SLW Capital, LLC v. Mansaray-Ruffin

OPINION OF THE COURT

This appeal requires us to determine whether the debtor in a Chapter 13 bankruptcy case successfully invalidated a lien on her property by providing for it as an unsecured claim in her confirmed plan, without initiating an adversary proceeding as required by the Federal Rules of Bankruptcy Procedure. We agree with the lienholder, as well as with the Bankruptcy Court and the District Court, that the answer to this question is no. Accordingly, we will AFFIRM.

I.

On November 26, 1996, Janica Mansaray-Ruffin borrowed $25,600 from United Companies Lending Corporation (“United”) and, as collateral for that loan, executed a mortgage in favor of United against her primary residence — 5101 West Girard Avenue, Philadelphia, PA 19131. The mortgage was recorded as a first lien against the property. United later assigned the mortgage to EMC Mortgage Corporation (“EMC”), and, after the instant appeal was filed, EMC assigned the mortgage to SLW Capital, LLC (“SLW”), making SLW the proper appellee.

On February 27, 2002, Mansaray-Ruffin’s counsel sent a letter to EMC, claiming that United had committed a number of violations of the Truth-in-Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., in connection with the initial execution of the mortgage. Counsel made clear in the letter that, based on these violations, Mansaray-Ruffin was asserting “a right to rescind the transaction, pursuant to 15 U.S.C. § 1635 of TILA, which she hereby exercises.” (App.30-31.) It does not appear that EMC ever responded to this letter. ■

On August 13, 2002, Mansaray-Ruffin filed a voluntary Chapter 13 bankruptcy petition and a Chapter 13 reorganization plan with the United States Bankruptcy Court for the Eastern District of Pennsylvania and, in the accompanying schedules, listed EMC as a disputed secured creditor. The plan included the following regarding EMC:

In addition, the Debtors shall file adversary proceedings seeking to rescind or otherwise avoid in whole or in part the secured claims arising from the mortgagee ] held against her residential realty by EMC.... However, the Debtor does anticipate making payments on the first and larger of these loans directly to EMC outside of the Plan to protect her interests in the event that the proceedings are not entirely successful.

(Original Chapter 13 Plan of Debtor.) On August 31, 2002, EMC was mailed notice of Mansaray-Ruffin’s plan, including the deadline for filing a proof of claim. EMC did not file a proof of claim — either before or after the December 31, 2002 bar date.

On February 19, 2003, Mansaray-Ruffin filed an amended plan, a copy of which she had mailed to EMC the day before. The amended plan replaced the above-quoted language with the following:

The Debtor planned to file a further adversary proceeding to avoid in whole *233or in part the secured claim allegedly arising from the first mortgage held against her residential realty by [EMC]. However EMC has not filed a proof of claim in this bankruptcy case. The Debtor will therefore file a proof of claim in the amount of $1000 on behalf of EMC, and will resort to an adversary proceeding against EMC only in the event that EMC successfully amends that claim and asserts a larger or a secured claim. The Debtor has been paying the regular mortgage payments to EMC outside of the plan in the event that her challenge of the claim of EMC would not be entirely successful. However, upon confirmation of this plan, in which the claim of EMC will be fixed as an unsecured claim in the amount of $1000 unless it is able to object to this claim, the Debtor will cease making payments to EMC, and EMC will be obliged to satisfy its mortgage against the Debt- or’s home upon the discharge of its debt as filed or allowed.

(App.34.) That same day, Mansaray-Ruffin filed an unsecured proof of claim on behalf of EMC in the amount of $1,000, with the following notation: “ALLEGED MORTGAGE-RESCINDED.” (App.32.)1

Neither EMC nor any other creditor filed objections to the plan, and it was confirmed on March 25, 2003. Thereafter, however, EMC continued to send Mansaray-Ruffin billing statements, as if the plan’s confirmation had no effect on the mortgage. Mansaray-Ruffin sent EMC two letters, explaining her position that, under the terms of the plan, she now owed EMC a $1,000 unsecured debt (not the approximately $40,000 mortgage-backed balance that EMC was asserting).

In December 2003, EMC commenced an adversary proceeding in the Bankruptcy Court by filing a “Complaint to Determine Secured Status Pursuant to 11 U.S.C. § 506.” EMC sought a determination that, under Federal Rule of Bankruptcy Procedure 7001(2), a lien could only be invalidated through an adversary proceeding and that, therefore, its mortgage continued unaffected by the plan confirmation. Mansaray-Ruffin countered with a motion to dismiss, contending that the confirmed plan was final under the Bankruptcy Code and that EMC had.to live with the consequences of not objecting to her treatment of its claim.

On May 6, 2004, the Bankruptcy Court denied Mansaray-Ruffin’s motion to dismiss, concluding that “neither the Debtor’s proof of claim, filed on behalf of EMC, nor the Debtor’s amended plan, nor both taken together, are sufficient to avoid EMC’s lien.” (App.2.) On July 6, 2004, the Court followed up its denial of the motion to dismiss by issuing an order that “EMC shall retain its first mortgage lien on the Debtor’s residence ..., that said mortgage shall be unaffected by the Debtor’s confirmed Plan of Reorganization and that said mortgage shall pass through the bankruptcy unaffected to the full extent of the outstanding balance due EMC in connection with the underlying mortgage loan.” (App.4.)

On September 26, 2005, the District Court affirmed the Bankruptcy Court’s order without explanation.

II.

The Bankruptcy Court had jurisdiction pursuant to 28 U.S.C. § 1334, the District Court had jurisdiction pursuant to 28 U.S.C. § 158(a), and we now have jurisdiction pursuant to both 28 U.S.C. § 158(d) and 28 U.S.C. § 1291. In conducting our *234review, we use the same standards as the District Court. In re Am. Classic Voyages Co., 405 F.3d 127, 130 (3d Cir.2005). Therefore, since the issues in this case are legal in nature, we review the decision of the Bankruptcy Court de novo. Id.

III.

A.

We begin with a discussion of the applicable law governing the procedure for invalidating liens in bankruptcy. The United States Supreme Court prescribes rules of practice and procedure for bankruptcy cases. 28 U.S.C. § 2075. The rules are not to “abridge, enlarge, or modify any substantive right.” Id. Pursuant to this authority, the Court has promulgated the Federal Rules of Bankruptcy Procedure.

Federal Rule of Bankruptcy Procedure 7001 sets forth matters that may only be resolved through an “adversary proceeding,” including the determination of the “validity, priority, or extent of a lien or other interest in property.” Fed. R. Bankr.P. 7001(2).2 An adversary proceeding is essentially a self-contained trial— still within the original bankruptcy casein which a panoply of additional procedures apply. See Fed. R. Bankr.P. 7001-7087. Many of these procedures derive in whole or in part from the Federal Rules of Civil Procedure, giving an adversary proceeding all the trappings of traditional civil litigation. For example, Federal Rule of Bankruptcy Procedure 7003 adopts wholesale Federal Rule of Civil Procedure 3 and thus requires the filing of a complaint to commence an adversary proceeding. Adopting and modifying portions of Federal Rule of Civil Procedure 4, Federal Rule of Bankruptcy Procedure 7004 requires the service of a summons and a copy of the complaint. Federal Rule of Bankruptcy Procedure 7012 provides that the defendant has 30 days to file an answer after the issuance of the summons and makes Federal Rule of Civil Procedure 12(b)-(h) applicable in its entirety, thus allowing, inter alia, all of the 12(b) defenses, motions for a more definite statement, and judgments on the pleadings. Moreover, an adversary proceeding offers the parties the same opportunity for discovery as traditional civil litigation, and the rules regarding voluntary and involuntary dismissals, default judgments, and summary judgment are identical as well. See Fed. R. Bankr.P. 7026-7037, 7041, *2357055-7056 (making Fed.R.Civ.P. 26-37, 41, and 55-56 applicable to adversary proceedings).

The Rules are binding and courts must abide by them unless there is an irreconcilable conflict with the Bankruptcy Code. See In re Am. Classic Voyages Co., 405 F.3d at 132; In re McKay, 732 F.2d 44, 47-48 (3d Cir.1984); In re Decker, 595 F.2d 185, 189 (3d Cir.1979). The three concepts included in Rule 7001(2) — validity, priority, and extent — all pertain in some way to “the basis of the lien itself.” Fed. R. Bankr.P. 3012 advisory committee’s note. The “validity” of a lien — which, unlike “priority” and “extent,” is at the heart of the case before us — refers to its “legal force.” American Heritage Dictionary of the English Language (4th ed.2004).3 The debtor here referred to the concept of commencing an adversary proceeding against EMC in her original plan and her amended plan, but none was ever initiated.

B.

Mansaray-Ruffin argues that she has successfully invalidated EMC’s lien without an adversary proceeding because (1) she filed an unsecured proof of claim on EMC’s behalf, (2) she treated EMC’s claim as unsecured in her plan, (3) EMC failed to object to the treatment of its claim as unsecured, and (4) the Bankruptcy Code generally makes all confirmed plans final.

At the outset, it must be noted that bankruptcy has traditionally afforded special status to liens, allowing them to pass through bankruptcy unaffected. See, e.g., Long v. Bullard, 117 U.S. 617, 620-21, 6 S.Ct. 917, 29 L.Ed. 1004 (1886). As the United States Court of Appeals for the Fourth Circuit explained:

[T]he general rule [is] that liens pass through bankruptcy unaffected. A bankruptcy discharge extinguishes only in personam claims against the debt- or^), but generally has no effect on an in rem claim against the debtor’s property. For a debtor ■ to extinguish or modify a lien during the bankruptcy process, some affirmative step must be taken toward that end. Unless the debtor takes appropriate affirmative action to avoid a security interest in property of the estate, that property will remain subject to the security interest following confirmation.

Cen-Pen Corp. v. Hanson, 58 F.3d 89, 92 (4th Cir.1995) (citations omitted).

Mansaray-Ruffin maintains that a secured creditor cannot have its lien “ride through” bankruptcy unaffected if the debtor files an unsecured claim on its behalf. (Appellant’s Reply Br. 3.) She therefore proposes that the proof of claim that she filed was a proper “affirmative action” to invalidate EMC’s lien. ' She cites no authority for this proposition and we can find none. Thus, we conclude that the proof of claim that Mansaray-Ruffin filed on behalf of EMC did not invalidate EMC’s lien.4

*236Next, Mansaray-Ruffin argues that the provision in her confirmed plan treating EMC’s claim as unsecured operated to invalidate EMC’s mortgage lien. She relies on cases that have permitted liens to be “stripped,” pursuant to § 506 of the Code, through the confirmation of a plan. See, e.g., In re Bennett, 312 B.R. 843 (Bankr.W.D.Ky.2004); In re Dickey, 293 B.R. 360 (Bankr.M.D.Pa.2003); In re Hudson, 260 B.R. 421 (Bankr.W.D.Mich.2001); In re Wolf, 162 B.R. 98 (Bankr.D.N.J.1993). The problem with Mansaray-Ruffin’s reliance on these cases is that the concept of “lien stripping” is related to the valuation of collateral, not the validity of a lien, and, as she has acknowledged in her brief and at oral argument, she challenges the validity of the lien itself, not the valuation of the collateral securing it. Therefore, these cases have no bearing on whether Mansaray-Ruffin could invalidate EMC’s lien by using a provision to that effect in her plan.

Mansaray-Ruffin also cites a number of cases in which a debtor successfully fixed the amount of a secured claim at an amount less than the creditor asserted by providing for such lesser amount in her plan. See In re Fesq, 153 F.3d 113 (3d Cir.1998); In re Holmes, 225 B.R. 789 (Bankr.Colo.1998). Like the lien-stripping cases, these cases, too, do not involve a challenge to the validity of the lien itself and thus have no bearing on whether Mansaray-Ruffin could invalidate EMC’s lien by treating it as an unsecured claim in her plan.

The Bankruptcy Code does state that a plan may include “any other appropriate provision not inconsistent with” the Code. 11 U.S.C. § 1322(b)(ll). However, we have previously considered whether a provision in a plan can invalidate a lien— which would run afoul of the Rules but not any specific provision of the Code itself— and have ruled that this “substantive catch-all provision” does not leave courts free to disregard the Rules. McKay, 732 F.2d at 48. In McKay, two debtors filed Chapter 13 bankruptcy plans, both of which provided that “Debtor avoids liens avoidable under 11 U.S.C. § 522(f).” Id. at 45. Section 522(f), which is not at issue here, allows for the avoidance of certain liens to take advantage of exemptions. Pennsylvania’s Department of Public Welfare (“DPW”), a creditor of both debtors, objected to the confirmation of each plan, arguing that § 522(f) lien avoidance could not be achieved through the confirmation process because it involved the determination of the “validity, priority, or extent of a lien” and thus fell under what is now Rule 7001(2). Id. at 46. The bankruptcy court confirmed both plans, notwithstanding this objection. On appeal, we agreed with DPW and reversed, “holding] that where a debtor seeks to avoid a judicial lien pursuant to 11 U.S.C. § 522(f), the adversary proceedings rules adopted by the Bankruptcy Code apply, and that the debt- or thus bears the burden of filing a complaint with the bankruptcy court and servicing a copy of it on each creditor whose lien the debtor seeks to avoid.” Id. at 45. McKay confirms that when an adversary proceeding is required under Rule 7001(2), courts are not free to disregard the Rule.5

As we have previously explained, “ ‘[a]s a general matter, the Code defines the creation, alteration or elimination of substantive rights but the Bankruptcy Rules define the process by which these privi*237leges may be effected.’ ” Fesq, 153 F.3d at 116 (alteration in original) (quoting In re Hanover Indus. Mach. Co., 61 B.R. 551, 552 (Bankr.E.D.Pa.1986)). The Rules are there for a reason.

It is appropriate that the Rules permit lien invalidation to occur only through litigation in -an adversary proceeding — and not through a provision in a plan — for the invalidation of a lien on'the property of the debtor held by a specific creditor is , a matter of particularly great • consequence, in terms of the applicable legal principles and the practical result. As discussed above, an adversary proceeding provides the lienholder with “greater procedural protection,” Tenn. Student Assistance Corp. v. Hood, 541 U.S. 440, 451, 124 S.Ct. 1905, 158 L.Ed.2d 764 (2004), requiring a complaint and a summons, providing for an answer and discovery, and generally concluding only after trial or a dispositive motion.

In contrast, the Rules establish less exacting requirements for the confirmation of a bankruptcy plan, a process which entails virtually none of the procedural safeguards of an adversary proceeding. Under Federal Rule of Bankruptcy Procedure 2002, “parties in interest,” including creditors, must receive notice by mail at least 25 days before both the deadline for filing objections to the plan and the date of the required confirmation hearing. Crucially, plan confirmation does not require the filing of a complaint or the service of a summons. Moreover, in the Chapter 13 context, the notice sent need not even include a full copy of the proposed plan; rather, a summary, of the plan can suffice. Fed. R. Bankr.P. 3015(d). Therefore, as the United States Court of Appeals for the Tenth Circuit recently put it, confirmation “does not require specific notice of a plan provision’s effect on a particular creditor, nor does it require notice to be served in any particular manner or -upon any particular person.” In re Mersmann, 505 F.3d 1033, 1043 (10th Cir.2007). In addition, an objection to the confirmation of a Chapter 13 plan is a “contested matter,” governed by Federal Rule of Bankruptcy Procedure 9014. Fed. R. Bankr.P. 3015(f). Contested matters are more informal than adversary proceedings, are initiated by motion (not by a complaint), and, unless the court directs otherwise, do not require a responsive pleading. Fed. R. Bankr.P. 9014; In re Indian Palms Assocs., 61 F.3d 197, 204 n. 11 (3d Cir.1995).

Mansaray-Ruffin also contends that by failing to object to the plan after receiving a copy of it in the mail, EMC waived its right to challenge the plan’s invalidation of its lien. While there is visceral appeal to this argument, it does not withstand scrutiny. In order for us to credit Mansaray-Ruffin’s position, we would have to find that EMC’s failure to object somehow constituted a waiver of Rule 7001 and all of the procedural protections that go with it (i.e., Rules 7002-7087). This, we cannot do. By way of analogy, if a plaintiff were to attempt to “commence” a civil litigation by filing a motion with the district court and mailing a copy of it to the defendant, and the defendant were to fail to file a pleading in response, we surely would not uphold the entry of a default judgment on behalf of the plaintiff. In that situation, the plaintiff has the affirmative duty to file a complaint and to serve a summons with a copy of the complaint on the defendant. See Fed.R.Civ.P. 3-4. This duty is not lessened or negated by the defendant’s inaction. Similarly, EMC’s failure to object to the plan did not do away with Mansaray-Ruffin’s duty to file a complaint and serve EMC pursuant to Rules 7001, 7003, and 7004. EMC had the legal right to do nothing and insist upon *238being served with a summons and a complairit in order for its lien to be invalidated.

The only issue that remains is whether, because Mansaray-Ruffin’s plan treating EMC’s lien as invalid has been confirmed, it should be deemed final and controlling notwithstanding her failure to follow the Rules.

The Bankruptcy Code does provide that the terms of a confirmed plan are binding. 11 U.S.C. § 1327.6 In In re Szostek, we explained that, “[u]nder § 1327, a confirmation order is res judicata as to all issues decided or which could have been decided at the hearing on confirmation.” 886 F.2d 1405, 1408 (3d Cir.1989). In that case, a secured creditor sought the revocation of the debtor’s confirmed Chapter 13 plan because the plan failed to provide for the full recovery of the present value of its claim. In finding'for the debtor, we in-' voked § 1327 and the “well settled law that a confirmed plan is final.” Id. at 1408-10. Quoting from our opinion in In re Penn Central Transportation Co., 771 F.2d 762, 767 (3d Cir.1985), we emphasized our view that:

the purpose of bankruptcy law and the provisions for - reorganization could not be realized if the discharge of debtors were not complete and absolute; that if courts should relax provisions of the law and facilitate the assertion of old claims against discharged and reorganized debtors, the policy of the law would be defeated; that creditors would not participate in reorganization if they could not feel that the plan was final, and that it would be unjust and unfair to those who had accepted and acted upon a reorganization plan if the court were thereafter to reopen the plan and change the conditions which constituted the basis of its earlier acceptance.

Szostek, 886 F.2d at 1409 (internal quotation marks omitted).

However, in Szostek, the secured creditor argued that the plan provision setting forth the amount to which it was entitled violated the Code, namely, 11 U.S.C. § 1325(a)(5), because the provision failed to require the payment of interest necessary for the secured creditor to receive the present value of the claim. We examined whether this Code provision was mandatory, stating that “[i]f the provisions of § 1325(a)(5) are mandatory, as [the creditor] contends, then a plan cannot be confirmed if it does not meet the requirements of that section.” Id. at 1411. We concluded that this provision was not mandatory. Id. at 1412. Thus, while Szostek does note the importance of finality, it recognizes that the policy of finality must yield to the principle that a plan cannot violate a mandatory provision of the Code.

We hold that the adversary proceeding Rule at issue here is mandatory and establishes a right to specific process that must be afforded. Its mandatory nature is grounded in principles of due process that trump “finality.” See In re Linkous, 990 F.2d 160, 162 (4th Cir.1993) (“[W]e cannot defer to [a Chapter 13 confirmation] order *239on res judicata grounds if it would result in a denial of due process in violation of the Fifth Amendment of the United States Constitution.”).

The level of process due to a party prior to the deprivátion of a property interest, such as a lien, is highly dependent on the context. As the Supreme Court has repeatedly emphasized, “ ‘[t]he very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.’ ” Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189, 196, 121 S.Ct. 1446, 149 L.Ed.2d 391 (2001) (quoting Cafeteria & Rest. Workers Union, Local 473 v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 6 L.Ed.2d 1230 (1961)). Thus, process that may be constitutionally sufficient in one setting may be insufficient in another.

Highlighting the contextual nature of the calculus, the Court famously explained almost sixty years ago that “[m]any controversies have raged about the cryptic and abstract words of the Due Process Clause but there can be no doubt that at a minimum they require that deprivation of life, liberty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case.” Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 94 L.Ed. 865 (1950) (emphasis added); see also id. at 314, 70 S.Ct. 652 (“An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” (emphasis added)); id. at 314-15, 70 S.Ct. 652 (“[I]f with due regard for the practicalities and peculiarities of the case these conditions are reasonably met the constitutional requirements are satisfied.” (emphasis added)).7

Accordingly, we have refused to treat confirmed bankruptcy plans as res judicata with respect to the claims of creditors who did not receive notice that was sufficient under the circumstances — even where adherence to the plain language of the relevant statute would have made the confirmed plan binding on all creditors. Jones v. Chemetron Corp., 212 F.3d 199, 209-10 (3d Cir.2000) (finding that despite 11 U.S.C. § 1141, the analog to § 1327 in the Chapter 11 context, “[u]nder fundamental notions of procedural due process, a claimant who has no appropriate notice of a bankruptcy reorganization cannot have his claim extinguished in a settlement thereto” (citing, inter alia, Mullane, 339 U.S. at 314-19, 70 S.Ct. 652)); In re Harbor Tank Storage Co., 385 F.2d 111, 114-15 (3d Cir.1967).

In addition, we have indicated that a creditor’s actual knowledge regarding the bankruptcy proceedings does not eliminate our due process concerns. Harbor Tank Storage, 385 F.2d at 114-16. In Harbor Tank Storage, a known creditor filed a claim after the debtor’s bankruptcy plan had already been confirmed under Chapter X of the now-superseded Bankruptcy Act. Id. at 112. The creditor argued that it should be permitted to file a post-confirmation claim because, although the debtor had published notice of the bankruptcy *240proceedings and the important dates in the local newspaper, the debtor had not mailed the creditor the various notices required by the statute. Id. The debtor countered that the creditor’s claim should be barred because the statute made confirmed plans “ ‘binding upon ... all creditors’ ” and because the creditor had actually known about the bankruptcy proceeding and had done nothing to protect its interests until after confirmation. Id. at 114-15 (quoting 11 U.S.C. § 624(1) (repealed by Pub.L. No. 95-598, 92 Stat. 2549 (1978))). According to the debtor, the creditor “should have independently checked on the progress of the proceedings, and should have filed his claim without waiting for notice to do so.” Id. at 115.

We agreed with the creditor on due process grounds, explaining that “the fact that a creditor knows of the initiation of reorganization proceedings does not of itself place a burden on the creditor to file an appearance or claim in the proceeding before receiving notice to do so.” Id. We went on to state unequivocally that “a creditor has every right to assume that he will be sent all the notices to which he is entitled under the Act.” Id. at 115. Thus, we made clear that there are statutory procedural requirements that bear directly on the level of process due to a party in a particular situation.

A number of our sister courts of appeals have concluded, based on these due process principles, that, despite any statutory prescription of finality or any knowledge that the creditor may have, a confirmed plan has no preclusive effect on issues that must be raised in an adversary proceeding, if no such proceeding has been brought.

In re Banks, 299 F.3d 296 (4th Cir.2002), involved a controversial debtor tactic that has come to be known as “discharge by declaration.” Federal Rule of Bankruptcy Procedure 7001(6) requires an adversary proceeding in order to discharge student loan debt. Further, under 11 U.S.C. § 523(a)(8), student loans may not be discharged in a Chapter 13 bankruptcy unless the debtor establishes that continuing liability for the loan would cause him or her “undue hardship.” In Banks, a Chapter 13 debtor sought to discharge a portion of his student loan debt by including a provision to that effect in his plan and did not initiate an adversary proceeding. 299 F.3d at 298-99. The plan was confirmed without objection, or even an appearance at the confirmation hearing, by the creditor, and the creditor did not appeal the confirmation order. Id. at 299. Further, the creditor did not dispute that it received a copy of the proposed plan, a hearing notice, and the confirmation order. Id. Five years after plan confirmation, the bankruptcy court issued a discharge order. Id. When the debtor then received a statement from the creditor that still included the student loan debt, he sought a declaration from the bankruptcy court that the confirmed plan’s treatment of the disputed debt was final. Id. The bankruptcy court agreed with the debtor. Id.

The United States Court of Appeals for the Fourth Circuit, however, ruled in the creditor’s favor, finding that the debtor’s failure to initiate an adversary proceeding — complete with the complaint, summons, and service of process required by Rules 7003 and 7004 — overrode § 1327’s finality provision. Id. at 302-03. The court explained: “We agree a bankruptcy court confirmation order generally is afforded a preclusive effect. But we cannot defer to such an order if it would result in a denial of due process in violation of the Fifth Amendment to the United States Constitution.” Id. at 302 (footnote omitted). In concluding that such a denial would result in the situation before it, the court held that “[wjhere the Bankruptcy *241Code and Bankruptcy Rules specify the notice required prior to entry of an order, due process generally entitles a party to receive the notice specified before an order binding the party will be afforded preclusive effect.” Id., quoted with approval in Baldwin v. Credit Based Asset Servicing & Securitization, 516 F.3d 734, 737 (8th Cir.2008).

In In re Ruehle, 412 F.3d 679, 684 (6th Cir.2005), another Chapter 13 discharge-by-declaration case, the United States Court of Appeals for the Sixth Circuit followed Banks’s lead in ruling that discharging student loan debt through a provision in a confirmed plan, and without the adversary proceeding required by Rule 7001(6), violates the creditor’s due process rights. It did not matter that the creditor did not raise its due process challenge until four years after the plan’s confirmation because, the court explained, “[e]very person and entity is entitled to the prescribed level of notice for the process to be due and only thereafter may the coercive power of the government be used against them.” Id. at 682, 684-85 (internal quotation marks omitted). Because the debtor failed to commence an adversary proceeding and serve the creditor with a summons and a complaint, the discharge of the disputed debt in the plan could not be given effect. Id. at 684-85.

In In re Hanson, 397 F.3d 482 (7th Cir.2005), the court faced a slightly different situation. There, the debtor’s plan did not provide for the discharge of his student loan debt, but the discharge order erroneously approved by the bankruptcy court did. Id. at 483-84. As in Banks and Ruehle, Rule 7001(6) was ignored and no adversary proceeding was ever initiated. Id. at 485. Six years after the discharge order, the creditor filed a motion in the bankruptcy court to void it. Id. at 483. The bankruptcy court granted the motion, id., and the United States Court of Appeals for the Seventh Circuit agreed, concluding that student loan creditors have the due process right not “to act until the service of a summons for an adversary proceeding apprises them that their property rights may be affected,” id. at 486-87. Invoking both Banks and Mullane, it reasoned: “Although we recognize the strong policy favoring finality of confirmation orders, due process entitles creditors to the heightened notice provided for by the Bankruptcy Code and Rules, and the dictates of due process trump policy arguments about finality.” Id. at 486.

In a context that did not implicate Rule 7001, the United States Court of Appeals for the Ninth Circuit has also endorsed the notion that, where an adversary proceeding is required, the preclusive effect of a confirmation order is limited. In re Enewally, 368 F.3d 1165, 1173 (9th Cir.2004). In Enewally, a creditor held a hen on a property owned by joint chapter 13 debtors and, even though Rule 7001 did not require it, the debtors filed an adversary complaint against the creditor, seeking to modify the lien amount based on the value of the collateral. Id. at 1167-68. While the adversary proceeding was pending, the bankruptcy court confirmed the debtor’s plan. Id. at 1168. When, in the still-pending adversary proceeding, the creditor later challenged the debtors’ modification of its lien, the debtors argued that § 1327 precluded the creditor from doing so. Id. at 1172. The Court of Appeals for the Ninth Circuit disagreed on due process grounds and explained:

Here, during plan confirmation and modification, the bankruptcy court specifically reserved the question at issue because it had been raised via an adversary proceeding. “[I]f an issue must be raised through an adversary proceeding it is not part of the confirmation process *242and, unless it is actually litigated, confirmation will not have a preclusive effect.” Thus a Chapter 13 plan confirmed while an adversary proceeding was pending would not have res judicata effect on the adversary proceeding.

Id. at 1173 (quoting Cen-Pen Corp., 58 F.3d at 93-94).

Before it could be deprived of its property interest in its lien, EMC had the constitutional right to a level of process that was “appropriate to the nature of the case.” See Mullane, 339 U.S. at 313, 70 S.Ct. 652. As we emphasized above, our determination regarding the process due in any particular case depends on the context. A crucial piece of the context here is the existence of a binding Federal Rule of Bankruptcy Procedure directly on point that makes clear that a lien may only be invalidated through an adversary proceeding. Just as a procedural prescription in the statute guided us in determining the process due to the creditor in Harbor Tank Storage, 385 F.2d at 114-15, a procedural prescription in the Rules guides us here. In Harbor Tank Storage, we found that a creditor had the due process right “to assume that he w[ould] be sent all the notices to which he [wa]s entitled under the Act” before his claim could be barred. Id. at 115. Similarly, we now conclude that EMC had the due process right to assume that, unless Mansaray-Ruffin commenced the adversary proceeding required by the Rules and served it with a complaint and a summons, its lien could not be invalidated. Whatever actual knowledge EMC may have had regarding the plan’s treatment of its lien did not eliminate this right and neither did the provisions of § 1327.

We wish to make clear, however, that we do not hold that the failure to adhere to every Rule of Bankruptcy Procedure implicates due process. Rather, we hold only that, where the Rules require an adversary proceeding — which entails a fundamentally different, and heightened, level of procedural protections' — to resolve a particular issue, a creditor has the due process right not to have that issue resolved without one. This conclusion fits comfortably with the precedents we have discussed from our sister circuit courts.8

In arguing that the Code’s policy of finality should control, Mansaray-Ruffin relies on our opinion in In re Fesq, 153 F.3d 113 (3d Cir.1998). She maintains that because SLW is seeking to nullify a central part of the confirmed plan, it is effectively asking us to revoke the Bankruptcy Court’s order of confirmation, which, according to Fesq, is impermissible absent fraud. Id. at 120. In Fesq, the creditor held a $70,000 judgment lien on the debtor’s home. Id. at 114. The debt- or’s Chapter 13 bankruptcy plan provided for full satisfaction of the creditor’s secured claim with a single payment of $7,050. The plan was confirmed without objection from the creditor. Id. The creditor then moved to revoke the confirmation order, blaming its failure to file an objection on a computer glitch that caused its attorney to think that the deadline for filing objections was two months later than it actually was. Id. at 114-15. We denied the creditor’s motion because, under 11 U.S.C. § 1330(a), a confirmed Chapter 13 *243plan can only be revoked on account of fraud. Id. at 120. We emphasized the fact that “Congress established finality as an important goal of bankruptcy law,” and we explained that our holding was consistent with that goal. Id. at 119-20.

Fesq, however, never directly confronted the issue of whether an adversary proceeding was necessary. Further, Fesq is distinguishable from our case in two key ways. First, quite simply, SLW is not seeking the revocation of the Bankruptcy Court’s confirmation order. Rather, it is asking us to declare that the confirmed plan did not invalidate the lien that it now holds. Second, and even more importantly, Fesq did not involve a determination as to the validity of the creditor’s lien or any other matter for which Rule 7001 requires an adversary proceeding. Rather, it involved the fixing of the amount of the secured claim, which, like the modification of a claim to comport with the value of the collateral in the lien-stripping cases discussed above, is not the same as lien invalidation. Thus, Fesq does not implicate the due process concerns that animate our decision in this case, and it does not control either our reasoning or conclusion regarding the issues before us.

IV.

In light of the foregoing, we conclude that the District Court properly held that EMC’s lien was not invalidated and passed through Mansaray-Ruffin’s bankruptcy unaffected. Accordingly, we will AFFIRM.