Does a Chapter 13 Debtor have the Absolute Right to Separately Classify “Codebtor Consumer Claims”? We don’t know says the 9th Circuit BAP

Meyer v. Renteria (In re Renteria), — B.R. — (9th Cir. BAP May, 2012)

Issue:   May a chapter 13 plan, that pays a “codebtor consumer debt” in full and other unsecured creditors 9%, be confirmed without considering whether the discrimination is reasonable?

Holding:   Yes, but only on these facts where the trustee conceded that the plan was filed in good faith.

Judge Richard Lee, Eastern District of California

Opinion by Markell, concurring opinions by Pappas and Dunn

The “majority” opinion said that it appears that there is an absolute right to separately classify “codebtor consumer claims” and pay that claim in full and other unsecured creditors a nominal amount.  The majority did not reach the ultimate issue because the trustee conceded that the plan was filed in good faith.  One concurring opinion said categorically there is no absolute right; the other said categorically there is an absolute right.