Bankruptcy Court Permits Plan Modification for Vehicle Surrender

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Oct. 27, 2025 Get Citation Alerts Download PDF Add Note

In re: Mike G. Carter and Nichole Carter

United States Bankruptcy Court, D. Utah

• Citations: None known
• Docket Number: 24-22514

• Precedential Status: Unknown Status

• Opinion

• Authorities (18)

• Cited By (0)

• Summaries (0)

• Similar Cases (75K)

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Trial Court Document

This order is SIGNED. =
APLCY C
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Dated: October 27, 2025 ce □□
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PEGGY HUNT ESF
U.S. Bankruptcy Judge Xa 4 i
aep
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF UTAH

In re:
Bankruptcy Case No. 24-22514
MIKE G. CARTER and
NICHOLE CARTER, Chapter 13
Debtors. Honorable Peggy Hunt

MEMORANDUM OPINION

The question presented is whether the Debtors may modify their confirmed Chapter 13
plan under § 1329 of the Bankruptcy Code! to surrender a vehicle subject to a lien that, at the
time of confirmation, they planned to retain and pay for pursuant to the parties’ prepetition
contracts. This modification is permitted under § 1329(a)(1) — (a)(3) and complies with
§ 1329(b).
I. JURISDICTION AND VENUE
The Court has jurisdiction over this contested matter under 28 U.S.C. §§ 157 (a) and 1334
and the Order of Reference of the United States District Court for the District of Utah at DUCiv
R 83-6.1. Pursuant to 28 U.S.C. § 157 (b), the Court may hear and determine this contested
matter by entry of a final order because it is a “core proceeding.” It arises under the Bankruptcy 111 U.S.C. § 101 et seq. Unless stated otherwise, statutory references are to title 11 of the United States Code.

Code and arises in this case, and it is included as a core proceeding under 28 U.S.C.
§ 157 (b)(2)(B) and (L). Venue of this case in this district is proper pursuant to 28 U.S.C. § 1408.
II. FACTS
The Debtors owned a Kia Sorento when they filed their petition seeking relief under

Chapter 13 of the Bankruptcy Code. Goldenwest Credit Union (the “Credit Union”), the entity
that financed the purchase of the vehicle, filed a Proof of Claim in the Debtors’ case asserting a
partially secured and partially unsecured claim based on its interest in and valuation of the Kia.2
The Debtors did not object to the Credit Union’s Proof of Claim.
The Debtors’ treatment of the Credit Union’s claim was included in the “Nonstandard
Plan Provisions” of their proposed Chapter 13 Plan.3 The Plan stated the Credit Union would be
paid “directly” – in other words, the Chapter 13 Trustee would not make distributions to the
Credit Union on account of its claim because the Debtors were paying the Credit Union
“outside” of the Plan pursuant to the parties’ prepetition contracts.4 General unsecured creditors
were to receive no distributions under the Plan and those claims were to be discharged at the end
of the Plan’s term pursuant to § 1328 if the Debtors completed their payments to the Trustee.5

The Credit Union did not object to confirmation and the Debtors’ proposed Plan was
confirmed.6 The order confirming the Plan stated in relevant part that the Credit Union’s claim

2 Claims Dkt. No. 5-1.
3 See Fed. R. Bankr. P. 3015(c)(2); Local Rule 2083-2(f)(3).
4 Dkt. No. 4 (Chapter 13 Plan (hereinafter, the “Plan”)), ¶¶ 1.3, 8.1(3); see discussion infra at III(1).
5 Plan, ¶ 5.1.
6 Dkt. No. 27 (Order Confirming Debtors Chapter 13 Plan Following Contested Confirmation Hearing (hereinafter,
the “Conf. Order”)).
would be paid directly by the Debtors “outside the Plan, pursuant to the conditions listed in
Local Rule 2083-2(f)(3) and Local Rule 2083-2(i)(4).”7
Shortly after the confirmation order was entered, the Debtors filed a motion pursuant to
§ 1329 seeking to modify the Plan (the “Modification Motion”).8 The Debtors determined they

could not afford the Kia and wanted to “surrender” the vehicle to the Credit Union to liquidate in
partial satisfaction of its claim. They planned to stop making payments to the Credit Union and
the Credit Union could amend its Proof of Claim to adjust the amount of its general unsecured
claim if the Kia was liquidated for less than the Credit Union’s total claim against the Debtors.9
The Trustee objected to the Modification Motion.10 The Credit Union did not. After
reviewing the pleadings and hearing arguments, the Court issued an Order granting the
Modification Motion.11 This Memorandum Opinion supplements that ruling.
III. ANALYSIS
The issue before the Court is whether the confirmed Plan may be modified under § 1329
to allow the Debtors to surrender the Kia to the Credit Union to sell, with liquidation proceeds

7 Conf. Order, ¶ 16(a). Local Rule 2083-2(f)(3) involves required nonstandard plan provisions. Subsection (i)(4)
states that when a secured creditor is paid directly –

the following conditions apply: (A) the debtor will pay the claim without any modification to the
terms of the contract; (B) upon entry of the [confirmation order], the automatic stay . . . and co-
debtor stay . . . are terminated . . . ; (C) the claim will not be discharged; and (D) neither the Court
nor the trustee will monitor the debtor’s performance . . . .

See discussion infra at n.38.
8 Dkt. No. 37 (Motion to Modify Plan and for Attorney Fees (hereinafter, the “Mod. Mot.”)); see Dkt. Nos. 38 and
40 (Notices of Hearing) and 42 (Memorandum in Support (hereinafter, the “Dr. Memo.”)). After the confirmation
hearing but prior to entry of the Confirmation Order, the Debtors filed a Notice of Preconfirmation Modification to
Chapter 13 Plan, Dkt. No. 18, stating they were modifying the Plan prior to confirmation pursuant to § 1323 to
surrender the Kia. They withdrew this Notice and filed the Modification Motion after the Confirmation Order was
entered. See Dr. Memo., at 1.
9 Mod. Mot., ¶ 2; Dr. Memo., ¶ 6.
10 Dkt. No. 39. The Trustee also argued that the monthly plan payments must increase to render the Plan feasible and
that a fee application was required prior to the allowance of any attorney’s fees. The feasibility issue was not before
the Court because the Debtors agreed to the payment amount. See Dkt. No. 51 (Stipulated Order). Debtors’ counsel
filed an application and the fees were allowed. See Dkt. Nos. 46, 47, 51.
11 Dkt. No. 46 (Order).
applied to its claim, and the deficiency claim treated as a general unsecured claim. This
modification is permitted under § 1329.
Section 1329(a) states that a plan may be modified “[a]t any time after confirmation of
the plan but before completion of payments under such plan . . . upon request of the debtor, the

trustee, or the holder of an allowed unsecured claim . . .” provided the proposed modification is
of the type described in subsections (a)(1), (a)(2), (a)(3) or (a)(4) of that section.12 Here,
modification of the Debtors’ confirmed Plan is permissible because it is within the express terms
of § 1329(a)(3) and, alternatively, is permitted under the plain language of § 1329(a)(1) and
(a)(2).13 These subsections authorize modifications that amend the treatment of an allowed
secured claim provided for in a confirmed plan. Case law to the contrary is unpersuasive.
1. The Debtors’ Plan May Be Modified Under § 1329(a)(3) Because the Amount
of the Distribution to the Credit Union Is Altered to Take Account of the
Surrendered Vehicle.

Section 1329(a)(3) states that a plan may be modified to “alter the amount of the
distribution to a creditor whose claim is provided for by the plan to the extent necessary to take
account of any payment of such claim other than under the plan. . . .” This language is very
broad.
The word “creditor” is defined in § 101(10)(A) as one with a prepetition claim, and the
creditor may hold a secured or unsecured claim because, under § 101(5)(A), the word “claim”
means any “right to payment, whether or not such right is . . . secured[] or unsecured.” The only
limitation on creditors who may be affected under § 1329(a)(3) is that their claim be “provided
for by the plan. . . .” There are no conditions on how the claim is “provided for by the plan” or on

12 See Fed. R. Bankr. P. 2002(a)(5), 3015(h) (governing procedures and notice of a modification).
13 See, e.g., United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240-41 (1989) (court must look to the language of
the statute itself and need not look beyond its plain language).
the type of “distribution” to be altered. Thus, § 1329(a)(3) applies if a claim is in any way dealt
with in the plan, including being paid through or outside of the plan, and the distributions may be
ones made by a trustee or a debtor.14 The only restriction is that the amount of a distribution may
only be altered “to the extent necessary to take account” of “any payment” on a secured and/or

unsecured claim “other than under the plan.” These phrases plainly encompass payments on a
claim resulting from a secured creditor’s liquidation of its collateral as the liquidation is
accomplished outside the authority of the confirmed plan.15
The Debtors’ proposal here to change the treatment of the Credit Union’s allowed claim
is squarely within § 1329(a)(3). Paragraph 8.1(3) of the Plan “provided for” the Credit Union’s
claim, stating the Debtors were electing to pay the Credit Union directly for the Kia. The Debtors
then determined they could not afford the Kia and wanted to surrender it to the Credit Union to
be sold and the liquidation proceeds applied to the claim. In other words, “to take account of
[this] payment of [the Credit Union’s] claim” made “other than under the [P]lan,” the Debtors
wanted to “alter the amount of the distribution” to the Credit Union to the amount of liquidation

proceeds, plus any claim that was asserted or could be asserted as a general unsecured claim.
Thus, the modification is one allowed under the plain language of § 1329(a)(3).

14 Section 1325(a)(5)(A) states that a plan must be confirmed if a holder of a secured claim provided for by the plan
consents. In the case of a direct payment – not invoking cram down and discharge, the creditor is consenting to such
treatment. The fact that the claim that is classified in the plan is paid directly does not mean it is not provided for by
the plan.
15 See In re Kinney, 5 F.4th 1136, 1142 (10th Cir. 2021) (“[A] payment ‘under’ a bankruptcy plan” is one “‘subject
to . . . or under the authority of’ the plan.”) (quoting Fla. Dep’t of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S.
33, 39-41 (2008)); see also In re Zieder, 263 B.R. 114, 118 (Bankr. D. Ariz. 2001) (surrender of collateral is
payment other than under plan).
2. The Debtors’ Plan May Be Modified Under § 1329(a)(1) and (a)(2) Because
the Debtors Are Only Changing the Amount and Timing of Payments of
Claims of a Particular Class.

The Debtors’ modification of their confirmed Plan also is permissible under the plain
terms of § 1329(a)(1) and (a)(2). These subsections state a confirmed plan may be modified to
“increase or reduce the amount of payments on claims of a particular class provided for by the
plan”16 or to “extend or reduce the time for such payments.”17 Like § 1329(a)(3), subsections
(a)(1) and (a)(2) are expansive in scope.
Subsection (a)(1) refers to “claims” and, as discussed above, this word includes secured
and unsecured claims under § 101(5)(A). The word “payments” is not qualified and applies to
payments by a debtor directly, by the trustee under a plan or even payments resulting from
collateral liquidation.18 The “particular class” need only be “provided for by the plan” and is
otherwise unrestricted – it could be a secured creditor class or a general unsecured creditor class.
Generally, each secured creditor is in a single class in a Chapter 13 plan so that the debtor may
afford treatment that is unique to its collateral interest.
Here, the Credit Union was a secured creditor separately classified to receive payments
directly from the Debtors that would fully pay its secured and unsecured claim. As modified,
there is a reduction in the amount of payments to the Credit Union’s secured class because that
amount will be reduced to the value of the Kia at liquidation.19 The time for such payments is
also reduced because the Credit Union will be paid when the Kia is liquidated, instead of in

16 § 1329(a)(1).
17 § 1329(a)(2).
18 See, e.g., In re Fayson, 573 B.R. 531, 535 (Bankr. D. Del. 2017) (“Surrender of collateral is a form of payment
under the Code.”) (citing Bank One, N.A. v. Leuellen, 322 B.R. 648, 654 (S.D. Ind. 2005)).
19 See In re Jones, 538 B.R. 844, 849 (Bankr. W.D. Okla. 2015) (holding that because “each secured creditor
constitutes a ‘class’, the reduction of a secured claim to an unsecured one by surrendering the collateral falls
squarely under § 1329(a)(1) because the creditor’s secured claim is reduced to zero . . .”).
installments over the remaining life of the parties’ contracts.20 Thus, the Debtors’ modification is
permitted under § 1329(a)(1) and (a)(2).
3. In re Nolan Does Not Change the Court’s Conclusion.

In In re Nolan21 the United States Court of Appeals for the Sixth Circuit concluded that
modifying a confirmed plan to surrender a vehicle is not allowable and several lower courts
outside of the Sixth Circuit have followed this case.22 The Court respectfully disagrees with
Nolan based on the plain language of § 1329(a)(1) – (a)(3) discussed above. Even though it is not
binding, Nolan merits discussion because the reasoning in that case does not consider how
claims are defined and allowed in bankruptcy and the treatment of allowed claims in a Chapter
13 plan. Examination of these concepts supports the Court’s decision in this case.
The conclusion in Nolan was based primarily on the premise that § 1329 does not
mention and therefore does not allow a debtor to “reclassify a previously allowed secured
claim”23 or to “add a claim to the class of unsecured creditors[,]”24 but only to change the
amount and timing of payments under subsection (a)(1) (subsections (a)(2) and (a)(3) of § 1329

were not considered). According to the court, the proposed modification would “bifurcate a
claim that has already been classified as fully secured into a secured claim as measured by the

20 In many cases the amount of payments to the unsecured creditor class will also be reduced because the creditor
would have been paid outside of the Plan and modification requires the creditor’s allowed unsecured claim to be
paid through the plan. The general unsecured creditor class was not projected to receive anything in this case and,
therefore, this analysis does not apply.
21 232 F.3d 528 (6th Cir. 2000).
22 See, e.g., In re Ramos, 540 B.R. 580, 592 n.33 (Bankr. N.D. Tex. 2015) (collecting cases); In re Arguin, 345 B.R.
876 (Bankr. N.D. Ill. 2006). Nolan was followed in an unpublished order entered in this district in 2003. In re
Blansett, Case No. 00-21397 (Thurman, J.) (Creditor did not file a proof of claim and debtors requested modification
of confirmed plan to surrender a vehicle they initially planned to retain “in full satisfaction” of the creditor’s secured
claim). To the extent not factually distinguishable from this case, the Court respectfully disagrees with the order in
Blansett.
23 232 F.3d at 532.
24 Id. collateral’s depreciated value [upon surrender] and an unsecured claim as measured by any
unpaid deficiency.”25
The Sixth Circuit is correct that § 1329(a) does not mention “reclassification,” “addition”
or “bifurcation” of claims, but this wording is not required. A modification to surrender a vehicle

does not reclassify or bifurcate a “fully secured” claim. There is no modification of the claim at
all. It is only the treatment of the allowed claim that is impacted and § 1329(a)(1) – (a)(3) allow
modifications that alter the treatment of a claim.
Again, under § 101(5)(A), the word “claim” means “any right to payment whether or not
such right is . . . secured or unsecured.” A creditor may assert its claim by filing a proof of claim
under § 501 and Federal Rule of Bankruptcy Procedure 3002. Absent objection, the claim
asserted in the proof of claim is “deemed allowed” under § 502(a). If an objection is filed, the
court determines the amount of the “allowed” claim under § 502(b). The “allowed claim” of a
creditor with an interest in a vehicle is valued under § 506(a)(1)26 which states in relevant part:
An allowed claim of a creditor secured by a lien on property in which the estate has an
interest . . . is a secured claim to the extent of the value of such creditor’s interest in the
estate’s interest in such property, . . . and is an unsecured claim to the extent that the value
of such creditor’s interest . . . is less than the amount of such allowed claim . . . .

Thus, under § 506(a)(1) the claim of a creditor is “divided into secured and unsecured portions,
with the secured portion of the claim limited to the value of the collateral.”27
In Chapter 13 cases, the secured and unsecured portions of the allowed claim are
provided for in the debtor’s plan. Confirmation of the plan occurs if the provisions of § 1325 are

25 Id. at 533.
26 In re Ballard, 526 F.3d 634, 641 (10th Cir. 2008) (Section 506(a) “provides a method for the judicial valuation of
an allowed secured claim . . .”) (citing Dewsnup v. Timm, 502 U.S. 410, 417 (1992) for its holding that the meaning
of “allowed secured claim” in § 506(a) does not determine the meaning of “allowed secured claim” in § 506(d)).
27 Assocs. Com. Corp. v. Rash, 520 U.S. 953, 961 (1997) (citing Ron Pair Enters., Inc., 489 U.S. at 238-39); Ballard, 526 F.3d at 637 (“[U]nder § 506(a), a claim secured by a lien is separated, or bifurcated, into a secured portion
reflecting the value of the property and an unsecured portion reflecting the remaining debt or deficiency.”).
met. Subsection (a)(5) of that section sets forth the required treatment of a creditor’s “allowed
secured claim” – i.e., the portion of the claim “that is allowed under § 502 and secured by a lien
under state law” as valued under § 506(a)(1).28 This treatment is based on satisfying one of three
conditions set forth in § 1325(a)(5): (i) the secured creditor consents to the treatment of its claim

(like this case) as allowed under § 1325(a)(5)(A); (ii) the debtor keeps the collateral and makes
payments on the secured portion of the claim required under § 1329(a)(2)(B) with the unsecured
portion of the claim being subject to “cram down” and paid as part of the general unsecured class
of the plan; or (iii) the debtor surrenders the vehicle to the creditor as permitted under
§ 1325(a)(5)(C). There is no required plan treatment of the unsecured portion of the allowed
claim, but this portion of the claim exists and is treated based on plan provisions that conform
with §§ 507, 1322, 1325 and 1326.
Accordingly, contrary to Nolan, modifying a confirmed plan to allow a collateral
surrender does not result in a “reclassification” or “bifurcation” of an allowed secured claim or
the “addition” of an unsecured claim. It merely modifies the treatment under the confirmed plan

of the existing secured and unsecured portions of the creditor’s allowed claim. This conclusion is
reinforced by the “hanging paragraph” at the end of § 1325(a)(5) and the decision of the United
States Court of Appeals for the Tenth Circuit in In re Ballard.29
The hanging paragraph in § 1325(a)(5), which was added to the Bankruptcy Code in
2005,30 states that if the debtor purchased and financed a vehicle within 910 days of the petition
date, the creditor’s claim is not valued under § 506. Thus, when the debtor elects to retain

28 Ballard, 526 F.3d at 641; see Rash, 520 U.S. at 957 (“The value of the allowed secured claim [referred to in
§ 1325(a)(5)] is governed by § 506(a) of the Code.”).
29 526 F.3d 634.
30 See The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 199 Stat. 23
§ 318 (April 20, 2005).
collateral and the creditor’s secured claim is treated under § 1325(a)(5)(B), the hanging
paragraph prohibits a “cram down” of the unsecured portion of the claim; rather, the debtor must
pay the creditor in full under the terms of the parties’ prepetition contracts. By excluding § 506
valuation of so-called “910 claims,” Congress recognized that that section applies to cases, such

as this case, where the hanging paragraph does not apply – thus requiring bifurcation of a
secured claim into secured and unsecured components.31
Ballard takes this analysis one step further holding that a creditor whose claim is secured
by a vehicle will always have an allowed claim that is bifurcated into secured and unsecured
components even when § 506 is inapplicable because of the hanging paragraph. That case
involved the confirmation of chapter 13 plans where the debtors proposed to surrender vehicles
subject to 910 claims. Lower courts held that the vehicle surrenders satisfied the lenders’ claims
in full because § 506 did not apply to bifurcate the claims and federal law does not afford
secured creditors deficiency claims. The Tenth Circuit reversed, holding that the creditors were
entitled to the value of their collateral obtained upon surrender, plus any deficiency claims
allowed under state law.32 This case therefore establishes that a secured claim is bifurcated with

secured and unsecured components even if not valued under § 506(a)(1).
In this case, the Credit Union’s uncontested Proof of Claim, allowed under § 502(a),
asserted a partially secured and partially unsecured claim based on its valuation of the Kia under
§ 506(a)(1). As confirmed, the Plan provided that the Debtors would pay the Credit Union’s
allowed claim (both the secured and unsecured portions) in full. The modification provided that

31 City & Cnty. of San Francisco, California v. Env't Prot. Agency, 604 U.S. 334, 344 (2025) (“Where Congress
includes particular language in one section of a statute but omits it in another section of the same Act, it is generally
presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (citations and
internal quotations omitted).
32 526 F.3d at 640-41.
the secured portion of the allowed claim would be satisfied by surrender of the Kia, and the
unsecured portion would be treated in the class of general unsecured creditors. This changed the
treatment of the Credit Union’s allowed claim that was already “bifurcated” and did not
“reclassify” it. Surrender of the Kia in fact is an acknowledgment of the Credit Union’s allowed

secured claim. Likewise, there was no “addition” of an unsecured claim – that claim was part of
the Credit Union’s allowed claim that at confirmation was to have been paid in full. The Debtors’
modification recognized the allowed unsecured claim by affording the Credit Union an
opportunity to amend its Proof of Claim after the sale of the Kia.
This same line of reasoning discredits the theory in Nolan that it is unfair to allow a
surrender modification because § 1329(a) only allows the trustee, a debtor or an unsecured
creditor, not a secured creditor, to seek a post-confirmation plan modification.33 Creditors with
interests in vehicles likely will always have an allowed claim with an unsecured component and,
therefore, they are unsecured creditors who, in addition to the trustee and the debtor, may seek a
modification of a confirmed plan under § 1329(a).

Nolan also takes issue with a post-confirmation reduction of the amount paid on an
allowed secured claim, stating that the modification violates § 1325(a)(5)(B), “which mandates
that a secured claim is fixed in amount and status and must be paid in full once it has been
allowed.”34 No authority exists in the Bankruptcy Code, including under § 1325(a)(5), to support
that conclusion. In fact, for the reasons set forth above, § 1329(a) expressly allows modification
of a plan to alter payments and distributions to a secured creditor. Furthermore, § 502(j)
specifically permits reconsideration of an allowed secured claim for “cause” and “according to

33 232 F.3d at 534.
34 Id. at 533.
the equities of the case.”35 Collateral surrender presents “cause” for reconsideration because
when the collateral is liquidated by the creditor, it no longer has an allowed secured claim as a
matter of law and the amount of its unsecured claim must be revalued. Also, considering the
equities of the case compels reconsideration in most cases. As discussed below, debtors often

must reassess their finances over a three-to-five-year plan term and they should be encouraged to
use good judgment and do so if it enhances their ability to complete a confirmed plan. Thus, the
reliance in Nolan on permanence of an allowed secured claim is without merit.
The inability to modify treatment of a secured claim relied on in Nolan is often connected
to denial of modifications based on the res judicata effect of a confirmed plan under § 1327. This
position does not recognize that (i) § 1329 itself allows a confirmed plan to be modified despite
its binding effect; (ii) pre-confirmation plan modifications under § 1323(c), and made applicable
to post-confirmation modifications by § 1329(b), expressly states that a plan may be modified to
affect a secured creditor’s rights; and (iii) § 502(j) creates an exception to the res judicata effect
of a confirmed plan.

For all these reasons, the Court respectfully declines to follow Nolan. This conclusion is
consistent with more recent case law rejecting Nolan for a variety of reasons, including those
stated by the Court here,36 as well as views set forth in leading treatises.37

35 See Fed. R. Bankr. P. 3008; see also Fed. R. Bankr. P. 3008 advisory committee’s note to 1983 amendment (“After
reconsideration, the court may allow or disallow the claim, increase or decrease the amount of a prior allowance,
accord the claim a priority different from that originally assigned it, or enter any other appropriate order.”); Fed. R.
Bankr. P. 9024 (making Fed. R. Civ. P. 60(b) applicable).
36 See, e.g., In re Cooke, 655 B.R. 181, 190-93 (Bankr. N.D. Ill. 2023) (comprehensive analysis rejecting Nolan
based on full reading of the Bankruptcy Code); In re Fayson, 573 B.R. 531, 533 (Bankr. D. Del. 2017) (collecting
cases); In re Rodriquez, 430 B.R. 694, 696 (Bankr. M.D. Fla. 2010) (permitting modification of plan that required
direct payments to creditors and collecting cases); see also In re Bain, No. 3:23-bk-03205, 2025 WL 1748157, at *2
n.5 (Bankr. M.D. Tenn. June 24, 2025) (distinguishing but collecting cases refusing to follow Nolan).
37 See 8 COLLIER ON BANKRUPTCY, ¶ 1329.041 (Courts
declining to follow Nolan are based on “a more careful and complete reading of the Code.”); Keith M. Lundin,
LUNDIN ON CHAPTER 13, § 127.7, at ¶ 11, LundinOnChapter13.com (last visited Oct. 27, 2025) (“To preclude a
Chapter 13 debtor from modifying the plan to reflect that a creditor repossessed its collateral and is thus no longer
the holder of an allowable secured claim turns the Code on its head.”).
4. The Debtors’ Proposed Modification Comports with the Fairness
Requirements of § 1329(b).

The Trustee argued that modification of the Debtors’ confirmed Plan was not fair to the
Credit Union because the Credit Union’s unpaid unsecured claim that was to have been paid in
full will now be crammed down and discharged. Specifically, as confirmed, the Debtors planned
to keep the Kia and pay the Credit Union in full directly under the parties’ prepetition contracts.
Cram down of the unsecured component of the allowed claim and discharge of any unpaid
portion of that claim was not allowed.38
Although treatment of the Credit Union’s claim, as argued by the Trustee, is altered by a
surrender modification, for the reasons discussed the modification is permitted under
§ 1329(a)(1) – (a)(3) and those terms control.39 Furthermore, the modification is not prohibited
under § 1329(b) which tempers post-confirmation modifications based on, among other things,
fairness. That section states that a modification allowed under § 1329(a) must be permissible
under §§ 1322(a) and (b), 1323(c) and 1325(a). The Debtors’ proposed modification is
permissible under these sections.
The modification does not run afoul of allowable plan provisions set forth in § 1322(a)
and (b), and subsection (b)(8) in fact provides that a plan may “provide for the payment of all or
part of a claim against the debtor from property of the estate or property of the debtor[.]”40 No
one alleges that the Debtors are acting in bad faith which, if proven, would ban the modification

38 See supra n.7 (quoting Local Rule 2083-2(i)). This Local Rule adopts the holding in In re Case, 11 B.R. 843 (Bankr. D. Utah 1981) (Mabey, J.) (debtors may pay secured creditors outside of a plan but may not invoke
cramdown or discharge of unsecured portion of claim)); see also In re Clay, 339 B.R. 784 (Bankr. D. Utah 2006)
(Thurman, J.) (Clay continues to apply after amendments to the Bankruptcy Code under The Bankruptcy Abuse
Prevention and Consumer Protection Act).
39 See Ron Pair Enters., Inc., 489 U.S. at 241 (“where . . . the statute’s language is plain, the sole function of the
courts is to enforce it according to its terms.”) (internal quotations omitted).
40 See Leuellen, 322 B.R. at 652 (Section 1322(b)(8) anticipates surrender); Cooke, 655 B.R. at 189 (same).
under § 1325(a)(3).41 Surrender of collateral also is appropriate treatment of an allowed secured
claim under § 1325(a)(5)(C). Finally, and notably, § 1323(c) governing preconfirmation plan
modifications, states in relevant part that:
Any holder of a secured claim that has accepted . . . the plan is deemed to have
accepted . . . the plan as modified, unless the modification provides for a change in the
rights of such holder from what such rights were under the plan before modification, and
such holder changes such holder’s previous acceptance. . . .

Thus, the Credit Union could have objected to the Debtors’ proposed modification, arguing that
its allowed unsecured claim could not be discharged. It did not do so.
Issues of fairness have consistently been raised in cases involving post-confirmation
vehicle surrender modifications under § 1329. Those rejecting the modification typically look to
Nolan, where the Sixth Circuit concluded that it was unfair for a secured creditor to take on risk
of depreciation of a vehicle after confirmation because the debtor could surrender collateral
“when the debtor no longer has any use for the devalued asset.”42 This conclusion not only
disregards that secured creditors with interests in vehicles extend credit knowing that their
collateral by its very nature is always depreciating in value, but it essentially “turns the code on
its head” because it penalizes other unsecured creditors inasmuch as the secured creditor with no
collateral is paid a premium.43 Paying a creditor who no longer has collateral is also contrary to
well-established state law property rights. 44

41 See, e.g., In re Butler, 174 B.R. 44, 48 (Bankr. M.D.N.C. 1994) (modification to surrender vehicle disallowed
because the debtor was not acting in good faith where it did not have insurance on totaled collateral).
42 232 F.3d at 533.
43 Lundin, § 127.7, at ¶ 11.
44 See, e.g., Butner v. United States, 440 U.S. 48, 55 (1979) (property rights in bankruptcy are determined under state
law); Ballard, 526 F.3d at 639 (“As the Supreme Court has emphasized, unless the Bankruptcy Code says otherwise,
the source of a secured or unsecured claim is state law . . .”).
Furthermore, post-confirmation plan modifications allowed under § 1329 make sense
from a fairness and feasibility perspective because, as discussed above, Chapter 13 debtors
commit to a plan for at least three years and often five years. As stated by one court:
There is never any money built into a chapter 13 budget for a vacation or car repairs.
Who can live like that for five years without some flexibility? The answer is that most
debtors cannot. And the Bankruptcy Code recognizes this. It allows debtors to come back
to the court to modify the plan when life’s unexpected events upset the carefully crafted
repayment plan that seemed so “do-able” at the time of confirmation. Section 1329 was
Congress’ answer to this problem. 45

IV. CONCLUSION
The Court concludes that the modification of the Debtor’s confirmed Plan to surrender a
vehicle and treat the deficiency claim as a general unsecured claim is permissible because it is
within the express terms of § 1329(a)(3) and, alternatively, is permitted under the plain language
of § 1329(a)(1) and (a)(2).
––END OF MEMORANDUM OPINION––

45 In re Kinney, No. BR 13-27912 EEB, 2019 WL 7938816, at *5 (Bankr. D. Colo. Nov. 22, 2019), aff’d, 5 F.4th
1136 (10th Cir. 2021), cert. denied, 143 S.Ct. 302 (2022), quoted in Cooke, 655 B.R. at 192 n.5. See Leuellen, 322
B.R. at 654 (“Debtors who have difficulty making plan payments should be encouraged to reduce expenses, such as
by surrendering a vehicle . . .” rather than dismissal, refiling or conversion) (quoting Zieder, 263 B.R. at 118).