On August 22, 1997, Sahnica Denise Nolan filed a petition for relief under Chapter 13 of the Bankruptcy Code. Chapter 13 permits a debtor with regular income to propose a repayment plan extending and/or reducing the balance of her obligations, thereby averting a loss of assets through Chapter 7 liquidation. Discharge of a portion of the debt is granted after a Chapter 13 debtor has complied with a court-confirmed repayment plan. Prior to confirmation of Nolan's proposed plan, Chrysler Financial Corporation filed a proof of claim showing that Nolan owed it $12,291.45 on an installment contract for the purchase of a 1995 Mitsubishi Mirage automobile. On September 23, 1997, the bankruptcy court confirmed Nolan's Chapter 13 plan, which took into account Chrysler's claim. Under the plan, Chrysler's secured claim on the automobile was for $8200, with interest at ten percent per annum. Of Nolan's monthly payments under the plan, $207.97 per month was to be applied toward the secured claim. The unsecured portion of Chrysler's claim, $4091.45, would be paid off on a cents-on-the-dollar basis from Nolan's installments under the plan, pursuant to 11 U.S.C. § 1329(a)(1).

On August 26, 1998, Nolan filed a motion to modify her plan and incur credit. Specifically, she sought permission to surrender her vehicle to Chrysler, reclassify the deficiency owed on the vehicle as an unsecured claim, and incur credit in the amount of $10,000 to purchase another car. Accordingto Nolan, her current automobile no longer provided dependable transportation. Chrysler objected to the motion on the ground that section 1329 of the Bankruptcy Code does not allow a debtor to reclassify a secured claim as an unsecured debt absent a good faith showing of unanticipated substantial change in circumstances. Chrysler contended that Nolan had not acted in good faith because she had failed to properly maintain her vehicle.

On October 19, 1998, a hearing was held before the bankruptcy court in which Nolan testified that she had placed 100,000 miles on the vehicle in three years (an average of 2777.77 miles per month), and had changed the oil three times between February and August of 1998 (she could produce documentation for only two changes). Following a hearing, the bankruptcy court granted her motion, finding that she did not act in bad faith.

Chrysler appealed to the district court, which reversed. Chrysler Fin. Corp. v. Nolan, 234 B.R. 390 (M.D. Tenn. 1999). It did not disturb the bankruptcy court's factual finding as to the good faith of Nolan. Rather, it held that as a matter of law 11 U.S.C. § 1329(a)1 did not permit Nolan to modify the plan by surrendering collateral to a secured creditor and reclassifying any deficiency as an unsecured claim.

Nolan now appeals to this court.

Chapter 13 of the Bankruptcy Code, entitled "Adjustments of debts of an individual with regular income," was originally adopted to address consumer credit loss during the Great Depression by providing a completely voluntary proceeding for consumers to amortize their debts out of future earnings. See David S. Cartee, Comment, Surrendering Collateral Under Section 1329: Can the Debtor Have Her Cake and Eat It Too?, 12 Bankr. Devs. J. 501, 505 (1996)(citing 11 U.S.C. § 1301 et seq. (1994); 5 Collier on Bankruptcy ¶ 1300.01, at 1300-11 to 1300-12 (15th ed. 1995)). In its present version, Chapter 13 allows individual debtors to reorganize with a repayment plan as an alternative to seeking a complete discharge of debts through the Chapter 7 bankruptcy liquidation process. Since a repayment plan may prove to be unsatisfactory, section 1329 of the Code allows modification of a Chapter 13 plan under certain circumstances. 11 U.S.C. § 1329 (1993). Section 1329 must be interpreted in conjunction with 11 U.S.C. §§ 1322(b),2 1325(a)3,and 1327(a)4.

There has been a debate over whether section 1329 allows a debtor to modify a confirmed plan to surrender collateral for a secured claim (the value of which typically will have been significantly reduced) and then reclassify any deficiency as an allowed, unsecured claim to be paid back at the general pennies-on-the-dollar rate set forth in the plan for unsecured debts. See Cartee, supra, 501-02 & 502 n.4 (citing contrasting holdings of district courts). This appeal presents an issue of first impression for the Courts of Appeals, while there is a clear and fairly even split of authority amongst the federal district courts. Cf. Chrysler Fin. Corp., 234 B.R. at 396-97; Cartee, supra, at 501-02, 511, 515, 519-20. The bankruptcy court's interpretation of section 1329(a)(1) is reviewed de novo. See Palmer v. United States (In re Palmer), 219 F.3d 580, 583 (6th Cir. July14, 2000).

Nolan argues for an interpretation of section 1329 that has been accepted by a sizable minority of the district courts,5 following the rationale of In re Jock, 95 B.R. 75 (Bankr. M.D. Tenn. 1989). Under the Jock interpretation, a debtor can modify a plan under section 1329(a) by: 1) surrendering collateral to a creditor; 2) allowingthe creditor to sell the collateral and apply the proceeds toward the claim; and 3)classifying any remaining deficiency as an unsecured claim. See Jock, 95 B.R. at 76-77; see also Chrysler Fin. Corp., 234 B.R. at 394. The rationale is that the "proposed modification would 'increase or reduce the amount of payments on claims of a particular class provided for in the plan' within the meaning of § 1329(a)(1)." Jock, 95 B.R. at 76. Under Jock, "[a] Chapter 13 debtor can use the permitted [original] plan provisions described in § 1322(b), subject to the confirmation requirements of § 1325(a), to modify a confirmed Chapter 13 plan under § 1329(a)." Id.

Jock rests on four supporting principles. First, each secured claim is separately classified in a Chapter 13 case,6 and therefore subject to modification under section 1329(a)(1). See Jock, 95 B.R. at 76. Second, under 11 U.S.C. §1329(b)(1), both the mandatory and permissive provisions of a Chapter 13 plan found in 11 U.S.C. §§1322(a) and (b) and the confirmation requirements of 11 U.S.C. § 1325(a) apply to impose limits upon any post-confirmation section 1329(a) modification of a Chapter 13 plan. See Chrysler Fin. Corp., 234 B.R. at 394 (quoting Jock, 95 B.R. at 77). Third, under section 1322(b)(8), a Chapter 13 debtor is permitted to "provide for the payment of all or part of a claim against the debtor from property of the estate or property of the debtor," while section 1325(a)(5)(C) permits the debtor to surrender the property securing a claim in order to satisfy an "allowed secured claim provided for by the plan." Jock, 95 B.R. at 77. Fourth, the incorporation of sections 1322(b)(8) and 1325(a)(5)(C) into the standards for post-confirmation modification in section 1329 empower the Chapter 13 debtor to satisfy the creditor's secured claim either by A)surrendering the collateral during the confirmation of the original plan, or B) modifying the confirmed plan to allow surrender of the collateral. See id. The distribution to a creditor can be altered by reducing the amount paid to the creditor from outside the plan, or by reclassifying a secured claim as an unsecured claim. See Chrysler Fin. Corp., 234 B.R. at 397 n.11 (quoting In re Stone, 91 B.R. 423, 425 (Bankr. N.D. Ohio 1988)).

We reject Jock's interpretation of section 1329. The district court correctly reversed the bankruptcy court under an alternative interpretation, adopted by In re Coleman,, 231 B.R. 397 (Bankr. S.D. Ga. 1999).7 Five fundamental deficiencies of the Jock position persuade us to reject it in this circuit.

First, section 1329(a) does not expressly allow the debtor to alter, reduce or reclassify a previously allowed secured claim. 11 U.S.C. § 1329(a) (1993). Instead, section 1329(a)(1) only affords the debtor a right to request alteration of the amount or timing of specific payments. A debtor cannot use section 1329(b)(1) to enlarge the modifications permitted by section 1329(a), since section 1329(b)(1) does not apply unless the proposed modification first complies with section 1329(a)(1). See Chrysler Fin. Corp. at 394 (quoting Taylor, 99 B.R. at 904-05). A modification that reduces the claim of a secured debtor would add a claim to the class of unsecured creditors, a change prohibited bysection 1329(a)8. See id. at 394-95 (quoting Taylor, 99 B.R. at 905 n.3). Section 1329(a)(1) should not be read so broadly as to authorize the reclassification of claims. See Coleman, 231 B.R. at 400.

Second, the proposed modification would violate section 1325(a)(5)(B), which mandates that a secured claim is fixed in amount and status and must be paid in full once it has been allowed.9 See 11 U.S.C. § 1325(a)(5)(B)(ii) (1993). Debtors seeking modification are attempting to bifurcate a claim that has already been classified as fully secured into a secured claim as measured by the collateral's depreciated value and an unsecured claim as measured by any unpaid deficiency. This would negate the requirement of section 1325(a)(5)(B)(ii) that a plan is not to be confirmed unless the property to be distributed on account of a claim is not less than the allowed amount of the claim. See Chrysler Fin. Corp., 234 B.R. at 395 (quoting Dunlap, 215 B.R. at 870).

Third, proposed modification would contravene section 1327(a), because a contrary interpretation postulates an unlikely congressional intent to give debtors the option to shift the burden of depreciation to a secured creditor by reclassifying the claim and surrendering the collateral when the debtor no longer has any use for the devalued asset. See Coleman, 231 B.R. at 400. The court in Banks saliently articulated the injustice of such a maneuver:

Code § 1329(a) basically authorizes the amendment of a confirmed plan so as to change (1) the amount; or (2) the time for payments "on claims of a particular class provided for by the plan." The boldest and most frequent attempt by debtors to use the postconfirmation modification to alter the treatment of secured claims occurs when the collateral no longer appears to have a value which justifies full payment of the balance of the secured claim-- in contrast with the composition percent being paid on unsecured claims. The collateral having lost its attractiveness, the debtor proposes an amendment to the plan so as (1) to surrender the now-unattractive collateral to the creditor; (2) to reduce the unpaid balance of the secured claim to reflect the now-diminished value of the collateral; (3) to have that reduced secured balance satisfied by the surrender of the collateral; (4) to have the remaining balance of the secured claim converted to an unsecured claim; and (5) to have this balance of the claim satisfied by the 5%, 17%, or whatever percent payment provided for unsecured claims--all over the objection of the holder of the secured claim.

Banks, 161 B.R. at 377 (citation omitted). We join the Banks court in rejecting the notion that debtors have such wide latitude to subject the creditor to their whims throughout the life of the plan. We further note that under the Jock approach, debtors would obtain a double reduction in debt in many cases, because the creditor already experiences a cram down in valuation at the time of confirmation. See Chrysler Fin. Corp., 234 B.R. at 396 (quoting Banks, 161 B.R. at 379). There is no indication that Congress intended to allow debtors to reap a windfall by employing a subterfuge that unfairly shifts away depreciation, deficiency, and risk voluntarily assumed by the debtor through her confirmation of the Chapter 13 plan10.

Fourth, only the debtor, the trustee, and holders of unsecured claims are permitted to bring a motion to modify a plan pursuant to section 1329(a). The Jock interpretation would create an inequitable situation where the secured creditor could not seek to reclassify its claim in the event that collateral appreciated, even though the debtor could revalue or reclassify the claim whenever the collateral depreciated. See Coleman, 231 B.R. at 400. Furthermore, allowing Chapter 13 modifications would permit the debtor to reclassify a secured creditor's claim while simultaneously evading the tradeoff risks and responsibilities attending conversion or dismissal under Chapter 7. See Chrysler Fin. Corp., 234 B.R. at 397 (citation omitted) (Chapter 7 alternative requires debtor to surrender nonexempt property to a trustee, and to lose opportunity for discharge for at least six years; Chapter 13 avoids these onerous burdens by allowing debtor to retain all personal and real property, to restructure debts, and to enjoy greater likelihood of future credit opportunities). These inequities are further indications Congress did not intend the resolution reached in Jock.

Fifth, Jock's interpretation is at odds with the plain language of section 1329. "This section does not state that the plan may be modified to increase or reduce the amount of claims. This is of significance in relation to secured claims." Banks, 161 B.R. at 378 (emphasis added). Jock fails to note that the terms "claim" and "payment" have two different meanings in the Bankruptcy Code.

(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or

(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.

See Johnson v. Home State Bank, 501 U.S. 78, 83 (1991) (quoting 11 U.S.C. § 101(5)). The term "claim" is consistently employed in the Code. See 11 U.S.C. § 101(5) (defining "claim"). Although "payment" is not defined in the Code, usage of the term is also consistent throughout the Code and reflects a meaning different from the term "claim."11 There is no reason to suppose that Congress intended in section 1329 to disregard the ordinary common law12 meaning of the term "payment," which is "the delivery of money or other value by a debtor to a creditor." Black's Law Dictionary 1129 (6th ed. 1990). Furthermore, if the term "payments" in section 1329(a) referred to the secured claim itself rather than to individual payments, the separate use of "claims" in section 1329(a)(3) would be superfluous. Read with the benefit of proper term definitions, section 1329 clearly indicates that modifications after plan confirmation cannot alter a claim (a right to a remedy or payment of a certain total amount), but can extend or compress payments and reduce or increase the amount of the delivery of value planned as an eventual satisfaction for the creditor's claim13.

We hold that a debtor cannot modify a plan under section 1329(a) by: 1) surrendering the collateral to a creditor; 2)having the creditor sell the collateral and apply the proceeds toward the claim; and 3) having any deficiency classified as an unsecured claim. See Coleman, 231 B.R. at 398. Section 1329(a) only permits modification of the amount and timing of payments, not the total amount of the claim. This principle holds true as to the portion of a claim that is secured, where the claim is partially instead of fully secured14.

We affirm the district court's reversal of the bankruptcy court, and remand thiscase to the bankruptcy court for further proceedings.