One of the more common concepts in Bankruptcy Court, and most other courts, is that if a party does not respond or object to the relief requested by another party, the relief is deemed unopposed. Most commonly, that comes up when a defendant does not timely file an answer to a complaint and a default judgment is entered. In Bankruptcy Court, it is common for various motions to be unopposed. This theory does not apply when people filing for Bankruptcy mischaracterize secured debt as unsecured debt, either by mistake or intentionally, in their Schedules. For example, if someone scheduled their home or auto lender as an unsecured debt in their Schedules, and the lender does not object, it does not mean that the lien goes away in the Bankruptcy case. There is no general obligation for any creditor to object to the Schedules and the Schedules generally are not the final word on the amount of the debt or the secured status.
In a typical Chapter 7 case, the debtor will receive a discharge of their personal liability for the debt in question, but any liens will remain in force after the case is over. If there is a reason that the lien could be removed, the burden is on the debtor (or in some cases the Trustee) to specifically ask that the Court remove the lien. For example, the debtor may file a motion to strip a second priority lien. If the collateral is sold by the Chapter 7 Trustee, the lender will generally file a claim and receive notice of the sale. The lender and Trustee will then resolve the amount to be paid to the lender and ask the Court for a ruling if they cannot agree.
In a Chapter 13 case, there are other considerations. Lenders will normally file a Proof of Claim in the case in order to receive distributions from the Chapter 13 Trustee. If there are past-due payments being paid through the Chapter 13 Plan, it is important that the lender actually receives these payments (in addition to normal monthly payments) so that the debtor can catch up on the debt during the plan period and avoid foreclosure. If the lender does not file a claim, the debtor should normally file the claim on the lender’s behalf so the money is paid to the lender. If the lender has an objection to the actual Chapter 13 Plan, including to the amount, they will object to the Plan rather than what is in the Schedules.