In re Bryan Matthew DAVIS; Carla Denise Bracey-Davis; Marquita E. Moore, Debtors. Timothy P. Branigan, Plaintiff-Appellant, and TD Bank, N.A., Plaintiff, v. Bryan Matthew Davis; Carla Denise Bracey-Davis; Marquita E. Moore, Defendants-Appellees, 716 F.3d 331

Affirmed by published opinion. Judge DIAZ wrote the majority opinion, in which Judge NIEMEYER joined. Judge KEENAN wrote a dissenting opinion. OPINION DIAZ, Circuit Judge: In this case, a

Chapter 13 bankruptcy trustee, Timothy Branigan (the “Trustee”), challenges confirmation orders, entered by the bankruptcy court and affirmed by the district court, stripping off junior liens against debtors’ residences. The Trustee argues that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) creates a per se rule barring lien-stripping in so-called “Chapter 20” cases.

BAPCPA, however, does not bar the orders entered by the bankruptcy court, and the stripping off of valueless liens- — that is a lien secured by collateral without a single penny of value to support it — is otherwise consistent with the Bankruptcy Code. We therefore affirm. I. We begin with a general overview of the relevant statutory framework, and then summarize the procedural history of the appeals. A.

Chapter 7 of the Bankruptcy Code governs liquidation of a bankruptcy estate and “offer[s] debtors limited relief in return for the relinquishment of their nonexempt assets for ratable distribution among creditors.” Collier on Bankruptcy ¶ 1300.02 (16th ed. 2012). For an individual debtor, this process involves the collection, liquidation, and distribution of nonexempt property. See id. ¶ 700.01. The process culminates in a discharge, which eliminates personal liability for debts not excepted from discharge, but leaves intact in rem claims. Johnson v.

Home State Bank, 501 U.S. 78, 84, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991). In addition, the discharge serves as an injunction against efforts to collect discharged debts, unless the debtor has reaffirmed them. See Collier on Bankruptcy ¶ 700.05.

Chapter 13 of the Bankruptcy Code, “Adjustment of Debts of an Individual with Regular Income,” on the other hand, is primarily focused on a plan of reorganization rather than liquidation. Unlike

Chapter 7,

Chapter 13 permits the debtor to “deal comprehensively with both unsecured and secured debts,” particularly large secured claims. Id. ¶¶ 1300.01, 1300.02. In a

Chapter 13 case, a debtor may propose a plan for paying creditors primarily out of the debtor’s income. Thus, creditors receive ratable recoveries from future income, a protection not available to creditors in liquidation proceedings. The

Chapter 13 plan “can provide for the payment of secured claims to permit the debtor to retain collateral for those claims and may provide for the cure of arrearages on long-term debts, such as home mortgages.” Id. ¶ 1300.01. In addition, a

Chapter 13 discharge excepts fewer types of debt than a

Chapter 7 discharge. Id. Congress enacted BAPCPA in 2005 “to correct perceived abuses of the bankruptcy system.” Milavetz, Gallop & Milavetz, P.A. v. United States, 559 U.S. 229, 130 S.Ct. 1324, 1329, 176 L.Ed.2d 79 (2010). An overarching goal was to “help ensure that debtors who can pay creditors do pay them.” Ransom v. FIA Card Servs., — U.S. -, 131 S.Ct. 716, 721, 178 L.Ed.2d 603 (2011). To that end, BAPCPA altered the

Chapter 13 regime by adding new requirements to make payments to holders of domestic support obligations, requirements to file prepetition tax returns, changes in maximum plan length, protection for pension contributions and pension loan repayments, requirements for scheduling of the confirmation hearing, requirements for greater payments on many secured debts, new methods of calculating disposable income under

section 1325(b), new requirements for pre-confirmation payments, new requirements to obtain a discharge, including postpetition credit education in addition to the prepetition credit counseling briefing required for all debtors, new exceptions to the

chapter 13 discharge, new limits on obtaining a

chapter 13 discharge after a prior bankruptcy discharge and new provisions permitting plan modification to obtain health insurance. Collier on Bankruptcy ¶ 1300.36[10] (footnotes omitted). Relevant to this appeal, BAPCPA provides additional protection for secured creditors. For example, creditors retain allowed secured claims until either payment of the underlying debt pursuant to nonbankruptcy law or discharge. Moreover, if a

Chapter 13 case is dismissed or converted without completion of the bankruptcy plan, the holder of an allowed secured claim retains the lien to the extent recognized by applicable nonbank-ruptcy law. See 11 U.S.C. § 1325(a)(5)(B). BAPCPA further provides that a debtor may not receive a

Chapter 13 discharge within four years of filing a

Chapter 7 petition that results in a discharge. 11 U.S.C. § 1328(f)(1). Despite the discharge limitations imposed by BAPCPA, a

Chapter 7 debtor may still wish to seek later relief under

Chapter 13 “in order to cure a default through a plan, or simply to seek protection of the bankruptcy court and the automatic stay while paying debts in an orderly fashion through a plan.” Collier on Bankruptcy ¶ 1328.06[1]. B. On June 7, 2008, Bryan Matthew Davis and Carla Denise Bracey-Davis filed a

Chapter 7 bankruptcy petition with the United States Bankruptcy Court for the District of Maryland. At the time, they ran a large monthly deficit, and Mrs. Bra-cey-Davis was unemployed. The Davises sought to discharge their unsecured debt, strip down liens on their primary residence and a rental property, and obtain a loan modification to address mortgage arrears on the properties. After learning that lien-stripping was prohibited under

Chapter 7, they nevertheless chose to proceed with their

Chapter 7 case because they were ineligible to convert to a

Chapter 13 case. They hoped, however, that their mortgage lenders would approve their pending loan modification applications. On September 17, 2008, they received a

Chapter 7 discharge, which absolved them of personal liability on nonexempt debts but left their mortgage debt unchanged. Thereafter, the Davises obtained gainful employment. They still had no savings, however, and large mortgage arrears, which they could not bring current, accrued. On September 4, 2009, they filed a

Chapter 13 petition to reorganize their debts, repay mortgage arrears and consumer debt, and strip off junior liens. At the time, their principal home was valued at $270,000, and was encumbered by a first-priority lien with a balance of $275,373.59, a second-priority lien with a balance of $115,138.58, and a third-priority lien with a balance of $117,603.31. On March 30, 2011, Bankruptcy Judge Wendelin I. Lipp granted the Davises’ Amended Motion to Avoid Lien, which sought to strip off the third-priority lien on the Davises’ home upon completion of the

Chapter 13 plan. Judge Lipp reasoned that BAPCPA did not create a per se rule against lien-stripping in the

Chapter 20 context. The court proceeded to consider, as it always does in any

Chapter 13 case, whether the debtors filed their petition in good faith. Finding that the Davises had acted in good faith, Judge Lipp entered an order stripping off the third-priority lien on the Davises’ home. J.A. 65-66. Judge Lipp subsequently entered orders stripping off the second and third hens on the Davises’ rental property and confirming the Davises’ bankruptcy plan. J.A. 67-72. Both the Trustee and the holder of the third-priority lien against the Davises’ home, TD Bank, N.A., appealed to the district court, which affirmed. c. Marquita Moore filed a

Chapter 7 petition on February 1, 2010, for which she received a discharge on October 20, 2010. One week later, Moore filed a

Chapter 13 petition. Moore sought to pay an Internal Revenue Service priority claim and strip off a second lien, which had no value, on her principal home. The Trustee never contended that Moore filed her

Chapter 13 petition in bad faith. On January 5, 2011, the bankruptcy court granted Moore’s motion to strip off the second lien. Subsequently, the bankruptcy court confirmed Moore’s plan and adopted Judge Lipp’s rationale to overrule the Trustee’s objection to the lien-stripping component of the confirmation order. The Trustee appealed, and the district court affirmed. We have jurisdiction to consider these appeals under 28 U.S.C. § 158(d). II. The question presented is whether BAPCPA precludes the stripping off of valueless liens by

Chapter 20 debtors ineligible for a discharge. In a bankruptcy appeal, “we review the district eourt[’s] decision de novo, effectively standing in its shoes to consider directly the findings of fact and conclusions of law by the bankruptcy court.” Morris v. Quigley (In re Quigley), 673 F.3d 269, 271 (4th Cir.2012) (internal quotations omitted). “[W]e review legal conclusions by the bankruptcy court de novo and may overturn its factual determinations only upon a showing of clear error.” Id. (internal quotations omitted). A. Before reaching the issue raised by the Trustee, we consider the threshold question of whether a bankruptcy court may strip off a valueless lien in a typical

Chapter 13 proceeding. The answer, in the view of those circuits to have considered the question, is that a bankruptcy court may grant such relief. See Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir.2002); Lane v. W. Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir.2002); Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2d Cir.2001); Tanner v. FirstPlus Fin. (In re Tanner), 217 F.3d 1357 (11th Cir.2000); Bartee v. Tara Colony Homeovmers Ass’n (In re Bartee), 212 F.3d 277 (5th Cir.2000); McDonald v. Master Fin. (In re McDonald), 205 F.3d 606 (3d Cir.2000).

We too have affirmed, albeit in unpublished opinions, the stripping off of valueless liens against principal residences in

Chapter 13 cases. See First Mariner Bank v. Johnson (In re Johnson), 407 Fed.Appx. 713 (4th Cir.2011); Suntrust Bank v. Millard (In re Millard), 404 Fed.Appx. 804 (4th Cir.2010). To exercise this authority, bankruptcy courts rely on sections 506 and 1322(

b) of the Bankruptcy Code. First, courts apply the valuation procedure in

section 506(a): An allowed claim of a creditor secured by a lien on property in which the estate has an interest ... is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property ... and is an unsecured claim to the extent that the value of such creditor’s interest ... is less than the amount of such allowed claim. In other words, a claim’s status as secured or unsecured depends on the value of the collateral. Next, courts look to

section 1322(b)(2), which provides that, subject to certain exceptions not relevant here, a

Chapter 13 bankruptcy plan may modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims[.] Applying this framework, a completely valueless lien is classified as an unsecured claim under

section 506(a). Only then does a bankruptcy court consider the rights of lienholders under

section 1322, which affords protection to holders of secured claims against principal residences.

Section 1322, however, expressly permits modification of the rights of unsecured creditors. The end result is that

section 506(a), which classifies valueless liens as unsecured claims, operates with

section 1322(b)(2) to permit a bankruptcy court, in a

Chapter 13 case, to strip off a lien against a primary residence with no value. See, e.g., Zimmer, 313 F.3d at 1226-27; Lane, 280 F.3d at 668. We recognize that the Supreme Court has interpreted

section 1322(b)(2) as precluding a “strip down” of a partially secured lien against a principal residence in

Chapter 13. That is, a debtor may not reduce an underwater mortgage to the value of the principal residence because partially secured lien-holders are “holders of secured claims” protected against lien modification. Nobelman v. Am. Sav. Bank, 508 U.S. 324, 331-32, 113 S.Ct. 2106, 124 L.Ed.2d 228 (1993). Nobelman notwithstanding, however, courts have generally permitted a “strip off’ of completely valueless liens in

Chapter 13 cases because, unlike the lienholder in Nobelman, holders of such liens are not “holders of secured claims” and, therefore, are not entitled to the protection of

section 1322(b)(2). We see no reason to depart from the conclusion of our sister circuits, as well as our own unpublished dispositions, on this issue. Accordingly, we hold that the Bankruptcy Code permits the stripping off of valueless liens in

Chapter 13 proceedings. B. We are left with the question raised in this appeal: whether the 2005 enactment of BAPCPA precludes the stripping off of valueless liens by

Chapter 20 debtors. Under BAPCPA, after filing for

Chapter 7 relief and receiving a discharge, a debtor is ineligible for a discharge in a

Chapter 13 proceeding for four years. 11 U.S.C. § 1328(f)(1). As previously noted, following a

Chapter 7 discharge, creditors may not seek a personal judgment against the debtor but may pursue recovery against the property securing the debt. Notwithstanding the bar on discharges imposed by BAPCPA, we have held that a debtor may still take advantage of the protections offered by

Chapter 13 short of a discharge. See Branigan v. Bateman (In re Bateman), 515 F.3d 272, 283 (4th Cir.2008). In doing so, we said that “it is the ability to reorganize one’s financial life and pay off debts, not the ability to receive a discharge, that is the debtor’s ‘holy grail.’ ” Id. We recognized that a debtor might pursue this course “to cure a mortgage, deal with other secured debts, or simply pay debts under a plan with the protection of the automatic stay.” Id. (internal quotations omitted). Bankruptcy courts are split on whether a debtor may strip off liens in a

Chapter 20 case. Compare In re Fisette, 455 B.R. 177 (8th Cir. BAP 2011) (concluding a

Chapter 20 debtor may strip off liens), and In re Dang, 467 B.R. 227 (Bankr.M.D.Fla.2012) (same), and In re Okosisi, 451 B.R. 90 (Bankr.D.Nev.2011) (same), and In re Tran, 431 B.R. 230, 237 (Bankr.N.D.Cal.2010) (same), with In re Gerardin, 447 B.R. 342 (Bankr.S.D.Fla.2011) (holding that

Chapter 20 debtors could not permanently strip off wholly unsecured junior liens), and In re Victorio, 454 B.R. 759 (Bankr.S.D.Cal.2011) (same), and In re Fenn, 428 B.R. 494 (Bankr.N.D.Ill.2010) (same), and In re Jarvis, 390 B.R. 600 (Bankr.C.D.Ill.2008) (same). The Trustee contends that lien-stripping is contingent on a debtor’s ability to receive a

Chapter 13 discharge. In support of this proposition, the Trustee points first to

section 1325(a)(5)(B)(i)(

I) of the Bankruptcy Code, which provides that a holder of a secured lien retains the lien until either the underlying debt is paid or there is a discharge. Because the debtors here are not eligible for a discharge, the Trustee contends that the liens must survive until paid in full. Next, the Trustee relies on

section 1325(a)(5)(B)(i)(II) — which reinstates liens if the case is dismissed or converted without completion of the plan— for the proposition that Congress intended to preserve liens absent a discharge. See also 11 U.S.C. §§ 349(b)(1)(C) (providing that any lien stripped under

section 506(

d) is reinstated upon dismissal), 348(f)(l)(C)(i) (providing that a creditor holding security shall continue to be secured by that security unless the claims have been paid in full as of the date of conversion, notwithstanding any valuation). Finally, the Trustee contends that, under

section 524, a discharge operates as an injunction against any action to enforce a debt. Absent this injunction, which is precluded in the

Chapter 20 context by

section 1328(f), the Trustee says there is no mechanism to enforce the stripping off of a lien. The Trustee also urges that Supreme Court precedent reinforces his statutory argument. Specifically, the Trustee directs our attention to Dewsnup v. Timm, 502 U.S. 410, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992), where, says the Trustee, petitioners were not allowed, in a

Chapter 7 case, to strip down junior liens on claims that had been fully allowed pursuant to

section 502, despite the fact that there was no equity in the collateral. In Dewsnup, the Court considered whether

section 506(d) (providing that “[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void”) permits a

Chapter 7 debtor to strip down a creditor’s lien to the value of the collateral. See 502 U.S. at 411-12, 112 S.Ct. 773. The Court held that “ § 506(

d) does not allow petitioner to ‘strip down’ [a creditor’s] lien, because [the creditor’s] claim is secured by a lien and has been fully allowed.” Id. at 417, 112 S.Ct. 773. The Court noted that

section 506 “and its relationship to other provisions of [the Bankruptcy] Code do embrace some ambiguities.” Id. at 416, 112 S.Ct. 773. Given that ambiguity, the Court declined to give “allowed secured claim” the same meaning in

section 506(

d) as in

section 506(

a) and concluded that

section 506 by itself is insufficient to effectuate lien-stripping. The Trustee contends that the debtors are attempting an end run around Dewsn-up ’s prohibition of

Chapter 7 lien-stripping and that construing sections 1325(a)(5) and 1328(

f) to bar lien-stripping by

Chapter 20 debtors is consistent with BAPCPA’s goal of rebalancing the scales in favor of creditors. The debtors respond that because BAPCPA left intact the operative lien-stripping provisions of the Code, Congress did not intend to alter the ability of bankruptcy courts to enter lien-stripping orders in

Chapter 13 cases. And this is so regardless of the availability of a discharge. A discharge, the debtors say, extinguishes only in personam liability. See Johnson, 501 U.S. at 84, 111 S.Ct. 2150 (“[A] bankruptcy discharge extinguishes only one mode of enforcing a claim — namely, an action against the debtor in personam— while leaving intact another — namely, an action against the debtor in rem.”). Because the debtors here have already discharged their in personam liability in the prior

Chapter 7 proceedings, they have no need for a discharge with respect to the liens. The debtors also say that once the bankruptcy court has entered an order stripping off liens, no provision of the Bankruptcy Code reinstates the liens once the plan is completed and the case closed. Thus, “the provisions of the plan become permanent [upon completion of the plan], and [a lien-stripping order] is, similarly, permanent.” Olcosisi, 451 B.R. at 100. The debtors also contend that the provisions relied on by the Trustee are inapplicable. Specifically,

section 1325(a)(5), which provides generally for the treatment of allowed secured claims, comes into play only after the claims have been valued under

section 506(a), and is therefore irrelevant to the unsecured claims at issue here. Similarly, the debtors say that the Trustee improperly relies on other provisions of the Code that apply when a case is dismissed or converted without completion of the plan, such as sections 1325(a)(5)(B)(i)(II), 349(b)(1)(C), and 348(f)(l)(C)(i). In a successful

Chapter 20 case, on the other hand, the plan is completed, and the case is closed administratively without dismissal or conversion. C. Although the Trustee’s arguments are not insubstantial, we conclude that the Bankruptcy Code permits the result advanced by the debtors. The starting point for our analysis is Bateman, where we held that a

Chapter 13 debtor need not be eligible for a discharge in order to take advantage of the protections afforded by

Chapter 13. 515 F.3d at 283. Therefore, if the Bankruptcy Code provides a mechanism for stripping off worthless liens absent a discharge, a debtor may avail himself of that relief. We are satisfied that the Bankruptcy Code does provide such a mechanism. To begin with, the debtors’ junior liens in this case are worthless and, therefore, unsecured claims under

section 506(a). While Dewsnup admittedly requires that

section 506 operate in tandem with another statutory provision to effectuate lien-stripping,

section 506 has always operated in tandem with

section 1322(

b) to strip liens in

Chapter 13 cases. BAPCPA did not amend sections 506 or 1322(b), so the analysis permitting lien-stripping in

Chapter 20 cases is no different than that in any other

Chapter 13 case. Courts concluding to the contrary rely on

section 1325(a)(5). See, e.g., Gerardin, 447 B.R. at 346-48. But this provision applies only to an “allowed secured claim.” We agree with the debtors that a court must first value the claim under

section 506(

a) before proceeding further. Because the liens in these cases have no value, they are wholly unsecured claims, which leaves no role in the analysis for

section 1325(a)(5). Relying on Gerardin, among other cases, the Trustee argues that any hen secured by real property, even if worthless, is a secured claim for purposes of

section 1325. We, however, cannot square Gerardin and similar cases with the Supreme Court’s opinion in Nobelman, which valued the claim in that case under

section 506 before analyzing whether

section 1322 barred its modification. See 508 U.S. at 328, 113 S.Ct. 2106. If, as the Trustee insists, it were not necessary to first value the claim pursuant to

section 506(a), the analysis in Nobelman would be superfluous. See id. Rather, the Court could have simply held that, because the lien was secured by a primary residence, it falls within the anti-modification provision of

section 1322(b), regardless of the value of the collateral. We do not take lightly the Trustee’s assertion that permitting lien-stripping in

Chapter 20 cases creates an end run around Dewsnup’s bar to such relief in

Chapter 7 cases. But the Trustee’s premise ignores the equally reasonable view that Congress intended to leave intact the normal

Chapter 13 lien-stripping regime where a debtor could otherwise satisfy the requirements for filing a

Chapter 20 case. In that regard, the law already provides a mechanism for preventing abuse of the bankruptcy process without the creation of a per se rule against lien-stripping, as bankruptcy courts are bound to carefully scrutinize filings for good faith and dismiss cases where the debtor attempts to use a

Chapter 20 procedure solely to strip off a lien. Likewise, creditors are also protected by

section 349(b)(1)(C), which provides that a lien springs back if the case is dismissed. Finally, the unavailability of a discharge in the

Chapter 20 context is not determinative. It bears emphasizing that a bankruptcy discharge alters in person-am rights, precluding an action against the debtor for personal liability. Johnson, 501 U.S. at 84, 111 S.Ct. 2150. In contrast, the lien-stripping orders at issue here alter in rem liability where the creditor’s lien has no value. For that reason we are persuaded that, upon completion of the plan, its provisions — including any orders stripping off valueless liens — become permanent, even in the absence of a discharge.

Our good colleague in dissent says that our holding creates a situation where unsecured creditors are treated more favorably than secured creditors. However, this conclusion does not acknowledge the distinction between in rem and in personam liability. While the dissent correctly notes that an unsecured creditor’s in personam claim survives a

Chapter 20 proceeding because of the absence of a discharge, the same is true for any in personam claim a secured creditor may have. All in person-am claims survive a

Chapter 20 proceeding, and creditors are treated equally in that respect. We simply hold today that the bankruptcy court may strip the in rem component of a valueless lien. It is an apples-to-oranges comparison to posit that unsecured creditors, who have no in rem rights at all, are treated more favorably because a limited class of secured creditors are stripped of their in rem claims. Our dissenting colleague also overlooks the bankruptcy court’s duty to dismiss

Chapter 20 cases filed in bad faith, which we think alleviates much of the concern with lien stripping in this context. III. In sum, although BAPCPA clearly tipped the bankruptcy scales back in the direction of creditors, we find nothing in the Act to suggest that Congress intended to bar lien-stripping of worthless liens in

Chapter 20 proceedings. This, we conclude, is the most sensible reading of a complex statutory scheme that admittedly “abounds with arbitrary distinctions.” Lane, 280 F.3d at 669. We therefore affirm the judgment of the district court. AFFIRMED. . “Chapter 20” is a colloquial reference to a

Chapter 13 bankruptcy filed within four years of a

Chapter 7 bankruptcy that concluded with a discharge. . "In a 'strip off' the entire lien is removed, whereas in a 'strip down’ a lien is bifurcated into secured and unsecured claims with only the unsecured claim component being removed.” Johnson v. Asset Mgmt. Group, 226 B.R. 364, 365 n. 3 (D.Md.1998). . The district court consolidated these cases before affirming both without a written opinion. . All

section references, unless otherwise indicated, are to the Bankruptcy Code, Title 11 of the United States Code.