IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA In re FRANK and SUSAN TODD,                                       No. 1-84-00998      Debtors. ______________________/ Memorandum of Decision      The debtors' Chapter 13 plan, which was confirmed in 1984, provides for the surrender of a parcel of real property to its three lienholders "in full settlement of all obligations." One of the lienholders was the Internal Revenue Service; the debtors now object to its unsecured claim on the grounds that the plan dealt with the claim in full by surrendering the property. The IRS argues that the property was not worth enough to cover its claim, and it therefore has an allowable unsecured claim for the deficiency.      The plan purports to do two things. First, it eliminates the secured claim by surrender of the security; this is permissible pursuant to section 1325(a)(5)(C) of the Bankruptcy Code and the IRS concedes that any secured claim it had was extinguished by the surrender. Second, however, the plan limits the unsecured claim of the IRS by providing that surrender was a satisfaction of all obligations, and not merely the secured claim. It is the latter effect which is troublesome.      The plan is clearly improper. It has the effect of disallowing the unsecured claim without compliance with Bankruptcy Rule 3007, and denies the IRS the right to have the value of its lien fixed by adversary proceeding pursuant to Rule 7001(2). However, the issue here is not whether the plan should have been confirmed but rather whether, having been confirmed, it is binding as to the IRS, which received proper notice of it and did not object to its confirmation.      Section 1327(a) of the Code provides that the provisions of a confirmed plan bind each creditor, whether or not the claim of such creditor is provided for by the plan. The order confirming the plan is given res judicata effect as to any issue which could have been raised at the time, just like any other judgment. In re Lewis (Bkrtcy.D.Idaho 1981) 8 B.R. 132, 137. Absent affirmative action at or prior to the confirmation hearing, the IRS, like any other creditor, has effectively waived any right to object to its treatment under the plan. In re Hebert (Bkrtcy.W.D.La.1986) 61 B.R. 44, 47. See also In re Gurwitch (Bkrtcy.S.D.Fla.1984) 37 B.R. 513, 515.      A review of the file indicates that the IRS claim was not timely filed in any event, and is disallowable for that reason alone. However, since the Court finds that the terms of the plan are binding on the IRS it need not determine whether its claim is barred on timeliness grounds.      For the foregoing reasons, the debtors' objection to claim #5 of the Internal Revenue Service will be sustained. Pursuant to Bankruptcy Rule 9021, counsel for the debtors shall submit an appropriate form of order.
Dated: June 2, 1988                                                                              _________________________                                                                                                                      Alan Jaroslovsky                                                                                                                      U.S. Bankruptcy