateral and Reclassify Claim as Unsecured

On February 16, 2015, the debtor borrowed approximately $3,800 from Republic. That loan was secured by various items of personal property.

On June 10, 2015, the debtor filed this chapter 13 petition for relief in this court. The debtor=s plan proposed to retain the personal property that was collateral for the Republic loan and to pay the claim in full with interest at 38.72% per annum. The plan was confirmed on December 12, 2015.

On April 21, 2017, the debtor moved to modify the confirmed plan. Under the modification, the debtor proposed to surrender all property securing Republic’s loan, and after liquidation of that property, to treat any remaining claim of Republic as unsecured.

The sole issue presented here is whether a chapter 13 debtor may modify a confirmed plan to surrender collateral to a secured creditor and thereafter, reclassify any remaining deficiency as a general unsecured claim provided that the
modification is made in good faith.

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