The opinion of the court was delivered by: Stengel, J.
This is an appeal from a final ruling issued by the United States Bankruptcy Court for the Eastern District of Pennsylvania. In connection with her June 2005 bankruptcy petition, Ms. Mary Sanitate filed an adversary action against her mortgagee, Green Tree Consumer Discount Company. In that action, she sought a ruling that Green Tree was bound to accept the terms of a prior bankruptcy plan and that the company had violated the Truth in Lending Act*fn1 and the Home Ownership and Equity Protection Act.*fn2
A hearing was held upon Green Tree's motion to dismiss. The Bankruptcy Court granted the motion and dismissed the case upon finding that Ms. Sanitate had failed to demonstrate that she could fund a viable Chapter 13 plan. Ms. Sanitate appeals that ruling. Upon consideration of the record and the parties' briefs, I will affirm the Bankruptcy Court's decision and deny the appeal.
When a debtor files for Chapter 13 bankruptcy protection, he or she is given the opportunity to deal comprehensively with both unsecured and secured debt without having to liquidate his or her assets. Instead, the Chapter 13 debtor may use future income. Filing the petition also triggers an automatic stay that prevents creditors from taking further actions against the debtor and allows the debtor to continue to keep and use property. 11 U.S.C. § 362 (2006).
The Chapter 13 case revolves around the chapter 13 plan for repayment. The plan is indispensable and statutorily mandated. Id. § 1321 ("The debtor shall file a plan."). Only the debtor may propose the plan. Id. Within this plan, the debtor sets forth his or her proposals for repaying existing debts and reorganizing his or her financial situation. At this time, the creditors may file "proofs of claim," which set forth the debt owed to them. See id. § 501. The creditors may also file objections to the plan. Failure to file either a proof of claim or an objection may harm the creditor's prospects of recovery.
The exact form of the plan is not strictly scrutinized. Rather, so long as the plan contains statutorily mandated provisions and clearly lays out how creditors will be paid, it may be accepted. Under § 1322, the plan must contain provisions for:
(1) submission of "all or such portion" of the debtor's future income that is necessary for executing the plan;
(2) full payment of all claims given priority under § 507, unless the holder otherwise agrees; and --
(3) the same treatment of all claims within a class, if the debtor has chosen to classify claims under the plan.
See § 1322(a)(1)--(3). Within these requirements, the debtor has wide discretion to set forth how to structure the payment schedule and distribution. As set forth in subsection (b), which provides a list of optional Chapter 13 provisions, the debtor is given leeway to "include any other appropriate provision not inconsistent with [Title 11]." See id. § 1322(b)(11).
This discretion should not be confused with Congressional permission for a debtor to do whatever he or she pleases. The Bankruptcy Code allows debtors to reorganize their finances with the caveat that they repay a substantial amount of their debts under the proposed plans. As one court opined, "Congress intended to encourage payment plans under which all creditors would be paid most, if not all, of their claims over an extended period." In re Aalto, 8 B.R. 157, 160 (Bankr. M.D. Fla. 1981). To this end, the Bankruptcy Code requires that the proposed plan be confirmed by the court. See id. § 1324(a) (requiring the court to hold a hearing for confirming the plan). Under § 1325, the court is directed to consider a series of issues on the plan's compliance with applicable law, whether it is proposed in good faith, whether creditors' interests are being protected, and whether it is beneficial for the estate.
One of the issues the court must determine before confirmation is whether for every secured claim allowed under the plan, "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." Id. § 1325(a)(5)(B)(ii). In other words, the debtor must propose a plan that provides for distributing property that covers all secured creditors included in the plan to the full amount of their secured claims. See 8 COLLIER ON BANKRUPTCY ¶ 1325.06 (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev. 2009). Once the plan is confirmed, the debtor and all creditors are bound to it. 11 U.S.C. § 1327(a); see also In re Szostek, 886 F.2d 1405, 1409 (3d Cir. 1989) ("[T]he binding effect of a chapter 13 plan extends to any issue actually litigated by the parties and any issue necessarily determined by the confirmation order.").
A Chapter 13 debtor is not automatically discharged when his proposed plan is confirmed. 11 U.S.C. § 1328(a). Generally, discharge is granted only when the debtor has made all payments under the plan. As a result, the Chapter 13 plan is only a temporary determination of the parties' rights; the final determination occurs "only upon the order denying or granting a discharge." In re Shaffer, 48 B.R. 952, 956 (Bankr. N.D. Ohio 1985).
It is important to note that Chapter 13 is a voluntary option for resolving bankruptcy issues. The debtor cannot be forced to petition for a Chapter 13 case. This voluntariness is also evidenced in the debtor's right to dismiss the case. He or she is not bound to complete the plan. Section 1307 provides a continuing right to request that the case be dismissed or converted to one under Chapter 7. § 1307(a)--(b). The case may also be dismissed if upon request of a party in interest and after notice and hearing, the court determines that converting the case to one under Chapter 7 or dismissing the entire case is in the best interests of the creditors and the estate. § 1307(c). As a result, the debtor retains a wide degree of flexibility on whether to discontinue the case.
On April 22, 1999, Ms. Sanitate executed and delivered two mortgages to Green Tree. The first was for $109,250.00 with an annual percentage rate of 10.392%; the second was for $17,000.00 with an annual percentage rate of 17.566%.*fn3 These mortgages were secured by Ms. Sanitate's residence at 548 South 69th Street in Upper Darby, Pennsylvania. Since executing the mortgages, Ms. Sanitate has twice filed for Chapter 13 bankruptcy protection. This appeal stems from the second filing.
1. The First Chapter 13 Filing
On September 12, 2000, Ms. Sanitate filed for Chapter 13 bankruptcy protection. On November 14, 2000, she filed a motion to bifurcate the larger Green Tree mortgage into a secured and an unsecured claim. After a hearing held on December 4, 2000, the court granted Ms. Sanitate's motion on December 7, 2000.
On April 17, 2001, Ms. Sanitate filed her second amended Chapter 13 plan. After a confirmation hearing held on May 15, 2001, the ...