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In re Cloverleaf Farmers Cooperative, Inc.

Bankr. No.: 
89-40531
Chapter: 
12
Date of Decision: 
June 1, 2004
Issue: 
Whether a creditor’s mortgages should be deemed discharged after completion of Chapter 12 plan payments where the creditor’s claim was treated as fully unsecured in the plan, without objection, but where the creditor had filed a proof that it held a secured claim?
Ruling: 
The record indicated all parties agreed by the time of confirmation that the creditor’s claim was wholly unsecured. Thus, upon the completion of the debtor’s plan payments, the creditor’s mortgages were discharged. In future Chapter 12 cases, however, as guided by present case law, the debtor should formally object to a creditor’s proof of claim. The confirmation process alone cannot overcome the presumed validity of the proof of claim as filed.
Full Bankruptcy Court Decision: