Todd Howard Teske von Gunten

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF WYOMING
fure 	)
)
TODD HOWARD TESKE VON GUNTEN,)
)
Debtor. 	)
Case No. 	10-21227
Chapter 13
MEMORANDUM OPINION DENYING CONFIRMATION OF
DEBTOR'S THIRD AMENDED PLAN
On March 23, 20 11, this matter came before the court for an evidentiary hearing
on the confirmation of Debtor's Third Amended Plan dated January 10, 2011 and the
objections filed by Diane Gifford ("Gifford"), Reliant Federal Credit Union ("Reliant"),
Aurora Loan Services ("Aurora"), and the Chapter 13 Standing Trustee ("Trustee"). The
parties were represented as stated on the record. The court, having reviewed the file,
testimony, and evidence finds that confirmation of the plan is denied.
Jurisdiction
This Court has jurisdiction of this matter under 28 U.S.C. §§ 1334 and
157(b)(2)(L). The motion to confirm was brought under 11 U.S.C. §1325. 1
Background
Todd Howard Teske von Gunten ("Debtor") filed his Chapter 13 bankruptcy
petition on October 14, 2010. The initial Chapter 13 Plan was filed on November 8,
2010. The Debtor filed an Amended Chapter 13 Plan on November 30, 2010. 	The
1 Unless otherwise indicated, all future statutory reference are to the Bankruptcy Code, Title ll of the
United States Code.
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confirmation hearing was scheduled for February 2, 2011. Subsequently, the Debtor filed
his Third Amended Chapter 13 Plan on January 11, 20 11 which is before the court for
confirmation.
Numerous objections to confirmation of the plan were filed. 	The Trustee objects,
alleging that the plan is not feasible. Aurora objects to the conditional surrender of its
collateral as proposed in the plan. Reliant asserts that: ( 1) it filed a claim in the amount of
$40,698.50 to which no objection has been filed by the Debtor and therefore should be
provided for in the plan; (2) the plan does not provide for the arrearage on its mortgage;
and, (3) Reliant also objects to the conditional surrender language in the plan. Mrs.
Gifford objects to confirmation alleging: (1) she has a priority claim for domestic support
obligations; and (2) that the Debtor has not made provisions for the Reliant claim in the
plan, exposing her to possible liability.
Discussion
1. 	Gifford's objection to confirmation ofthe plan.
Mrs. Gifford filed a proof of claim asserting a priority claim. According to the
Debtor's Status Report filed April21, 2011, to which Gifford did not object, the Debtor's
child support obligation has been modified by a Stipulated Order for Modification of
Child Support on April 14, 2011 in the State of Wyoming District Court of the Seventh
Judicial District to $600.00 per month. Additionally, the parties agreed to a resolution of
Gifford's claim for reimbursement of other expenses that were presented to this court as
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part of Gifford's claim against the Debtor. Mrs. Gifford filed an amended proof of claim
on April 18, 20 11 which claims only the revolving line of credit at Reliant in the amount
of$40,698.50 as a secured claim. 	Therefore, Gifford's priority claim based upon a
domestic support obligation is resolved.
Mrs. Gifford also objects that the Debtor has not provided for the Reliant claim in
the plan exposing her to possible liability. The court will address the Reliant claim
below. However, the court will not address Mrs. Gifford's liability or her remedies under
the Bankruptcy Code.
2. 	Aurora's objection to confirmation of the plan.
Aurora objects to the Debtor's plan providing for the conditional surrender of the
real property secured by a mortgage. In Class 5, the plan provides that the debtor will
surrender the collateral, with the following condition:
"Surrender will occur if residence cannot be sold for an amount
sufficient to satisfy mortgage balances and homestead claim on or before
October 13, 2011. There may be a challenge to the perfection ofthe
[A]urora mortgage that would affect surrender."
Aurora argues that the Bankruptcy Code does not allow for the conditional surrender of
collateral in a Chapter 13 Plan?
The issue is whether the alternatives for the treatment of secured claims under
§ 1325(a)(5) are mutually exclusive. The United States Bankruptcy Court for the District
2 § 1325(a)(5)(c),
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of Ohio in In re Elkins3, following the decisions in Williams4, Covington5 and Schwartz6,
found "that §1325(a)(5) sets forth mutually exclusive options for the treatment of secured
claims, not alternatives that may be combined to form a composite remedy." In this case,
the Debtor is attempting to form a "composite remedy" by retaining the property, but not
paying the underlying debt, and surrendering the property on a date certain, but only if
"the residence cannot be sold for an amount sufficient to satisfy mortgage balances and
[the Debtor's] homestead claim." This court finds the decisions cited above to be
persuasive. The language of §1325(a)(5) does not allow treatment of the secured claims
as proposed by the Debtor. 	Accordingly, the objection filed by Aurora is sustained.
3. 	Reliant's objection to confirmation of the plan.
Reliant also objected to the conditional surrender of its collateral. As stated above,
the court finds that the Bankruptcy Code does not allow for alternative treatments of
secured debt, other than what is specifically allowed under §1325(a)(5). Therefore,
Reliant's objection to confirmation of the plan is sustained.
Reliant also asserted that the plan did not provide for its filed claim or arrearage.
The court's ruling on the Debtor's proposed alternative treatment of this secured debt,
makes these issues moot.
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3 In re Elkins, Case No. 04-67951, 2005 Bankr. LEXIS 2900 (Bankr. S.D. Ohio, August 16, 2005).
4 Williams v. Tower Loans, Inc. (In re Williams), 168 F.3d 845 (5 1h Cir. 1999).
5 In re Covington, 176 B.R. 152 (Bankr. E.D. Tenn. 1994).
6 In re Schwartz, 1998 Bankr. LEXIS 74, 1998 WL 37551 (Bankr. E.D. Pa. 1998).
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4, 	Trustee's objection to confirmation of the plan.
The Trustee's objections mirror the previous objections, in that if the plan is
approved as proposed, it would not be feasible. 	The Court has addressed each of the
above objections.
Therefore, based upon the above analysis, the court finds: (1) that the objection
filed by Gifford is moot; (2) the objection filed by Aurora is sustained; (3) the objection
filed by Reliant is sustained; and (4) the objection filed by the Trustee is moot.
This opinion constitutes the Court's findings of fact and conclusions of law. A
separate order shall be entered pursuant to Fed. R. Bankr. P. 9021.
DATED this 4-day ofJune, 2011.
By the Court
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