                                                                FILED
                                                                 FEB 25 2015
 1
                                                            SUSAN M. SPRAUL, CLERK
                                                               U.S. BKCY. APP. PANEL
 2                                                             OF THE NINTH CIRCUIT


 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.    SC-14-1132-KiKuJu
                                   )
 6   STEVEN PATRICK SCHLEGEL;      )      Bk. No.    08-13539-PB13
     JOANNE MARIE SCHLEGEL,        )
 7                                 )
                    Debtors.       )
 8                                 )
                                   )
 9                                 )
     STEVEN PATRICK SCHLEGEL;      )
10   JOANNE MARIE SCHLEGEL,        )
                                   )
11                  Appellants,    )
                                   )
12   v.                            )      O P I N I O N
                                   )
13   THOMAS H. BILLINGSLEA, JR.,   )
     Chapter 13 Trustee,           )
14                                 )
                    Appellee.      )
15   ______________________________)
16                       Submitted Without Oral Argument
                              On January 22, 20151
17
                            Filed - February 25, 2015
18
                 Appeal from the United States Bankruptcy Court
19                   for the Southern District of California
20            Honorable Peter W. Bowie, Bankruptcy Judge, Presiding
21
22   Appearances:     Daniel J. Winfree on brief for appellants Steven
                      Patrick Schlegel and Joanne Marie Schlegel; Jenny
23                    Judith Hayag on brief for appellee Thomas H.
                      Billingslea, Jr., Chapter 13 Trustee.
24
25   Before:    KIRSCHER, KURTZ and JURY, Bankruptcy Judges.
26
27
          1
             On November 25, 2014, the parties filed a joint motion to
28   submit on briefs, which was granted on December 1, 2014.
 1   KIRSCHER, Bankruptcy Judge:
 2
 3        Appellants Steven Patrick Schlegel and Joanne Marie Schlegel
 4   (“Schlegels”) appeal an order dismissing their chapter 132 case
 5   for failing to complete plan payments within the applicable five-
 6   year commitment period.   This appeal raises for the first time
 7   whether a confirmed chapter 13 plan may be dismissed for the
 8   debtors’ failure to pay both the required plan payment and the
 9   approved percentage dividend to unsecured nonpriority creditors
10   during the applicable commitment period.   We AFFIRM.
11              I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
12   A.   Pre-confirmation events
13        The Schlegels, as above median income wage earners, filed a
14   chapter 13 bankruptcy case on December 31, 2008.   Their Schedule A
15   identified a fee interest in a residence on Casita Way in San
16   Diego, California (“Residence”) with a value of $274,500 and
17   secured claims against it totaling $434,053.   Their Schedule D
18   identified a junior lien on the Residence held by CitiMortgage,
19   Inc. (“CitiMortgage”) in the amount of $156,348.   The claims bar
20   date expired on April 30, 2009.    CitiMortgage did not file a proof
21   of claim by the claims bar date.
22        In their original chapter 13 plan filed on January 15, 2009,
23   Schlegels proposed monthly plan payments of $963 for 60 months and
24   a 24% dividend to unsecured nonpriority creditors.   The original
25   plan provided in Paragraph 19:
26
27        2
             Unless specified otherwise, all chapter, code and rule
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
28   the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

                                       -2-
 1        VALUATION AND RECLASSIFICATION OF LIENS ON REAL PROPERTY
          The following creditors are anticipated by this plan to
 2        be deemed unsecured creditors by operation of 11 USC
          §§ 506(a) and 1322(b) and Federal Rule of Bankruptcy
 3        Procedure § [sic] 3012, and will be subject to motion to
          that end under Federal Rule of Bankruptcy Procedure
 4        § [sic] 9014: [CitiMortgage] Heloc on 3957 Casita Way in
          approximate amount of $156,500 . . . .
 5
 6        The chapter 13 trustee, Thomas H. Billingslea (“Trustee”),
 7   objected to the original plan and moved to dismiss the case,
 8   contending that: “Feasibility of plan at 24% dividend requires
 9   evaluation whether to-be-stripped creditors file proof of claim.”
10   Ultimately, the bankruptcy court denied confirmation of the
11   original plan.
12        On April 8, 2009, Schlegels filed an amended Motion to Avoid
13   Lien and Reclassify Loan3 with respect to CitiMortgage’s junior
14   lien on the Residence (“Motion to Value”).   Schlegels sought to
15   value the Residence at $266,500, which would leave CitiMortgage’s
16   junior lien wholly unsecured.   After proper service of the Motion
17   to Value, CitiMortgage did not respond.
18        The bankruptcy court revised its tentative ruling4 on August
19   28, 2009, entered its order granting the Motion to Value on
20   October 22, 2009 (“Valuation Order”) and valued the Residence at
21   $266,500.   The Valuation Order also provided:
22        The Court determines that the Second Trust Deed of
          Citibank (West) . . . is entirely unsecured under 11
23
24
          3
             Schlegels filed an amended motion after the court informed
25   them that the matter needed to be renoticed for hearing, that they
     were seeking improper relief and that they filed an incomplete
26   declaration with their motion.
27        4
             The court issued a revised tentative ruling after
     Schlegels’ attorney filed an amended certificate of service
28   establishing proper service of the motion.

                                     -3-
 1        U.S.C. Section 506(a) given the value of the property and
          the amount of liens senior to Citibank’s (West) lien
 2        secured thereby, and avoids Citibank’s (West) lien under
          11 U.S.C. Section 1322(b), contingent on entry of a
 3        confirmation order so providing, and completion of
          Debtor’s [sic] Chapter 13 Plan and Debtors’ resultant
 4        discharge.
 5        On October 12, 2009, after the bankruptcy court orally
 6   granted the Motion to Value, but before it entered the Valuation
 7   Order, CitiMortgage filed a secured proof of claim for its junior
 8   lien in the amount of $155,246.17, which the bankruptcy court
 9   rendered unsecured by its Valuation Order, pursuant to § 506(a).
10   Schlegels did not object to CitiMortgage’s judicially-determined
11   unsecured claim.
12        Meanwhile, on July 1, 2009, Schlegels had filed an amended
13   chapter 13 plan in which they proposed monthly plan payments of
14   $812 for 60 months and a 48% dividend to unsecured nonpriority
15   creditors.5    The amended plan provided the same “Paragraph 19” as
16   did the original plan, wherein Schlegels stated that CitiMortgage
17   would be treated in their plan as an unsecured creditor.
18   B.   Post-confirmation events
19        The bankruptcy court eventually confirmed the Schlegels’
20   amended plan on May 5, 2010 (the “Plan”).    The confirmation order
21   drafted by Schlegels’ counsel stated that consistent with
22   Paragraph 19 of the Plan dated July 1, 2009, and the Valuation
23   Order entered on October 22, 2009, the wholly unsecured lien of
24   CitiMortgage would be treated and paid as an unsecured claim under
25   the Plan.     However, the Plan apparently did not take into
26
27        5
             Schlegels filed the amended plan after the claims bar date
     and they calculated the increase in percentage to unsecured
28   creditors based on the claims filed before the bar date.

                                       -4-
 1   consideration CitiMortgage’s claim when it promised to pay
 2   unsecured creditors a 48% dividend, even though CitiMortgage filed
 3   its claim months before Plan confirmation.
 4        On May 14, 2010, nine days after the entry of the
 5   confirmation order, Trustee filed a Notice of Claims Filed and
 6   Intention to Pay Claims (“Notice of Claims”).   The Notice of
 7   Claims, which included CitiMortgage’s judicially-determined
 8   unsecured claim of $155,246.17, showed the aggregate total for all
 9   unsecured claims as $219,596.   The Notice of Claims also stated:
10   “Pursuant to 11 U.S.C. § 502(a), the claims which have been filed
11   as stated above will be deemed allowed for purposes of
12   distribution and shall be paid unless the debtor or other party in
13   interest files with the court in accordance with Rule 3007, [an]
14   Objection to Claim and Request for Hearing within thirty (30) days
15   of this notice.”    The record reflects service of the Notice of
16   Claims on both Schlegels and their counsel.   No party filed any
17   claim objections.
18        1.    Schlegels’ motion for hardship discharge
19        On December 13, 2013, on the eve of the sixtieth month of the
20   Plan, Schlegels filed a motion for hardship discharge (the
21   “Hardship Motion”).   Schlegels contended that several reasons
22   warranted a hardship discharge:    (1) Mrs. Schlegel’s recent cancer
23   diagnosis and loss of employment; (2) the need of an additional 96
24   months of payments to satisfy the percentage dividend payout of
25   the Plan; and (3) the impracticality of plan modification, given
26   the lapse of nearly five years in the plan.   The bankruptcy court
27   scheduled a Hardship Motion hearing on March 5, 2014.
28        Trustee objected to the Hardship Motion, contending that

                                       -5-
 1   Schlegels had failed to establish the necessary elements to
 2   support a hardship discharge for the following reasons:   (1) at
 3   confirmation, the Plan term approximated 158 months, given the 48%
 4   dividend, CitiMortgage’s allowed unsecured claim and Schlegels’
 5   failure to object to CitiMortgage’s claim; (2) Schlegels paid a
 6   total of $48,391, approximately 58.5 months of the required 60
 7   Plan payments; and (3) the approximate remaining payoff of $77,780
 8   required an additional 96 months to complete.   Under the Plan
 9   terms, the Schlegels had provided a 10.8% to 15.42% dividend to
10   unsecured nonpriority creditors.
11        2.      Trustee’s motion to dismiss
12        On January 6, 2014, Trustee moved to dismiss the Schlegels’
13   chapter 13 case for failing to complete plan payments within five
14   years from commencement of the case (“Motion to Dismiss”).    The
15   attached notice provided:
16        You are further notified that IF YOU FAIL TO REQUEST AND
          SERVE NOTICE OF HEARING within [the] 28 day period
17        provided by this notice, the Trustee will present [an]
          order dismissing this case to the Court for entry without
18        any hearing or further notice to you.
19   The Schlegels failed to file any opposition to the Motion to
20   Dismiss by the deadline of February 6, 2014.
21        On February 20, 2014, Trustee filed a Statement of Case
22   Status re Non-Contested Motion to Dismiss and Opposition to
23   Debtors’ Motion for Hardship Discharge.    Trustee maintained that
24   Schlegels:    failed to timely oppose the Motion to Dismiss; failed
25   to make all Plan payments; failed to pay off the remaining balance
26   of $76,960; and failed to pay the percentage dividend, all within
27   the Plan term.    Accordingly, he requested the court to enter a
28   non-contested dismissal order.    Trustee noted that his periodic

                                       -6-
 1   and annual reports sent to Schlegels throughout the case from 2009
 2   to 2013 should have alerted them to the percentage dividend
 3   deficiency.
 4           On February 22, 2014, Schlegels’ counsel filed a responsive
 5   Declaration re Status, asserting that filing an opposition to the
 6   Motion to Dismiss would have been redundant considering the
 7   pending Hardship Motion.    Nonetheless, he asserted that the
 8   Schlegels’ inability to perform the Plan requirements arose from
 9   the allowance of CitiMorgtage’s claim filed after the claims bar
10   date.
11           3.   The bankruptcy court’s ruling on both motions
12           The bankruptcy court held a hearing on the Hardship Motion on
13   March 5, 2014.    Although Schlegels failed to file any written
14   opposition or to request/obtain a hearing date on the Motion to
15   Dismiss, the transcript of the hearing confirms that the court
16   also considered the parties’ arguments on the Motion to Dismiss.
17           At the hearing, Schlegels’ counsel did not dispute the
18   court’s statements that they knew by at least May 2010, based on
19   Trustee’s Notice of Claims, that with the monthly payments and the
20   48% dividend required by their Plan, 96 additional monthly
21   payments would be required to complete their Plan given
22   Citimortgage’s unsecured claim.    Thus, Schlegels had known for
23   nearly four years that they could not fully perform under the
24   terms of the confirmed Plan.    Hr’g Tr. (March 5, 2014) 3:13-3:24.
25   Schlegels’ counsel stated that they were hoping to secure a
26   financing arrangement during the applicable commitment period to
27   complete all financial obligations of their Plan, but Mrs.
28   Schlegel’s health, her loss of employment and the foreclosure of

                                       -7-
 1   their rental property prevented that from happening, hence their
 2   need for a hardship discharge.   Id. at 3:25-4:9, 4:20-5:1, 5:6-22.
 3   In response, the court stated that Schlegels should have filed a
 4   timely plan modification, reducing the percentage dividend based
 5   upon their circumstances, and should not have waited so late in
 6   the Plan’s applicable commitment period to request a hardship
 7   discharge.   Id. at 5:23-6:2, 6:20-7:5.    Schlegels’ counsel made no
 8   argument as to the allowance of CitiMortgage’s proof of claim and
 9   the court made no observations on the matter.     After hearing
10   further argument from the parties, the court orally denied the
11   Hardship Motion.    Id. at 11:13-12:3.    The bankruptcy court did not
12   make an oral ruling on the Motion to Dismiss.
13        The bankruptcy court entered a form order granting the Motion
14   to Dismiss (“Dismissal Order”) on March 7, 2014, for Schlegels’
15   “[f]ailure to fully complete plan payments on or before five (5)
16   years from the commencement of this case.”     It entered a separate
17   order denying the Hardship Motion on March 5, 2014, but Schlegels
18   did not appeal that order.   Schlegels timely appealed the
19   Dismissal Order on March 21, 2014.
20                              II. JURISDICTION
21        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
22   and 157(b)(2)(A).    We have jurisdiction under 28 U.S.C. § 158.
23                                 III. ISSUE
24        Did the bankruptcy court abuse its discretion in dismissing
25   Schlegels’ bankruptcy case for failure to complete plan payments
26   within five years?
27                          IV. STANDARDS OF REVIEW
28        A court’s interpretation and application of a local rule is

                                      -8-
 1   reviewed for an abuse of discretion.        United States v. Heller, 551
 2   F.3d 1108, 1111 (9th Cir. 2011).      We review the bankruptcy court’s
 3   dismissal of a chapter 13 bankruptcy case under any of the
 4   enumerated paragraphs of § 1307(c) for abuse of discretion.
 5   Ellsworth v. Lifescape Med. Assocs., P.C. (In re Ellsworth), 455
 6   B.R. 904, 914 (9th Cir. BAP 2011).        A bankruptcy court abuses its
 7   discretion if it applied the wrong legal standard or its findings
 8   were illogical, implausible or without support in the record.
 9   TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th
10   Cir. 2011).
11                               V. DISCUSSION
12        The bankruptcy court did not abuse its discretion when it
          dismissed the Schlegels’ chapter 13 bankruptcy case for
13        failing to complete their plan payments within the five-year
          period.
14
15        Before we turn to the merits of the bankruptcy court’s
16   decision to dismiss Schlegels’ chapter 13 case, we address an
17   argument they raise regarding whether the court properly deemed
18   the Motion to Dismiss as “uncontested.”
19        The caption of the Dismissal Order, which appears to be a
20   form order submitted by Trustee, reads: “Order on Noncontested
21   Motion Dismissing Chapter 13 Case.”        A motion to dismiss a
22   bankruptcy case under § 1307(c) is a contested matter subject to
23   Rule 9014(a).6   Rule 1017(f)(1).    Schlegels contend that Rule
24   9014(a) did not require them to file a response to the Motion to
25
26        6
              Rule 9014(a) provides:
27        In a contested matter not otherwise governed by these rules,
          relief shall be requested by motion, and reasonable notice
28        and opportunity for hearing shall be afforded the party
          against whom relief is sought. No response is required under
          this rule unless the court directs otherwise.

                                         -9-
 1   Dismiss.   This contention is correct, but they also concede that
 2   Local Rule 9014-4(f) for the Bankruptcy Court for the Southern
 3   District of California directs that failure to file a timely
 4   opposition to a contested motion allows the court to deem the
 5   parties’ silence as consent to granting the motion.      Schlegels
 6   contend the bankruptcy court erred by concluding they failed to
 7   contest the Motion to Dismiss when they otherwise actively sought
 8   a hardship discharge.
 9        Courts have broad discretion to interpret their local rules.
10   Only in rare cases will an appellate court question the exercise
11   of discretion in connection with the application of the local
12   rules.   Qualls v. Blue Cross, 22 F.3d 839, 842 (9th Cir. 1994);
13   Katz v. Pike (In re Pike), 243 B.R. 66, 69 (9th Cir. BAP
14   1999)(“The bankruptcy court has broad discretion to apply its
15   local rules.”).   Whether or not the bankruptcy court considered
16   the Motion to Dismiss to be “uncontested,” the Schlegels fail to
17   state what difference it would make had the bankruptcy court
18   considered the matter “contested.”       It appears the court
19   considered their oral arguments against dismissal to some extent
20   at the Hardship Motion hearing.    Even if not, the court clearly
21   had discretion to deem Schlegels’ lack of a written opposition as
22   consent to granting the Motion to Dismiss, as long as it was
23   meritorious.   We agree with the bankruptcy court’s conclusion that
24   Schlegels failed to contest the Motion to Dismiss.
25   A.   Dismissal under 1307(c)
26        Section 1307(c) allows the bankruptcy court to dismiss a case
27   for “cause,” including a material default with respect to a term
28   of a confirmed plan.    See § 1307(c)(6).     The decision to dismiss a

                                       -10-
 1   chapter 13 case under § 1307(c) is a discretionary decision of the
 2   trial court.    Sievers v. Green (In re Sievers), 64 B.R. 530, 530
 3   (9th Cir. BAP 1986).
 4        The bankruptcy court dismissed the Schlegels’ case under
 5   § 1307(c)(6) for failing to complete their plan payments within
 6   five years from the commencement of their case.   Although
 7   Schlegels had made their $812 monthly plan payments, they had
 8   failed to pay their unsecured nonpriority creditors the promised
 9   48% dividend.   Schlegels contend that the bankruptcy court erred
10   in dismissing their case because they completed all of their
11   payments under the Plan as required by § 1328(a) even if they
12   failed to pay the required percentage dividend.   Neither the Ninth
13   Circuit nor this Panel has addressed this precise issue.     However,
14   persuasive authority supports the bankruptcy court’s decision to
15   dismiss for this reason.
16   B.   Analysis
17        1.   Authority supporting dismissal of the case
18        In Roberts v. Boyajian (In re Roberts), 279 B.R. 396, 397-98
19   (1st Cir. BAP 2000), aff’d, 279 F.3d 91 (1st Cir. 2002), a case
20   with nearly identical facts, debtors’ confirmed chapter 13 plan
21   promised to pay monthly payments of $474, to pay filed tax claims
22   and to pay unsecured creditors a 10% dividend.    Three years later,
23   the IRS filed a proof of claim for a postpetition trust fund tax.
24   No person filed objections to the IRS’s claim and the trustee
25   began making payments on account of the IRS claim.   Six years
26   after confirmation, the trustee moved to dismiss on the basis that
27   debtors’ plan payments failed to pay both the IRS claim and the
28   10% dividend to unsecured creditors.    In response, debtors filed a

                                      -11-
 1   motion for discharge under § 1328(a)7 or for a hardship discharge
 2   under § 1328(b).   The bankruptcy court dismissed the case and
 3   denied debtors’ motion.
 4        The First Circuit BAP affirmed.    The Panel rejected debtors’
 5   argument that they had satisfied their obligations under the plan
 6   simply because they paid the monthly dollar amount stated in the
 7   plan for 60 months.   This argument ignored their failure to comply
 8   with the other plan terms — to pay any postpetition tax claims and
 9   to pay unsecured creditors a dividend of 10%.   Id. at 399.   The
10   Panel held that debtors’ failure to pay the IRS claim or their
11   unsecured creditors as promised in their confirmed plan
12   constituted a material default warranting dismissal under
13   § 1307(c)(6).   Id. at 400.   The Panel considered debtors’ failure
14   to object to the IRS’s claim or to seek modification of their plan
15   under § 1329 important in its decision.   Id.
16        In another similar case, In re Rivera, 177 B.R. 332 (Bankr.
17   C.D. Cal. 1995), the debtors’ plan, confirmed prior to the claims
18   bar date, provided for 36 monthly payments of $2,300 and a
19   dividend of 65% to unsecured creditors.   Id. at 333.   Had the
20   allowed claims been limited to those scheduled by the debtors, the
21   $2,300 monthly payments would have been sufficient to provide the
22   proposed 65% return to creditors within three years.    However, the
23   amounts for filed claims substantially exceeded debtors’ scheduled
24   debts and debtors had not filed any objections to the claims.     As
25
26        7
             Section 1328(a) provides in part: “Subject to subsection
     (d), as soon as practicable after completion by the debtor of all
27   payments under the plan . . . the court shall grant the debtor a
     discharge of all debts provided for by the plan or disallowed
28   under section 502 of this title . . . .”

                                      -12-
 1   a result, the plan failed to pay the 65% dividend by about
 2   $15,000.    Id.   The trustee moved to dismiss debtors’ case under
 3   § 1307(c)(6) for a material default in the plan.     Debtors
 4   responded with a motion for discharge under § 1328(a).
 5           The issue before the Rivera court involved which plan
 6   provision takes precedence — the percentage dividend to unsecured
 7   creditors or the monthly plan payments.    Persuaded by the
 8   reasoning of In re Carr, 159 B.R. 538 (D. Neb. 1993) and In re
 9   Phelps, 149 B.R. 534 (Bankr. N.D. Ill. 1993), the Rivera court
10   found that debtors’ payment of less than the percentage dividend
11   required in the plan precluded a discharge.    Id. at 334-335.     By
12   failing to pay their unsecured creditors the promised 65%
13   dividend, the debtors had not completed their payments under the
14   plan within the meaning of § 1328(a).    Id. at 335.
15           In In re Hill, 374 B.R. 745 (Bankr. S.D. Cal. 2007), the
16   bankruptcy court considered two separate cases in one decision
17   involving a husband and wife in one and an individual woman in the
18   other.    In each case, the debtors or debtor had a confirmed plan
19   providing for monthly payments and a 100% dividend plus 10%
20   interest to unsecured creditors.    Id. at 746-48.   In both cases,
21   total claims ended up being more than debtors had accounted for,
22   and the debtors failed to seek amendments to their plans in order
23   to complete them within 60 months, despite the trustee’s notices
24   that their plan payments would necessarily exceed the five-year
25   term.    In one of the cases, the debtor needed an additional 33
26   months to complete the plan payments; in the other, debtors needed
27   an additional 53 months of plan payments.    The trustee moved to
28   dismiss both cases for failure to pay the plan in full within five

                                       -13-
 1   years.
 2        The Hill court acknowledged that failing to complete plan
 3   payments within the applicable 36 or 60-month period could
 4   constitute cause for dismissal under § 1307(c)(6).   Id. at 748-49.
 5   However, it opined that dismissal was not absolute, despite the
 6   mandate in § 1322 that a plan must not provide for payments over a
 7   period that exceeds five years.    Section 1322 involved
 8   confirmation, not dismissal.   Id. at 748.   While the court
 9   determined that the debtors materially breached a term of their
10   plans within the meaning of § 1307(c)(6) by needing an additional
11   33 or 53 months to complete the plans — i.e., they had failed to
12   pay their unsecured creditors the promised dividend of 100% plus
13   10% interest — it decided not to dismiss the debtors’ cases due to
14   their unique circumstances.    The debtors or debtor in each case
15   had been consistently performing over the past 60 months, no real
16   property arrearages continued to drag out and no unsecured
17   creditor had complained about not receiving 100% plus 10% interest
18   over the past five years.   Id. at 749-50.   See also In re Grant,
19   428 B.R. 504, 506-508 (Bankr. N.D. Ill. 2010) (holding that
20   failing to complete plan payments within five years, and where the
21   plan cannot be modified to make completion feasible, constitutes a
22   material default for purposes of § 1307(c)(6); the court also
23   interpreted § 1322(d) as limiting a plan to a maximum of five
24   years and concluded that allowing a plan to continue an additional
25   twelve to eighteen months beyond that would ignore § 1322(d) and
26   Congress’ clear intent).
27        We agree with the above cases to the extent they hold that,
28   even though a chapter 13 debtor has completed his or her monthly

                                       -14-
 1   plan payments, failure to pay unsecured creditors the promised
 2   percentage dividend constitutes a material default with respect to
 3   a term of a confirmed plan.   § 1307(c)(6).   Because the Schlegels
 4   did not seek to continue their Plan payments beyond the 60 months
 5   but instead sought a hardship discharge, we do not render any
 6   opinion as to whether § 1322(d) limits a bankruptcy court’s
 7   ability to allow a debtor to continue making plan payments beyond
 8   the applicable commitment period.
 9          Schlegels argue that under Fridley v. Forsythe (In re
10   Fridley), 380 B.R. 538 (9th Cir. BAP 2007), a plan is “complete”
11   and debtors are entitled to a discharge when they either pay all
12   claims 100% or make 60 months of payments.    We disagree with their
13   position.   In Fridley, debtors sought an early discharge after
14   making a lump-sum payment in month 14 of their 36-month plan,
15   which satisfied the plan’s dollar amount.     308 B.R. at 540.   The
16   Panel held that since debtors’ plan did not provide for 100%
17   payment to unsecured creditors, they had to commit themselves to
18   the temporal requirement of 36 months and their prepayment did not
19   “complete” their plan for purposes of §§ 1328(a) or 1329.      Id. at
20   545.   To obtain an early discharge without paying allowed
21   unsecured claims in full, debtors had to follow the § 1329
22   modification procedure.   Id. at 544.
23          Fridley did not hold, or even infer, that simply making plan
24   payments for the applicable commitment period without also
25   providing unsecured creditors with the promised percentage
26   dividend entitles a debtor to discharge.    Further, that case
27   involved the early completion of plan payments and ultimately
28   discharge, not debtors’ failure to complete plan payments within

                                      -15-
 1   the applicable commitment period and dismissal under § 1307(c).
 2   At any rate, Schlegels are no longer even able to modify the Plan
 3   as they have made all monthly payments.    See § 1329(a).8
 4        2.   It was proper to allow CitiMortgage’s unsecured claim
 5        Schlegels also dispute whether CitiMortgage’s “late-filed”
 6   claim should have been allowed and paid by Trustee, which claim
 7   ultimately caused their Plan to implode and not pay unsecured
 8   nonpriority creditors a 48% dividend.    Although Schlegels spend a
 9   great deal of time arguing this issue, they have never filed an
10   objection to CitiMortgage’s claim.     Therefore, we fail to see how
11   they can argue this issue on appeal.    Without objection,
12   CitiMortgage’s claim is deemed allowed, § 502(a), subject to the
13   bankruptcy court’s subsequent Valuation Order determining the
14   claim to be unsecured under § 506(a) and the confirmation order,
15   declaring that CitiMortgage will be treated and paid in the Plan
16   as an unsecured nonpriority creditor.
17        Without question, the claims bar date in Schlegels’ case was
18   April 30, 2009.   The Motion to Value and the avoidance of
19   CitiMortgage’s junior lien came later.    The Valuation Order, which
20   stripped CitiMortgage’s lien and rendered its claim unsecured, was
21   entered on October 22, 2009.   Until that point, CitiMortgage was
22   operating in this case as a secured creditor.
23        Secured creditors in a chapter 13 case may, but are not
24   required to, file a proof of claim.    See Rule 3002(a).     Such
25
26        8
             Section 1329(a) provides, in relevant part: “At any time
     after confirmation of the plan but before the completion of
27   payments under such plan, the plan may be modified, upon request
     of the debtor, the trustee, or the holder of an allowed unsecured
28   claim[.]”

                                     -16-
 1   creditors may choose not to participate in the bankruptcy case and
 2   look to their liens for satisfaction of the debt.   Brawders v.
 3   Cnty. of Ventura (In re Brawders), 503 F.3d 856, 872 (9th Cir.
 4   2007).   Secured liens pass through bankruptcy unaffected.   Long v.
 5   Bullard, 117 U.S. 617, 620-21 (1886); Dewsnup v. Timm, 502 U.S.
 6   410, 418 (1992); In re Brawders, 503 F.3d at 872.   However, if the
 7   lien is avoided and the formerly secured creditor failed to file a
 8   secured claim prior to the claims bar date, the creditor may file
 9   a proof of claim within 30 days after the order avoiding the lien
10   becomes final.   See Rule 3002(c)(3);9 Prestige Ltd. P’ship-Concord
11   v. E. Bay Car Wash Partners (In re Prestige Ltd. P’ship-Concord),
12   234 F.3d 1108, 1118 (9th Cir. 2000); Zebley v. First Horizon Home
13   Loans (In re Ong), 469 B.R. 599, 601 (Bankr. W.D. Pa. 2012).
14        The exception under Rule 3002(c)(3) permits a creditor like
15   CitiMortgage, whose unsecured claim arises as the result of an
16   order invalidating its secured claim, to file a proof of claim
17   within 30 days after entry of the order regardless of expiration
18   of the 90-day limitation in Rule 3002(a).   As explained in the
19   Advisory Committee Notes to Rule 3002(c):
20        Although the claim of a secured creditor may have arisen
          before the petition, a judgment avoiding the security
21        interest may not have been entered until after the time
          for filing claims has expired. Under Rule 3002(c)(3),
22        the creditor who did not file a secured claim may
          nevertheless file an unsecured claim within the time
23        prescribed.   A judgment does not become final for the
          purpose of starting the 30 day period provided for by
24        paragraph (3) until the time for appeal has expired or,
25
          9
             Rule 3002(c)(3) provides in part: “An unsecured claim
26   which arises in favor of an entity or becomes allowable as a
     result of a judgment may be filed within 30 days after the
27   judgment becomes final if the judgment is for the recovery of
     money or property from that entity or denies or avoids the
28   entity’s interest in property.”

                                     -17-
 1        if an appeal is taken, until the appeal has been disposed
          of.
 2
 3        CitiMortgage filed its proof of claim, albeit as a secured
 4   claim, on October 12, 2009, after the bankruptcy court had orally
 5   granted the Motion to Value, but before the entry of the Valuation
 6   Order on October 22, 2009, which deemed the claim unsecured.
 7   Thus, its claim was timely filed within the 30 days required under
 8   Rule 3002(c)(3).   See In re Prestige Ltd. P’ship-Concord, 234 F.3d
 9   at 1118 (proof of claim filed before judgment became final
10   considered timely for purposes of Rule 3002(c)(3)when court waived
11   creditor’s security interest).
12        Schlegels never objected to CitiMortgage’s timely filed
13   claim.    Their contention that they had no notice of CitiMortgage’s
14   claim defies credulity.   Trustee’s Notice of Claims sent to
15   Schlegels and their counsel, just days after confirmation,
16   conspicuously listed CitiMortgage’s unsecured claim and the amount
17   to be paid.   Therefore, Trustee did not err in making payments to
18   CitiMortgage under the Plan.10
19                               VI. CONCLUSION
20        We conclude that the bankruptcy court did not abuse its
21   discretion in granting the Motion to Dismiss, particularly since
22
23        10
             Although not raised by the Schlegels, the bankruptcy court
     did not engage in any “best interest of creditors” analysis before
24   dismissing their case, which is required. Nelson v. Meyer (In re
     Nelson), 343 B.R. 671, 675 (9th Cir. BAP 2006). However, on this
25   record dismissal appears to be in the best interest of creditors
     and the estate. Over the course of 60 months, the unsecured
26   creditors have not received anywhere near the 48% dividend
     required by their Plan. With dismissal and the dissolving of the
27   stay, these creditors are now free to pursue collection of their
     claims against the Schlegels, which would likely result in more
28   money than if the case had been converted to chapter 7.

                                      -18-
 1   Schlegels failed to object to CitiMortgage’s claim or to modify
 2   their Plan to address the claim once filed.   By failing to pay
 3   their unsecured creditors the promised 48% dividend, they did not
 4   complete plan payments within the applicable commitment period.
 5   Accordingly, we AFFIRM.
 6
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

                                    -19-
