Chapter 20 Lien-Retention Rule: No “Plan-Completion” Substitute for § 1325(a)(5)(B)(i)(I) When § 1328 Discharge Is Unavailable

1. Introduction

In re: Sharenne L. Tucker is a Sixth Circuit Bankruptcy Appellate Panel decision addressing a recurring “Chapter 20” problem: when an individual debtor receives a Chapter 7 discharge and then promptly files Chapter 13, 11 U.S.C. § 1328(f) often makes the debtor ineligible for a Chapter 13 discharge. The dispute in Tucker concerns how such a debtor may confirm a plan that keeps collateral (here, a motor vehicle) over the objection of the secured creditor.

Parties. Sharenne L. Tucker (Debtor-Appellee) proposed to keep her vehicle and pay Santander Consumer USA Inc. (Creditor-Appellant) through a Chapter 13 plan. Santander objected to plan language governing lien retention under § 1325(a)(5)(B)(i)(I).

Key issue. Whether, absent acceptance by the secured creditor (and absent surrender), a bankruptcy court may confirm a Chapter 13 plan that replaces the statute’s lien-retention endpoint of “discharge under section 1328” with “completion of plan payments,” where the debtor is ineligible for a § 1328 discharge.

2. Summary of the Opinion

The Panel reversed confirmation and remanded. Applying a strict plain-meaning approach, it held that § 1325(a)(5)(B)(i)(I) is mandatory and lists only two permissible lien-retention endpoints: (aa) payment of the underlying debt under nonbankruptcy law, or (bb) discharge under § 1328. A Chapter 20 debtor cannot substitute a third endpoint—completion of plan payments—over a secured creditor’s objection.

Because the debtor was ineligible for a Chapter 13 discharge, the “discharge” endpoint could never occur; therefore, if the creditor does not accept the plan, the debtor’s only statutory path to lien release under § 1325(a)(5)(B)(i)(I) is payment of the underlying debt determined under nonbankruptcy law.

3. Analysis

3.1 Precedents Cited

  • Shaw v. Aurgroup Financial Credit Union, 552 F.3d 447 (6th Cir. 2009)
    Role in the decision: The central controlling authority. Shaw held that the requirements of § 1325(a) are “mandatory” and that “a bankruptcy court has no discretion to confirm a plan which does not comply with those requirements.” The Panel used Shaw to reject the bankruptcy court’s “form over substance” rationale and to frame lien retention as a non-negotiable condition of cramdown.
  • Conn. Nat'l Bank v. Germain, 503 U.S. 249 (1992)
    Role: The canonical statement of the plain-meaning rule: when statutory language is unambiguous, “judicial inquiry is complete.” The Panel invoked Germain to foreclose interpretive “gap filling” where the text already provides specific endpoints.
  • Lamie v. U.S. Tr., 540 U.S. 526 (2004)
    Role: The Panel relied on Lamie for the distinction between legitimately filling congressional silence and impermissibly adding words to a statute. Substituting “completion of plan payments” for “discharge under section 1328” was treated as judicial rewriting.
  • RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012)
    Role: Used as an analogy: when the Code provides multiple cramdown alternatives separated by “or,” a plan proponent must satisfy one of the listed paths and cannot invent a new one. The Panel drew support for treating the disjunctive structure as exclusive of unlisted options.
  • Assocs. Com. Corp. v. Rash, 520 U.S. 953 (1997)
    Role: Cited for the proposition that § 1325(a)(5) provides three basic treatments for secured claims: acceptance, surrender, or cramdown. The Panel used Rash to situate lien retention within the cramdown bargain.
  • Till v. SCS Credit Corp., 541 U.S. 465 (2004) and McDonald v. Chambers (In re Chambers), 838 F. App'x 979 (6th Cir. 2021)
    Role: These cases underscore that a debtor may cram down by modifying the interest rate, but only within the confines of § 1325(a)(5)(B). The Panel acknowledged rate modification as permissible generally, while emphasizing that lien retention is a separate statutory condition.
  • Johnson v. State Home Bank, 501 U.S. 78 (1991)
    Role: Provides foundational concepts: a Chapter 7 discharge eliminates personal liability but generally leaves liens intact (in rem rights survive), and Congress did not categorically bar serial Chapter 7/13 filings. The Panel used Johnson to explain why Santander’s lien survived the Chapter 7 discharge and why Chapter 20 filings exist, even if limited by later-enacted provisions.
  • Carroll v. Sanders (In re Sanders), 551 F.3d 397 (6th Cir. 2008)
    Role: Cited for the Sixth Circuit’s recognition and application of § 1328(f) discharge ineligibility—establishing the premise that the debtor here could not obtain a Chapter 13 discharge.
  • In re Cain, 513 B.R. 316 (B.A.P. 6th Cir. 2014) and Lane v. W. Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. 2002)
    Role: Addressed and distinguished. In re Cain allowed lien release in a Chapter 20 context where the lien was wholly unsecured and § 1325(a)(5) did not apply; Lane supplied the framework. The Panel held Cain inapposite because Santander was “indisputably” secured and thus entitled to § 1325(a)(5) protections.
  • In re Donnadio, 608 B.R. 507 (B.A.P. 6th Cir. 2019) and Bank of the Prairie v. Picht (In re Picht), 428 B.R. 885 (B.A.P. 10th Cir. 2010)
    Role: Persuasive authority applying the same statutory text. Both decisions treated § 1325(a)(5)(B)(i)(I) as requiring the plan to track the statute and, in no-discharge scenarios, pointed to subsection (aa) as the operative endpoint.
  • Brown v. Ellman (In re Brown), 851 F.3d 619 (6th Cir. 2017) and Law v. Siegel, 571 U.S. 415 (2014)
    Role: Used to preempt any equitable end-run: bankruptcy courts cannot invoke equitable powers to reach outcomes inconsistent with the Code’s clear text. Although the bankruptcy court did not expressly rely on § 105(a), the Panel explained why such reliance would not be permissible.
  • Hamilton v. Lanning, 560 U.S. 505 (2010), Harris v. Viegelahn, 575 U.S. 510 (2015), Marrama v. Citizens Bank of Mass., 549 U.S. 365 (2007), and Bartenwerfer v. Buckley, 598 U.S. 69 (2023)
    Role: Contextual support. These cases describe the Chapter 7/Chapter 13 “bargains” and the Code’s balancing of debtor and creditor interests, reinforcing the Panel’s view that § 1325(a)(5)(B)’s lien-retention rule is part of the creditor-protection side of that bargain.
  • Ritzen Grp., Inc. v. Jackson Masonry, LLC, 589 U.S. 35 (2020), Bullard v. Blue Hills Bank, 575 U.S. 496 (2015), and O'Hara v. Vara (In re O'Hara), 167 F.4th 358 (6th Cir. 2026)
    Role: Jurisdiction and finality. These cases support appealability and liberal construction of notices of appeal; they did not drive the merits but ensured the Panel reached them.

3.2 Legal Reasoning

  1. Start with text and structure.
    The Panel treated § 1325(a)(5)(B)(i)(I) as unambiguous: the lien is retained until the earlier of (aa) payment under nonbankruptcy law or (bb) a § 1328 discharge. The debtor’s plan inserted a third endpoint—completion of plan payments—thereby removing and replacing a statutory alternative.
  2. “Or” means the listed alternatives are the alternatives.
    Relying on the Code’s “Rules of construction” in § 102(5) (defining “or” as “not exclusive”) and the statute’s grammatical disjunction, the Panel reasoned that the plan must include both statutory endpoints and that satisfaction of at least one triggers lien release. But where (bb) is impossible (no discharge), (aa) becomes the only route—without judicial supplementation.
  3. Mandatory confirmation requirements under Shaw.
    The bankruptcy court acknowledged Shaw but nonetheless approved the plan as a practical workaround. The Panel viewed that as an impermissible departure from Shaw’s holding that § 1325(a) conditions are mandatory and non-discretionary.
  4. No “gap” to fill; no equitable override.
    The debtor argued the Code is “silent” about lien retention when discharge is unavailable and urged a holistic approach through § 1325(a)(1). The Panel rejected this: § 1325(a)(1) requires compliance with Chapter 13 provisions (including § 1325(a)(5)), and the statute is not silent because it supplies an alternative endpoint—payment of the underlying debt under nonbankruptcy law.
  5. Legislative-design reinforcement (BAPCPA context).
    The Opinion notes that BAPCPA both tightened secured-creditor protections and created § 1328(f). The cross-referencing of § 1325(a)(5)(B)(i)(I)(bb) to § 1328, alongside § 1328(f)’s discharge limits, supports the inference that Congress anticipated the Chapter 20 consequence and nevertheless chose the text.

3.3 Impact

For Chapter 20 practice in the Sixth Circuit. Tucker squarely rejects a common debtor-side workaround: providing that a secured creditor’s lien is released upon plan completion when the debtor is discharge-ineligible. If the secured creditor objects and the debtor wants to keep the collateral, the plan must respect § 1325(a)(5)(B)(i)(I)’s endpoints, which in practice means: the lien persists until the “underlying debt determined under nonbankruptcy law” is paid.

For secured creditors. The decision strengthens leverage in Chapter 20 vehicle cases: creditors can insist on lien retention until payoff as defined by nonbankruptcy law and can defeat confirmation if a plan offers lien release at plan completion.

For plan drafting and confirmation litigation. Bankruptcy courts in the circuit are put on notice that “practical” fixes cannot be used to deviate from § 1325(a) conditions. The ruling also signals that arguments based on general confirmation provisions (like § 1325(a)(1)) or equitable sensibilities will likely fail when they conflict with detailed secured-creditor protections.

Potential downstream effects. Debtors may respond by (i) seeking creditor acceptance, (ii) surrendering collateral, (iii) refinancing outside bankruptcy, (iv) litigating what “payment of the underlying debt determined under nonbankruptcy law” means in particular settings, or (v) avoiding Chapter 20 structures where the primary objective is to “reset” vehicle interest terms while shortening lien-retention rights.

4. Complex Concepts Simplified

  • “Chapter 20” debtor. A debtor who files Chapter 13 soon after receiving a Chapter 7 discharge. The debtor can use Chapter 13 tools (like paying arrears over time) but often cannot receive a Chapter 13 discharge due to § 1328(f).
  • In personam vs. in rem. A Chapter 7 discharge generally ends the debtor’s personal obligation (in personam) but does not automatically remove a lien on property (in rem). The creditor may still enforce the lien against the collateral.
  • Cramdown. Confirming a plan over a secured creditor’s objection by meeting statutory protections for the creditor—typically paying the present value of the secured claim and allowing the creditor to keep its lien under § 1325(a)(5)(B).
  • Lien retention under § 1325(a)(5)(B)(i)(I). If the creditor does not accept and the debtor does not surrender, the creditor keeps its lien until the earlier of: (aa) payment of the underlying debt under nonbankruptcy law, or (bb) a § 1328 discharge. Tucker holds courts cannot add “(cc) completion of plan payments.”
  • “Underlying debt determined under nonbankruptcy law.” The debt as defined by the parties’ contract and applicable state law (e.g., contract interest, payoff terms), rather than a bankruptcy-created substitute triggered merely by finishing plan payments.
  • 910-claim / “hanging paragraph.” Certain vehicle purchase-money claims incurred within 910 days of filing cannot be bifurcated into secured/unsecured portions in Chapter 13. Here, that context reinforced that Santander’s claim was treated as fully secured and entitled to § 1325(a)(5) protections.

5. Conclusion

In re: Sharenne L. Tucker establishes a clear Sixth Circuit BAP rule for discharge-ineligible Chapter 20 cases: § 1325(a)(5)(B)(i)(I) is mandatory and exclusive. When a secured creditor does not accept the plan and the debtor does not surrender the collateral, a bankruptcy court may not confirm a plan that substitutes “completion of plan payments” for “discharge under section 1328” as the lien-release trigger. The decision elevates textual fidelity over pragmatic plan engineering and channels any remedy for Chapter 20 harshness to Congress rather than the courts.