Third Circuit disposition — 22-3418

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 22-3418
_______________
IN RE: TIFFANY D. SMITH,
Debtor
FREEDOM MORTGAGE CORPORATION,
Appellant
_______________
On Appeal from the United States District Court
For the District of New Jersey
(D.C. No. 2-21-cv-11025)
District Judge: Honorable Evelyn Padin
Bankruptcy Judge: Honorable John K. Sherwood
_______________
Argued
September 13, 2023
Before: JORDAN, BIBAS, and PORTER, Circuit Judges
(Filed May 22, 2024)
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William M. E. Powers, III [ARGUED]
Powers Kirn
308 Harper Drive
Suite 210
Moorestown, NJ 08057
Counsel for Appellant
Kevin De Lyon [ARGUED]
Herbert B. Raymond
Raymond and Raymond
7 Glenwood Avenue
Suite 408
East Orange, NJ 07017
Counsel for Debtor-Appellee
Marie Ann Greenberg
30 Two Bridges Road
Fairfield, NJ 07052
Trustee
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Before a court will consider a creditor’s objections to a
bankruptcy plan, the creditor must be timely in the objections.
Freedom Mortgage Corporation (“Freedom”) did not object to
certain terms in early versions of Tiffany Smith’s bankruptcy
plan, but it now challenges those same terms in her third
modified plan. Most of the objections are too late and are
foreclosed by res judicata. The only objection not so

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foreclosed bears on the feasibility of the plan, but the
Bankruptcy Court did not clearly err in finding that Smith’s
third modified plan was feasible. Consequently, we will affirm
the District Court’s affirmance of the Bankruptcy Court’s order
confirming the bankruptcy plan.
I. BACKGROUND
In May of 2019, Smith filed a voluntary petition for a
Chapter 13 bankruptcy proceeding in the United States
Bankruptcy Court for the District of New Jersey.1 In addition
to her day-to-day employment as a product manager, she owns
a two-unit rental property in Newark, New Jersey (the
“Property”). The Property is secured by a mortgage held by
Freedom. That mortgage contains an “absolute assignment” of
rents provision whereby Smith agreed to “unconditionally
assign[] and transfer[] to [Freedom] all the rents and revenues
of the Property.” (App. at 94.)
A. The First Modified Plan
Smith filed a Chapter 13 payment plan in the
Bankruptcy Court, as required by the Bankruptcy Code.2 11
1 Chapter 13 of the Bankruptcy Code is entitled
“Adjustment of Debts of an Individual with Regular
Income[.]” 11 U.S.C. §§ 1301-1330. It “offers the possibility
of relief to individual debtors who have some capacity to make
payments on their debts.” In re Klaas, 858 F.3d 820, 823 (3d
Cir. 2017).
2 “After filing a voluntary petition for relief, a Chapter
13 debtor must propose a plan that provides for the payment of
future earnings to cover claims on the debtor’s estate.” Klaas,

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U.S.C. § 1321.3 Freedom then filed a secured proof of claim
for its mortgage on the Property in the amount of $242,906.4
Before the Bankruptcy Court ruled on Smith’s proposed plan,
she petitioned the Bankruptcy Court to accept a different plan
(the “First Modified Plan”). The First Modified Plan included
a motion to partially void Freedom’s mortgage lien on the
Property and to reclassify Freedom’s underlying claim as
partially secured and partially unsecured. Specifically, Smith
requested that the collateral value of the Property, which she
listed as $95,000, plus interest, be deemed the secured amount
of Freedom’s claim and that the remainder of its claim be
reclassified as unsecured. Approximately $150,000 of
Freedom’s claim would be transformed from secured to
unsecured under the terms of Smith’s First Modified Plan.5 In
858 F.3d at 823 (internal quotation marks omitted). The
proposed plan is subject to the Bankruptcy Court’s approval.
11 U.S.C. § 1325(a)(1). The details of Smith’s original
bankruptcy plan are not before us.
3 Unless otherwise indicated, all further section
references in this opinion are to the Bankruptcy Code, as
amended, 11 U.S.C. § 101 et seq.
4 Amounts stated here are rounded to the nearest dollar.
Smith was $72,647 in arrears on the payments associated with
her mortgage at the time of her petition.
5 The total amount Smith owed to Freedom had
increased to $255,303 by the time Smith filed her First
Modified Plan.

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bankruptcy parlance, such a reclassification is known as a
“cramdown.”6
The First Modified Plan noted that Smith had paid
$8,200 over four months through September of 2019 and
proposed that Smith would pay the bankruptcy trustee $450 per
month over the remaining 56 months of the 60-month plan.7
The First Modified Plan also called for the Property’s rental
income of $1,600 per month to be remitted directly to Freedom
and that such income would reduce the amount of Freedom’s
crammed-down secured claim.8
6 In a cramdown, the bankruptcy judge “determines the
market value of the collateral,” and then “[t]he creditor’s claim
is treated as a secured claim to the extent of that value.” In re
Howard, 597 F.3d 852, 854 (7th Cir. 2010). “If the value is
less than the unpaid balance of the secured loan, the difference
is demoted to being an unsecured claim of the creditor.” Id.
This demotion “forc[es] the secured creditor to accept less than
the full value of its claim and thereby allow[s] the plan to be
‘crammed down the throats of objecting creditors.’” In re
Phila. Newspapers, LLC, 599 F.3d 298, 304 (3d Cir. 2010), as
amended (May 7, 2010) (quoting Kham & Nate’s Shoes No. 2,
Inc. v. First Bank of Whiting, 908 F.2d 1351, 1359 (7th Cir.
1990) (Easterbrook, J.)).
7 Section 1322(d) limits the duration of a Chapter 13
bankruptcy plan to a maximum of five years.
8 Under the First Modified Plan, Smith would also pay
all costs and expenses related to the Property.

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Freedom objected to the First Modified Plan. In
particular, it protested the cramdown of its secured claim, the
Property’s listed valuation of $95,000, the Property’s rents
being applied to reduce its secured claim, and the feasibility of
the overall plan. The Bankruptcy Court held a hearing in
November of 2019 to address Freedom’s objections. At the
hearing, Freedom clarified that it was not, in fact, disputing the
listed value of the Property. To confirm its understanding of
Freedom’s assertion, the Bankruptcy Court asked, “You’re
okay with ninety-five [thousand] [a]s the value[?]” (App. at
202.) Freedom responded: “Correct.” (App. at 202.)
Later in the hearing, the Bankruptcy Court explained
that “the big issue” was how the Property’s rents were to be
applied: whether Freedom was required to use the rents
received to reduce its secured claim, or if it could apply them
“towards [its] unsecured claim and retain [its] entire secured
claim in full.” (App. at 210.) The parties characterized that
issue as the “Jason Realty [] issue,” naming it after a case that
similarly involved an absolute assignment provision in a
bankruptcy proceeding. (App. at 199 (emphasis added).) In In
re Jason Realty, L.P., we held that the rents at issue were
“unavailable for use, allocation or utilization” in the debtor’s
proposed bankruptcy plan. 59 F.3d 423, 431 (3d Cir. 1995).
During the hearing, the parties disputed whether In re
Jason Realty’s holding prohibited the Bankruptcy Court from
requiring Freedom to use the rents it would receive from the
Property to reduce its secured claim. The Court stated that it
did not believe In re Jason Realty prohibited the rents from
being used to reduce the secured claim. Freedom’s counsel
asked the Bankruptcy Court, “So the rent payment would go to
pay down the $95,000 plus interest over the 55 months, that

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payment will pay … down that amount, correct?” (App. at
216-17.) The Court answered, “Yes,” and explained that Smith
would still be responsible to reimburse Freedom for any
carrying costs it had incurred on the Property. (App. at 217.)
Freedom’s counsel responded, “That’s fine. Then I will
discuss that with my client on that issue, okay. Let them know
where the Court is going in its decision process.” (App. at
217.) Subsequently, the Bankruptcy Court issued an order
enforcing the assignment of the Property’s rents to Freedom,
but otherwise stayed relief, giving the parties time to resolve
Freedom’s other objections to the plan.9
Shortly after the November hearing, the parties resolved
their differences and filed a consent order (the “Consent
Order”). In that Consent Order, the parties agreed, in relevant
part, to the following terms:
a. The Property has a fair market value of
$95,000. As such, Freedom’s secured lien on the
Property shall be reduced to $95,000. … The
remaining [amount] shall be treated as an
unsecured claim and paid out with the unsecured
creditors.
…
d. The Parties agree that the total amount the
Debtor is to pay towards the cram down amount
9 The order following the November hearing prohibited
Smith from using the Property’s rents and required her to turn
them over to Freedom.

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… will be … [the] $95,000.00 Crammed Down
Value + … interest and … post-petition escrow.
…
f. The Parties agree that all rental payments that
are held by the Debtor or Debtor’s counsel shall
be immediately paid to the Chapter 13 Trustee.
On a go forward basis, the Debtor shall tender all
rental payments to the Chapter 13 Trustee.
(App. at 120-21.) Thus, Freedom’s claim on the Property was
bifurcated into a secured claim of $95,000, plus interest, and
an unsecured claim for the remaining amount. Additionally,
the rental payments would go to the bankruptcy trustee, rather
than directly to Freedom, to be used to pay off the crammed-
down secured claim. The parties agreed that the Consent Order
would “be incorporated into and become part of any Order
Confirming Plan[.]” (App. at 122.) In January of 2020, the
Bankruptcy Court confirmed the First Modified Plan, which
reflected the terms of the Consent Order.
B. The Second Modified Plan
Shortly after the inception of the COVID-19 pandemic,
Congress passed the Coronavirus Aid, Relief, and Economic
Security Act (the “CARES Act”), which, among other things,
added a temporary provision to the Bankruptcy Code that
allowed Chapter 13 debtors to extend the duration of their
bankruptcy plans up to 84 months, two years longer than the
normal 60-month maximum, if “the debtor [was] experiencing
or ha[d] experienced a material financial hardship” because of
the COVID-19 pandemic. § 1329(d) (repealed 2022); Pub. L.
No. 116-136, 134 Stat. 281, 312 (2020). To take advantage of
that provision, Smith filed another modified plan (the “Second

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Modified Plan”) in June of 2020, seeking a six-month
extension of her plan. Notably, Smith’s Second Modified Plan
called for a stepped-up payment component, proposing
payment of $1,500 per month for six months, and then for
payment of $2,440 per month for the remaining 47 months of
the plan.10 Except for the revised payment plan, the terms of
the Second Modified Plan mirrored the terms of the First
Modified Plan.
Freedom did not object to the Second Modified Plan,
and the Bankruptcy Court confirmed it in July of 2020, stating
that “it appear[ed] that the applicable provisions of the
Bankruptcy Code have been complied with[.]” (Supp. App. at
26.)
C. The Third Modified Plan
In December of 2020, Smith filed a third modified plan
(the “Third Modified Plan”), the one at issue here. She again
sought to extend the payment term – this time to the CARES
Act statutory maximum of 84 months – because she had
delinquent tenants, and she could not evict them due to
pandemic-related eviction moratoriums. The Third Modified
Plan maintained the $95,000 cramdown value and called for
stepped-up monthly payments of $1,500 per month for eight
10 Smith explained in her certification to the Second
Modified Plan that COVID-19 had caused her tenants to be
behind in their rental payments and that the six-month plan
extension, with a reduction in payment on the front end, would
accommodate the decrease in rent receipts.

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months and then $2,010 per month for the remaining fifty-
seven months.
Freedom objected to the Third Modified Plan. It
argued, among other things, that (1) the use of rental income to
pay the secured claim was foreclosed by In re Jason Realty; (2)
the plan’s stepped-up monthly payments violated
§ 1325(a)(5)(B)(iii)(I); (3) the Property’s cramdown valuation
was too low and thus violated § 1325(a)(5)(B)(ii), and (4) the
plan was not feasible.
The Bankruptcy Court held a hearing in March of 2021
to consider Freedom’s objections to the Third Modified Plan.
At the hearing, the Bankruptcy Court questioned Freedom
about why it was challenging the use of rental income to pay
off its secured claim when it had consented to that arrangement
previously: “[I]n January of 2020, a little over a year ago,
[Freedom] was okay with using the rents to apply against plan
payments. They consented to it. And … now you’re saying
you don’t want to do that anymore[?]” (App. at 241.) In
response, Freedom argued that the Third Modified Plan was “a
new plan” to which it had not consented, stating that “[t]here
was nothing in [the Consent Order] that required the creditor
to consent to future plans, different plans.” (App. at 241.) It
also asserted that the Property’s value needed to be
redetermined. The Bankruptcy Court was not convinced by
Freedom’s arguments:
But it’s really not a whole new plan for you.
You’re still getting the present value of $95,000
that you agreed to initially. … [W]hat’s troubling
me is, you know we had this Covid situation and
Congress has come down and provided some

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legislation that is relief for debtors. And … here
you have a debtor who is trying to take advantage
of that provision by extending her plan out two
years and all of a sudden the bank doesn’t like
the deal that it did way back when and it’s using
this as an opportunity to, you know renegotiate
or void previous agreed to terms.
(App. at 256.) Regardless, the Court reserved decision on the
Third Modified Plan.11
A confirmation hearing was held the following month.
The Bankruptcy Court held that “the issues of value, the use of
the rents [to pay down the secured claim,] and the step up in
payments [were] res judicata” because of the Consent Order
and Smith’s Second Modified Plan. (App. at 11.) It then
examined the plan’s feasibility. After analyzing Smith’s
financial schedules, the Court found that Smith had sufficient
income, after subtracting expenses, to make the payments
proposed in the Third Modified Plan. The Court also received
confirmation from the bankruptcy trustee that Smith was up to
date on her obligations in the bankruptcy proceeding. The
Court acknowledged that Smith might have difficulty making
the payments, saying “it’s going to be really close once the step
up [in payment] occurs to [$]2,010 per month[.]” (App. at 11.)
11 During the March 2021 hearing, the parties also
disputed issues regarding Smith’s delinquency in paying
property taxes and whether she needed to reimburse Freedom
for certain insurance premiums. The Bankruptcy Court
resolved those issues in a written order following the hearing,
and they are not relevant to this appeal.

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It also questioned, “who knows what’s going to happen with
the rent[?]” referring to the uncertainty of whether Smith
would receive rent from her tenants. (App. at 12.)
Nevertheless, the Court summarized why it would be
confirming the Third Modified Plan:
I don’t think anyone has a crystal ball, all we can
do is project. Certainly, there is a hope and
expectation that things might get back to some
normalcy soon. I have no idea when the eviction
moratorium is going to be lifted but I do know
that people are getting back to work.
…
I didn’t do the math, but at the end of the day,
[Freedom] is going to get [$]95,000 plus interest
at the percentage that was bargained for and was
going to get reimbursed for anything it went out
of pocket for and would be adequately protected
going forward by the payment of taxes and
insurance. That was the deal that was approved
and bargained for and then approved again last
summer[,] … the President extended the CARES
Act[,] … the debtor wants more time because
Covid has gone on longer than anticipated[,] and
the law gives the debtor the right to seek more
time[.] … So for those reasons, I’m inclined to
confirm the amended plan.
(App. at 13-14.)
The Bankruptcy Court then confirmed the Third
Modified Plan in a written order, stating that it “considered the

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objection filed by [Freedom] … and for reasons stated on the
record at the … confirmation hearing[,] creditor’s objection is
overruled[,]” and it again noted that “it appear[ed] that the
applicable provisions of the Bankruptcy Code have been
complied with[.]” (App. at 194.)
Freedom appealed the Bankruptcy Court’s order to the
District Court, which affirmed it, holding that all of the issues
that Freedom raised, including feasibility, were precluded by
res judicata.12 Freedom has now timely appealed to us.
II. DISCUSSION13
Freedom argues that, for five reasons, the District Court
erred in affirming the Bankruptcy Court’s confirmation of the
12 Notwithstanding the District Court’s holding that
Freedom’s feasibility argument was precluded by res judicata,
the Court stated in a footnote, without analysis, that “[t]he
feasibility issue … was properly determined in [Smith]’s favor
during the First, Second, and Third Modified Plan
confirmations.” (App. at 37 n.13.)
13 The Bankruptcy Court had jurisdiction under 28
U.S.C. §§ 1334(b), 157(a), and 157(b)(1). The District Court
had jurisdiction to review the Bankruptcy Court’s decision
under 28 U.S.C. § 158(a)(1). We have jurisdiction pursuant to
28 U.S.C. § 158(d)(1). We “‘stand in the shoes’ of the District
Court and ... review the Bankruptcy Court’s legal conclusions
de novo and its factual findings for clear error.” In re Glob.
Indus. Techs., Inc., 645 F.3d 201, 209 (3d Cir. 2011) (en banc)
(citations omitted).

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Third Modified Plan: (1) the District Court incorrectly applied
res judicata, (2) the Third Modified Plan unlawfully allowed
Smith to use the Property’s rental income to pay the secured
claim, (3) the cramdown value of the Property must be updated
to its current value, rather than the $95,000 value specified in
Smith’s previously confirmed bankruptcy plans, (4) the Third
Modified Plan violated the Bankruptcy Code by calling for
unequal monthly payments, and (5) the Third Modified Plan is
not feasible.
We agree with both the Bankruptcy Court and the
District Court that res judicata precludes Freedom’s objections
to Smith’s use of rental income to pay its secured claim, to the
valuation of the Property, and to the plan’s stepped-up payment
schedule. And, while the District Court should not have held
that feasibility was barred by res judicata, we conclude that the
Bankruptcy Court did not clearly err when it determined the
Third Modified Plan to be feasible.
A. Res Judicata Applies
The doctrine of res judicata “preclude[s] parties from
contesting matters that they have had a full and fair opportunity
to litigate[.]” Montana v. United States, 440 U.S. 147, 153
(1979). It “protect[s] against ‘the expense and vexation
attending multiple lawsuits, conserve[s] judicial resources, and
foster[s] reliance on judicial action by minimizing the
possibility of inconsistent decisions.’” Taylor v. Sturgell, 553
U.S. 880, 892 (2008) (cleaned up) (quoting Montana, 440 U.S.
at 153-54).
Section 1327(a) of the Bankruptcy Code effectively
codifies the res judicata doctrine as it relates to confirmed

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bankruptcy plans: “The provisions of a confirmed plan bind
the debtor and each creditor, whether or not the claim of such
creditor is provided for by the plan, and whether or not such
creditor has objected to, has accepted, or has rejected the plan.”
According to a leading treatise, “[t]he purpose of section
1327(a) is the same as the purpose served by the general
doctrine of res judicata.” 8 Collier on Bankruptcy
¶ 1327.02[1] (16th ed. 2023). “There must be finality to a
confirmation order so that all parties may rely upon it without
concern that actions that they may later take could be upset
because of a later change or revocation of the order.”14 Id.
Accordingly, “[c]onfirmation has preclusive effect,
foreclosing relitigation of ‘any issue actually litigated by the
parties and any issue necessarily determined by the
confirmation order.’” Bullard v. Blue Hills Bank, 575 U.S.
14 The protection provided by res judicata is of high
importance in the bankruptcy context:
It would hardly serve the purposes for which the
federal bankruptcy laws were intended to permit
a dissatisfied creditor to withhold its opinion of
the practicality and fairness of a debtor’s plan
until after that plan has been completed. At such
a late point in time, a meaningful modification of
the plan is difficult, if not impossible, and the
objecting creditor is in a position to circumvent
the protective shield provided debtors under
chapter 13.
8 Collier on Bankruptcy ¶ 1327.02[1] (16th ed. 2023)
(quoting In re Gregory, 19 B.R. 668, 670 (B.A.P. 9th
Cir. 1982), aff’d, 705 F.2d 1118 (9th Cir. 1983)).

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496, 502 (2015) (quoting 8 Collier on Bankruptcy
¶ 1327.02[1][c]). Further, confirmation “bars all challenges to
the plan that could have been raised.” In re Arctic Glacier Int’l,
Inc., 901 F.3d 162, 166 (3d Cir. 2018), as amended (Oct. 24,
2018) (emphasis added); In re Szostek, 886 F.2d 1405, 1408
(3d Cir. 1989) (“Under § 1327, a confirmation order is res
judicata as to all issues decided or which could have been
decided at the hearing on confirmation.”).
Notwithstanding a confirmed plan being res judicata,
§ 1329(a) of the Bankruptcy Code allows a debtor to modify a
confirmed plan, subject to judicial approval, in four ways: first,
to increase or reduce the amount of payments on claims of a
particular class; second, to extend or reduce the time for
making payments; third, to alter the payment amount to a
creditor to account for payment made to that creditor outside
of the confirmed plan; and fourth, subject to certain
requirements, to reduce plan payments by the actual amount
expended by the debtor to purchase health insurance for the
debtor and any of the debtor’s dependents. In addition, under
§ 1329(d) and, as noted earlier, Congress granted debtors the
opportunity to modify their plans if the COVID-19 pandemic
had caused them material financial hardship. § 1329(d)
(repealed 2022). Thus, reading § 1327(a) and § 1329 together,
a confirmed plan is res judicata except for when the debtor
seeks to modify a plan in one or more of the ways set forth in
§ 1329(a), or when, under § 1329(d), the debtor experienced a
material financial hardship caused by the COVID-19
pandemic. Cf. Astoria Fed. Sav. & Loan Ass’n v. Solimino,
501 U.S. 104, 108 (1991) (explaining, in an age discrimination
case, that the common law rules of claim and issue preclusion
“will apply except when a statutory purpose to the contrary is
evident” (internal quotation marks omitted)).

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Modifications under § 1329(a) or § 1329(d) are subject
to many of the requirements that the Bankruptcy Code places
on a debtor’s original bankruptcy plan.15 § 1329(b)(1);
§ 1329(d)(3) (repealed). And, if a modified plan is confirmed,
it “becomes the [operative] plan[.]” § 1329(b)(2). Thus,
“[o]nce the plan is modified, it is binding on the parties under
section 1327(a)[.]” 8 Collier on Bankruptcy ¶ 1329.06 (16th
ed. 2023). That includes conclusively determining whether the
modified plan complies with the Bankruptcy Code. Id.
¶ 1327.02[1][c] (“It is quite clear that the binding effect of a
chapter 13 plan extends to any issue actually litigated by the
parties and any issue necessarily determined by the
confirmation order, including whether the plan complies with
… the Bankruptcy Code.” (emphasis added)).
The question in this case is whether res judicata applies
to a confirmed plan when the debtor properly seeks to modify
plan terms under § 1329.16 Freedom argues that, once a plan
is modified, all of the components of the plan are open to
15 A modification should be approved only if it satisfies
§§ 1322(a), 1322(b), 1323(c), and 1325(a), which require a
Chapter 13 bankruptcy plan to meet various requirements prior
to confirmation. § 1329(b)(1); § 1329(d)(3) (repealed 2022).
16 Smith requested to modify her plan under § 1329(d).
Because the res judicata principles we analyze spring from case
law involving modifications under § 1329(a), and because
Freedom argues that § 1329(a) enforces its arguments, we
necessarily discuss that subsection. Moreover, the principles
we set forth in this case will remain applicable in this Circuit
to future cases that concern modifications under § 1329(a).

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challenge. In other words, Freedom says that all of the terms
of Smith’s plan can be reconsidered when she asks to modify
the plan under § 1329. As Freedom sees it, “[c]onsiderations
of finality and reliance … are absent” because Smith
“abandoned the prior confirmed plans and filed a Third
Modified Plan[.]” (Opening Br. at 13.)
Freedom contends that In re Conrad supports its
position. 604 B.R. 163 (Bankr. M.D. Pa. 2019). The
bankruptcy court in that case was tasked with determining
whether § 1327(a) invokes res judicata “in full,” even
preventing a change under § 1329(a), “in the absence of a
demonstrated change in circumstance.”17 Id. at 170 (emphasis
added). Relying on the harmonious-reading canon,18 the
bankruptcy court concluded that “the plain and unambiguous
17 We do not weigh in here on the circuit split regarding
whether a court must find a change in the debtor’s
circumstances before allowing a modification under § 1329(a).
Compare In re Murphy, 474 F.3d 143, 150 (4th Cir. 2007)
(requiring a “substantial and unanticipated change in [debtor’s]
post-confirmation financial condition” before a modification
will be granted), with In re Guillen, 972 F.3d 1221, 1228 (11th
Cir. 2020) (holding that no change is required), In re Meza, 467
F.3d 874, 877-78 (5th Cir. 2006) (same), Barbosa v. Solomon,
235 F.3d 31, 41 (1st Cir. 2000) (same), and In re Witkowski,
16 F.3d 739, 746 (7th Cir. 1994) (same).
18 See United States v. Bass, 404 U.S. 336, 344 (1971)
(recognizing that “courts should interpret a statute with an eye
to the surrounding statutory landscape and an ear for
harmonizing potentially discordant provisions”).

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language of § 1329 … clearly demonstrates that the common
law doctrine of res judicata does not apply to modifications.”
Id. at 175.
Based on that, Freedom asserts that res judicata does not
apply to any terms of a post-confirmation modified plan. But
it misreads In re Conrad’s holding. The court held that res
judicata does not apply to “post-confirmation modification[s]
sought pursuant to § 1329(a).” Id. at 173. It did not hold that
res judicata is inapplicable to the other terms of the debtor’s
previously confirmed plan. See id. at 173, 175.
Moreover, In re Conrad is a single bankruptcy court
decision. Other bankruptcy courts have found that a confirmed
plan is a res judicata bar “to issues related to the confirmed plan
that are unrelated to a proposed modification.” In re Loden,
572 B.R. 211, 219 (Bankr. W.D. Ark. 2017) (emphasis added).
For example, in Massachusetts Housing Finance Agency v.
Evora, a creditor argued that the unmodified amount of its
secured claim needed to be revalued after the debtors sought to
modify the payment terms under § 1329(a). 255 B.R. 336,
340-41 (D. Mass. 2000). The court was unpersuaded,
reasoning that “[t]here is nothing in the Bankruptcy Code nor
case law to suggest that the [creditor]’s secured claim must be,
or for that matter can be, redetermined[,]” that “section 1327
binds the [creditor] to the amount allowed in the confirmed
[p]lan[,]” and that “[t]he [Bankruptcy] Code does not provide
a second bite at the apple.” Id. at 343.
We agree with that reasoning. Allowing all the terms of
a previously confirmed plan to be reconsidered during a
modification proceeding would be “inconsistent with the
general policy favoring the finality of confirmed plans[.]” In

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re Szostek, 886 F.2d at 1414. If Freedom’s position were to
prevail, then overdue objections could be shoehorned into the
confirmation proceedings, even though unrelated to a debtor’s
proposed modification. Such a result would violate § 1327(a).
The binding effect of the plan should … bar
creditors from raising, at the time of a motion for
modification of the plan, issues that could have
been raised at the time the plan was originally
confirmed. If the word “bind” in section 1327(a)
is to have any meaning, it cannot be the case that
any provision of the plan may be challenged at a
later date.
8 Collier on Bankruptcy ¶ 1327.02[1][c] (16th ed. 2023).
Accordingly, we hold that res judicata prevents
creditors from challenging the terms of a previously confirmed
bankruptcy plan, except for those terms that the debtor seeks
to modify under § 1329 of the Bankruptcy Code. Thus,
Freedom is barred from raising any challenges to Smith’s Third
Modified Plan that could have been raised when the
Bankruptcy Court confirmed Smith’s First and Second
Modified Plans. With that foundation, and as discussed more
fully herein, we conclude that res judicata precludes Freedom’s
objections to Smith’s Third Modified Plan as to use of the
Property’s assigned rents to pay Freedom’s secured claim, to
the valuation of the Property, and to the plan’s stepped-up
payment schedule.

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1. Rental Income Issue
The applicability of res judicata settles the argument
over In re Jason Realty. In that case, we held that rents were
“unavailable for use, allocation or utilization” in the debtor’s
proposed bankruptcy plan because of an absolute assignment
agreement on the property in question. 59 F.3d at 431.
Bankruptcy courts in our Circuit have since disagreed about
the proper application of the precedent as it relates to paying
down secured claims. In In re Parks, the bankruptcy court held
that a debtor could pay down a secured claim using a property’s
rents, notwithstanding that the creditor had legal title to the
rents. No. 12-13045, 2012 WL 3561738, at *3 (Bankr. D.N.J.
Aug. 16, 2012). In contrast, in In re Surma, the court held that
a creditor was not required to use rents received from the
debtor’s property to reduce a secured claim. 504 B.R. 770, 774
(Bankr. D.N.J. 2014). We need not decide whether or how In
re Jason Realty applies in this case, however, because Freedom
consented to the In re Parks approach via the Consent Order.
The Consent Order stated that “all rental payments that
are held by [Smith] … shall be immediately paid to the Chapter
13 Trustee” and that “[o]n a go forward basis, [Smith] shall
tender all rental payments to the Chapter 13 Trustee.” (App. at
121.) Freedom does not dispute that, by consenting to have the
rents go directly to the Trustee, it agreed that the Property’s
rents would reduce its secured claim. But it argues that “there
can be no issue preclusion where [Freedom] never consented
to the Third Modified Plan and there is nothing in the [C]onsent
[O]rder resolving the objection to the First Modified Plan that
bars [Freedom]’s objection to [Smith] using or allocating the
assigned rents to fund the Third Modified Plan.” (Opening Br.
at 21.) Thus, once again, Freedom’s position is that the Third

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Modified Plan is a new plan and that the Consent Order should
have no impact on it.
That position is inconsistent with the res judicata
principles just discussed. The parties resolved Freedom’s use-
of-rents objection when they agreed to the In re Parks approach
in the Consent Order. Accordingly, the District Court correctly
concluded that Freedom’s objection about the use of the rental
income is foreclosed by res judicata.
2. Valuation Issue
Freedom argues that the Property’s value should have
been re-evaluated before confirmation of the Third Modified
Plan. It relies on § 506(a)(1), which provides, in relevant part,
that the value of property used as collateral “shall be
determined … in conjunction with any hearing on such
disposition or use or on a plan affecting such creditor’s
interest.” That, says Freedom, means “[t]he pertinent date for
valuation purposes is in conjunction with the confirmation
hearing on the Third Modified Plan[.]” (Opening Br. at 24.)
Once again, Freedom’s objection is barred by res
judicata. “[A] creditor may not after confirmation assert …
that the plan should give a higher valuation to a particular
property[.]” 8 Collier on Bankruptcy ¶ 1327.02[1][c] (16th ed.
2023); see also Evora, 255 B.R. at 343 (“While section
1329(a)(1) provides that a plan may be modified to increase or
reduce the amount of payments[,] it does not state that the plan
may be modified to increase or reduce the amount of the
secured claim.”).

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The cramdown value of the Property was listed as
$95,000 in Smith’s First Modified Plan. Freedom agreed to
that value at a confirmation hearing. At the hearing, Freedom
specifically told the bankruptcy court that it was not disputing
the $95,000 valuation. And, in the subsequent Consent Order,
the parties agreed that “[t]he Property has a fair market value
of $95,000.” (App. at 120.) Accordingly, Freedom has no
basis to complain about the property’s valuation now.
3. Unequal Payments Issue
So too for Freedom’s complaints about unequal
payments. The Bankruptcy Code states that any periodic
payments under a Chapter 13 bankruptcy plan are to “be in
equal monthly amounts[.]” § 1325(a)(5)(B)(iii)(I). Freedom
argues that the Third Modified Plan’s step-up payment
schedule violates that provision. But it did not raise that
objection to Smith’s Second Modified Plan, which included a
step-up payment schedule. Freedom tries to evade that
inconvenient fact by asserting that bankruptcy courts have a
statutory duty to ensure that a modified plan complies with the
Bankruptcy Code, even if a creditor does not raise an objection.
The principles that the Supreme Court set forth in United
Student Aid Funds, Inc. v. Espinosa prompt us to reject
Freedom’s argument. 559 U.S. 260 (2010).
In Espinosa, a creditor “filed a motion under Federal
Rule of Civil Procedure 60(b)(4) asking the Bankruptcy Court
to rule that its order confirming the plan was void because the
order was issued in violation of the [Bankruptcy] Code[.]” Id.
at 264. The creditor asserted that the confirmation discharged
a portion of student loan debt even though the bankruptcy court
did not first find undue hardship, which it was required to do.

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Id. at 263-65. Nevertheless, the Supreme Court upheld the
Bankruptcy Court’s confirmation, reasoning that “Rule
60(b)(4) strikes a balance between the need for finality of
judgments and the importance of ensuring that litigants have a
full and fair opportunity to litigate a dispute.” Id. at 276.
Because the creditor in Espinosa had actual notice of the plan
and its contents, the creditor could not “sleep on [its] rights.”
Id. at 275.
The Supreme Court explained that § 1325(a) “instructs
a bankruptcy court to confirm a plan only if the court finds,
inter alia, that the plan complies with the applicable provisions
of the [Bankruptcy] Code.” Id. at 277 (internal quotation
marks omitted). That is beyond dispute. “[T]he [Bankruptcy]
Code makes plain that bankruptcy courts have the authority –
indeed, the obligation – to direct a debtor to conform his plan
to the requirements” of the Bankruptcy Code. Id. Thus, it is a
“step too far” for a Bankruptcy Court to approve a plan
“despite its failure to comply with the [Bankruptcy] Code[,]”
only because there was no objection from a creditor. Id. at 276.
Nevertheless, as the Espinosa Court went on to explain, when
“a party is notified of a plan’s contents and fails to object to
confirmation of the plan before the time for appeal expires, that
party has been afforded a full and fair opportunity to litigate[.]”
Id.
Espinosa’s principles, although stated in the context of
a Rule 60(b)(4) dispute, are applicable here because the plan
modification context involves the same kind of finality
concerns. Finality is so critical in a bankruptcy proceeding that
we have called confirmation’s preclusive effect “a principle
that anchors bankruptcy law[.]” In re Arctic Glacier, 901 F.3d
at 166. Allowing a creditor to object to previously uncontested

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terms would inhibit a debtor’s ability to rely on and
expeditiously complete her plan. In fact, finality’s powerful
importance to bankruptcy confirmation and modification is
evident from Congress’s choice to codify the res judicata
doctrine in § 1327(a).
Applying Espinosa’s principles is consistent with our
own precedent favoring finality over a plan’s compliance with
the Bankruptcy Code. In In re Szostek, we were “faced … with
a clash between two seemingly divergent policies involved in
the Bankruptcy Code[,] … the policy of finality, as evidenced
by § 1327, … [and] § 1325(a)[,] which provides that a court
shall confirm a plan which meets the conditions listed in that
section.” 886 F.2d at 1408. We explained that, “[w]hile we do
not understate the importance of the obligation of the
bankruptcy court … to determine that a plan complies with the
… Bankruptcy Code prior to” plan confirmation, “we
nonetheless recognize that the affirmative obligation to object
to the [debtor’s] plan rested with [the creditor], not with the
bankruptcy court[.]” Id. at 1414. For that reason, we
concluded that, “after [a] plan is confirmed the policy favoring
the finality of confirmation is stronger than the bankruptcy
court’s … obligations to verify a plan’s compliance with the
[Bankruptcy] Code.” Id. at 1406.
Here, Smith included a stepped-up payment plan in the
Second Modified Plan. Freedom was on notice of the
provisions of that plan.19 Having received such notice,
19 The Second Modified Plan’s Certificate of Notice
shows that Freedom was sent notice by first class mail on

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Freedom was “obligated to take an active role in protecting [its]
claim[].” Id. at 1414. Yet, it did not object to the Second
Modified Plan. The Bankruptcy Court confirmed the plan,
stating that “it appear[ed] that the applicable provisions of the
Bankruptcy Code ha[d] been complied with[.]” (Supp. App. at
26.) Thus, the Court did not confirm the plan only because
there was no objection from a creditor. Whether the
Bankruptcy Court was correct in its ruling is not what matters
at this juncture. Freedom’s objection is barred by res judicata,
even if such a payment plan violated the Bankruptcy Code.20
B. Feasibility
Before a bankruptcy court confirms a Chapter 13 plan,
the feasibility requirement stated in § 1325(a)(6) requires the
court to determine whether “the debtor will be able to make all
payments under the plan and to comply with the plan[.]”
Freedom argues that the Third Modified Plan is not feasible
and, thus, should not have been confirmed. The District Court
concluded that Freedom’s feasibility argument was barred by
June 17, 2020. Freedom does not dispute that it received such
notice.
20 The parties dispute whether the scope of
§ 1325(a)(5)(B)(iii)(I) extends to rental property or to stepped-
up payment plans that do not have a balloon payment at the end
of the plan’s term. We do not reach the issue of whether
Smith’s stepped-up payment plan violates
§ 1325(a)(5)(B)(iii)(I) or any other provision of the
Bankruptcy Code. For today’s purposes, it is sufficient to say
that Freedom’s unequal payment objection is foreclosed by res
judicata.

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res judicata. But, as the parties agree, Smith’s modifications
to the payment schedule in the Third Modified Plan required
feasibility to be considered anew. Otherwise, bankruptcy
courts could not deny proposed modifications, like the change
to the payment schedule in this case, that would make a plan
infeasible but would otherwise comply with the Bankruptcy
Code.21 We will therefore address the merits of Freedom’s
feasibility argument, after setting forth the applicable standard
of review.
1. Standard of Review
We have not written precedentially on the appropriate
standard of review for a feasibility determination. The District
Court said that a feasibility determination is reviewed for abuse
of discretion.22 Feasibility, however, is a question of fact and
must be reviewed for clear error.
“Facts include past events, but they are not restricted to
historical events.” Kaplun v. Att’y Gen., 602 F.3d 260, 269 (3d
Cir. 2010). “A finding of fact may also stem from an
assessment of what is expected to occur in the future[,]” id., so
“an assessment of the probability of a future event should
generally be categorized as a finding of fact,” In re Fosamax
(Alendronate Sodium) Prods. Liab. Litig., 852 F.3d 268, 289
(3d Cir. 2017), vacated and remanded on other grounds sub
21 Freedom objected to the feasibility of the First
Modified Plan, but those objections were resolved in the
Consent Order.
22 The District Court did not cite to any authority when
it stated the standard of review was for abuse of discretion.

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nom. Merck Sharp & Dohme Corp. v. Albrecht, 587 U.S. 299
(2019). “Of course, to call a likelihood ‘fact’ is not to say that
the likely outcome will necessarily occur, but the likelihood
itself remains a factual finding that can be made ex ante the
actual outcome.” Kaplun, 602 F.3d at 269-70.
A feasibility determination is a prototypical example of
a forward-looking factual finding. The bankruptcy court must
forecast whether the debtor will make all plan payments over
the duration of the plan’s term. Thus, a bankruptcy court’s
feasibility determination is a question of fact to be reviewed
for clear error. In so holding, we join several of our sister
circuits that have said as much when considering the
appropriate standard of review of a feasibility determination.
See In re DBSD N. Am., Inc., 634 F.3d 79, 106 (2d Cir. 2011);
In re Save Our Springs (S.O.S.) All., Inc., 632 F.3d 168, 172
(5th Cir. 2011); In re Monnier Bros., 755 F.2d 1336, 1341 (8th
Cir. 1985); In re Gentry, 807 F.3d 1222, 1225 (10th Cir. 2015).
But see In re Sunnyslope Hous. Ltd. P’ship, 859 F.3d 637, 647
(9th Cir. 2017), as amended (June 23, 2017) (“A bankruptcy
court’s finding of feasibility is reviewed for abuse of
discretion.”).
2. Application of Clear Error Standard
Freedom argues that the Bankruptcy Court’s remarks
during the Third Modified Plan’s confirmation hearing,
including “who knows what’s going to happen with the rent[,]”
“I have no idea when the eviction moratorium is going to be
lifted[,]” and “I didn’t do the math,” (App. at 12-13), “show
that there was [] no serious analysis or evidence upon which a
factual determination of feasibility was made.” (Opening Br.
at 28-29.)

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Although the Bankruptcy Court acknowledged the
uncertainty of the impact of COVID-19 in the future when it
made those statements, it did not clearly err in determining that
Smith would be able to meet her payment obligations under the
Third Modified Plan. The Court analyzed Smith’s bankruptcy
petition, which showed that she had a monthly income of
$6,164 and monthly expenses of $4,111, leaving an excess of
$2,053. Because the Third Modified Plan called for payments
of $1,500 per month for eight months, and then $2,010 per
month for the remaining fifty-seven months, the Court
calculated that Smith would have sufficient income, after
expenses, to make the payments. So, the Bankruptcy Court did
do the math.23 Furthermore, it verified with the bankruptcy
trustee that Smith was current with all of her existing
obligations under the bankruptcy plan.
For those reasons, the Bankruptcy Court’s factual
finding that the Third Modified Plan was feasible was not
“completely devoid of a credible evidentiary basis[,]” and
certainly had a “rational relationship to the supporting data.”
Shire US Inc. v. Barr Lab’ys Inc., 329 F.3d 348, 352 (3d Cir.
2003). In short, the Bankruptcy Court did not clearly err in its
feasibility determination.
23 The Bankruptcy Judge’s statement, “I didn’t do the
math,” was not in regard to Smith’s ability to make plan
payments but was rather about Freedom receiving the present
value of the Property over the term of the Third Modified Plan.
(App. at 13.)

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III. CONCLUSION
For the foregoing reasons, we will affirm the District
Court’s affirmance of the Bankruptcy Court’s order that
confirmed Smith’s Third Modified Plan.

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