Bankruptcy—Chapter 13—”Surrender” Means “Only That the Debtor Will Make Its Collateral Available so the Secured Creditor Can, if it Chooses to do so, Exercise its State Law Rights In the Collateral”—A Mortgagee May Have Valid Reasons to Resist Accepting a Conveyance—”Forcibly Vesting Property ‘Could Significantly Injure the Lender if, For Example, the Collateral Property is Dilapidated, Damaged or Otherwise a Public Nuisance’”

A U.S. District Court explained that when a debtor files for Chapter 13 bankruptcy protection, the U.S. Bankruptcy Code (Code) “strictly regulates the manner in which the debtor’s secured creditors are repaid.” Pursuant to 11 U.S.C. §1325(a)(5), “a repayment plan is only confirmable if, with respect to each secured creditor, one of the following is true: (1) the creditor consents to the plan,…; (2) the plan provides for the creditor to retain his security interest in his collateral and receive periodic payments equaling the present value of the collateral,…; or (3) the debtor agrees to surrender the collateral so that the creditor may pursue any legal remedies he may have….” The court explained that the foregoing provisions are “the exclusive methods of repaying a secured creditor, and a proposed Chapter 13 plan which, as to each secured claim, does not satisfy one of these three requirements, cannot be confirmed, even if the plan complies with the…Code in all other respects.”

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