Opinion

Court: United States Bankruptcy Court, D. Puerto Rico
Filed: Sep 15, 2026
Cited by: 0 cases

The opinion

IN THE UNITED STATES BANKRUPTCY COURT

2 FOR THE DISTRICT OF PUERTO RICO

3 IN RE

CASE NO. 23-02251 (ESL)

4 ABIEZER RAMOS GONZALEZ and

LIZ YANELLY BAEZ RAMIREZ CHAPTER 13

6 Debtor(s)

7 ABIEZER RAMOS GONZALEZ and ADVERSARY NO. 25-00058 (ESL)

LIZ YANELLY BAEZ RAMIREZ

Plaintiff(s)

10 vs.

11 COOPERATIVA ROOSEVELT ROADS

FILED AND ENTERED 9/15/2026

12 Defendant

OPINION AND ORDER

This adversary proceeding is before the court upon the Motion for Summary Judgment

(dkt. #11), Statement of Uncontested Material Facts in Support of Motion for Summary Judgment

(dkt. #12), and Memorandum of Law in Support of Motion for Summary Judgment (dkt. #13) filed

by Cooperativa Roosevelt Roads (“Cooperativa”). Also before the court are the Opposition to

Defendant’s Motion for Summary Judgment (dkt. #23), and Opposition to Defendant’s Statement

of Uncontested Material Facts in Support of Motion for Summary Judgment (dkt. #24) filed by

the Debtor-Plaintiffs; the Sur-Reply to Plaintiffs’ Opposition to Cooperativa’s Motion for

Summary Judgment (dkt. #31) filed by Cooperativa; and the Response to Defendant’s Sur-Reply

and Further Opposition to Defendant’s Motion for Summary Judgment (dkt. #38) filed by the

Debtor-Plaintiffs.

For the reasons discussed below, the Motion for Summary Judgment (dkt. #11) is

DENIED.

1 Jurisdiction

2 The court has jurisdiction pursuant to 28 U.S.C. §§ 1334(b) and 157(a). This is a core

3 proceeding pursuant to 28 U.S.C. §§ 157(a) and (b). Venue of this proceeding is proper under 28

4 U.S.C. §§ 1408 and 1409.

5 Factual and Procedural Background

6 1. On November 10, 2025, the Debtor-Plaintiffs filed an adversary proceeding

7 complaint (dkt. #1) against Cooperativa alleging that Cooperativa has (i) continued collection

8 efforts against Plaintiffs by unilaterally applying a post-petition setoff in the amount of

9 approximately $451.18 from Plaintiffs’ account held at Cooperativa, in contravention of the

10 automatic stay, and (ii) withheld and restricted access to the remaining funds in said account,

11 thereby preventing Plaintiffs from withdrawing or utilizing monies. Debtor-Plaintiffs assert

12 alleged willful violation of the automatic stay, 11 U.S.C. § 362 (Count I), and violation of the Fair

13 Credit Billing Act, 15 U.S.C § 1666h(a) (the “FCBA”) (Count II), and seek declaratory relief,

14 actual and statutory damages of not less than $500 and not greater than $5,000, punitive damages,

15 reasonable attorneys’ fees, as provided by 11 U.S.C. § 362(k) and 15 U.S.C. § 1640, and an order

16 directing the immediate release of unlawfully held funds. Debtor-Plaintiffs.

17 2. On December 23, 2025, Cooperativa filed an Answer to Complaint (dkt. #10).

18 3. On December 24, 2025, Cooperativa filed a Motion for Summary Judgment (dkt.

19 #11), a Statement of Uncontested Material Facts in Support of Motion for Summary Judgment

20 (each a “Cooperativa Proposed Fact”, dkt. #12), the Affidavit of Carlos R. Maldonado Rivera

21 (“Maldonado Affidavit”, dkt. #12-1), and a Memorandum of Law in Support of Motion for

22 Summary Judgment (dkt. #13).

23 4. On January 21, 2026, the Debtor-Plaintiffs filed an Opposition to Defendant’s

24 Motion for Summary Judgment (the “Opposition to Summary Judgment”, dkt. #23), and an

25 Opposition to Defendant’s Statement of Uncontested Material Facts in Support of Motion for

26 Summary Judgment (dkt. #24).

1 5. On February 6, 2026, Cooperativa filed a Sur-Reply to Plaintiffs’ Opposition to

2 Cooperativa’s Motion for Summary Judgment (the “Reply”, dkt. #31). Among other things,

3 Cooperativa requests the court grant summary judgment, dismiss the complaint with prejudice,

4 as all claims are barred by the binding effect of the confirmed Plan, and award Cooperativa

5 reasonable costs and attorneys’ fees incurred in defending this action.

6 6. On March 10, 2026, the Debtor-Plaintiffs filed a Response to Defendant’s Sur-

7 Reply and Further Opposition to Defendant’s Motion for Summary Judgment (the “Sur-Reply”,

8 dkt. #38).

9 7. The Initial Scheduling Conference scheduled for March 23, 2026, at 10:00 a.m.

10 was continued without a date pending a decision on the motion for summary judgment. See dkt.

11 #40, 41.

12 Legal Issues

13 The issues before this court are whether Cooperativa’s collection of funds from the

14 Debtor-Plaintiffs’ shares account, following confirmation of the plan (and subsequent post-

15 confirmation modification), constituted (i) a violation of the automatic stay; (ii) an offset

16 prohibited by 15 U.S.C. § 1666h or, alternatively, authorized under the exception set forth in 15

17 U.S.C. § 1666h(a)(1)–(2).

18 Uncontested Material Facts

19 After reviewing the record, the court finds that the following material facts are

20 uncontested:

21 1. Prior to filing for bankruptcy, the Debtors opened a credit card account, a shares

22 account, and a savings account with Cooperativa. See Cooperativa Proposed Fact ¶ 4;

23 Maldonado Affidavit ¶ 5; dkt. #24, ¶ 4 (Debtors’ admission).

24 2. On July 22, 2023, the Debtor filed a voluntary petition under Chapter 7 of the

25 Bankruptcy Code (the “Petition Date”), and disclosed Cooperativa as a creditor owed $549.58,

26 $299.00 of which are secured by “Coop. Roosevelt Road, shares”. See Bankr. Case No. 23-02251,

27 dkt. #1, Schedule A/B, p. 12, item no. 17 (disclosing a savings account of $248.00, a shares

1 account of $145.00 , and Coop. Roosevelt Road shares totaling $299.00); Schedule C, p. 25

2 (claiming exemption over $248.00 in savings account); Schedule D, p. 27, item no. 2.2 (disclosing

3 claim of $549.58, secured by shares valued at $299.00); Statement of Intention for Individuals

4 Filing Under Chapter 7, p. 62 (“[s]urrender of property”, specifically “Coop. Roosevelt Road,

5 shares”); Creditor Matrix, p. 79.

6 3. As of the Petition Date, the Debtors owed a balance on their MasterCard credit

7 card account with Cooperativa. See dkt. #24, ¶ 5 (Debtors’ admission).

8 4. On July 22, 2023, the court issued a Notice of Chapter 7 Bankruptcy Case (dkt.

9 #5), which was served on Cooperativa via first class mail to the following address: Apartado 31,

10 Fajardo, PR 00738-0031.1 See Certificate of Service, dkt. #7.

11 5. Cooperativa received notice and had knowledge of Debtors’ bankruptcy petition.

12 See Certificate of Service, Bankr. Case No. 23-02251, dkt. #7. See also Answer to Complaint, dkt.

13 #10, ¶¶ 12, 18, 33 (Cooperativa’s admission).

14 6. On August 14, 2023, Cooperativa filed (i) a Notice of Appearance (dkt. #13), and

15 (ii) Proof of Claim No. 3 in the secured amount of $726.79 on account of a Master Card debt (the

16 “Master Card Debt”), secured by “shares & deposits” pursuant to 7 L.P.R.A. § 1366(b), and

17 subject to a sight of setoff (“POC #3”). See Bankr. Case No. 23-02251, POC #3-1, p. 2, item 9

18 and 11.

19 7. On August 31, 2023, the case was converted to Chapter 13. See Bankr. Case No.

20 23-02251, dkt. #15, 16, 17.

21 8. On September 27, 2023, Debtor Ramos González withdrew $299.00 from

22 Debtors’ shares account with Cooperativa to Debtors’ savings account with Cooperativa. See

23 Cooperativa Proposed Fact ¶ 11; Maldonado Affidavit ¶ 13. See also Shares History, dkt. #12-1,

26 1 Cooperativa’s Fed. R. Bankr. P. 2002 notice address is P.O. Box 31, Fajardo, PR 00738-0031. See Bankr. Case No.

23-02251, POC #3-1, p. 1, item 3; POC #3-2, p. 1, item 3. The court highlights that “apartado” or “apartado postal”

27 is Spanish for “P.O. Box”. As such, the notice address provided in the Creditors’ Matrix and POC #3 are the same.

1 p. 7, transaction no. 41377832, and dkt. #12-2, p. 7, transaction no. 41377832; Withdrawal of

2 Shares Request, dkt. #12-1, p. 8, and dkt. #12-2, pp. 8-9.

3 9. On January 17, 2024, the Debtors filed an Objection to Proof of Claim #3 objecting

4 to the secured status of POC #3, and arguing that the Fair Credit Billing Act “prevents a card

5 issuer from setting-off a debtor’s deposit accounts to off-set alleged credit card debts”. See Bankr.

6 Case No. 23-02251, dkt. #39, ¶ 2.

7 10. On January 22, 2024, Cooperativa filed an amended POC #3 reclassifying the

8 Master Card Debt as an unsecured debt no longer subject to a sight of setoff. See Bankr. Case No.

9 23-02251, POC #3-2.

10 11. On February 21, 2024, the court denied Debtors’ objection to POC #3 upon the

11 filing of the amended POC #3. See Order, Bankr. Case No. 23-02251, dkt. #43.

12 12. On April 1, 2024, the court entered an Order Confirming Plan (Bankr. Case No.

13 23-02251, dkt. #65), confirming the Chapter 13 Plan dated 03/08/2024 (the “Plan”, Bankr. Case

14 No. 23-02251, dkt. #61).

15 13. Part 3 of the confirmed Plan proposed the surrender of the collateral that secures

16 Cooperativa’s claim as follows:

The Debtor(s) elect to surrender to [Cooperativa] the collateral [(Coop. Roosevelt

18 Road, shares)] that secures [Cooperativa’s] claim. The Debtor(s) request that upon

confirmation of this plan, the stay under 11 U.S.C. § 362(a) be terminated as to the

19 collateral only and that the stay under § 1301 be terminated in all respects. Any

allowed unsecured claim resulting from the disposition of the collateral will be

20 treated in Part 5 below.

21 Plan, Bankr. Case No. 23-02251, dkt. #61, Part 3, item 3.5.

22 14. Part 5 of the confirmed Plan further provides that nonpriority unsecured claims

23 shall be paid pro rata from the funds remaining after disbursements have been made to all other

24 creditors provided for in this plan. See Plan, Bankr. Case No. 23-02251, dkt. #61, Part 5, item

25 5.1.

26 15. Part 8 of the confirmed Plan, which outlines nonstandard plan provisions, reads as

27 follows:

PAYMENT/DISTRIBUTION ON SECURED AND/OR PRIORITY CLAIMS

Any payment and/or distribution on any secured and/or priority claim, which is

2 listed for or provided for under Section … 3.5 … of this Chapter 13 Plan is

specifically subject to and/or conditioned upon such secured or priority creditor

3 being deemed the holder of an "Allowed Claim" in at least such an amount.

Conversely, where the secured or priority creditor is deem[ed] to hold an "Allowed

4 Claim' in an amount less than the amount provided for herein or holder of a not

"Allowed Claim" (i.e., where the claim is disallowed) then and notwithstanding the

amount set-forth in Section ….3.5 … the secured and/or priority creditor shall only

6 be entitled to a payment[ ]up to the amount of its "Allowed Claim."

Plan, Bankr. Case No. 23-02251, dkt. #61, Part 8, item 3.

16. On December 3, 2024, Cooperativa setoff the amount of $451.18 held in Debtors’

shares account to partially satisfy the Master Card Debt. See Cooperativa Proposed Fact ¶ 8;

Maldonado Affidavit ¶ 10. See also Shares History, dkt. #12-1, p. 7, transaction no. 46609102,

and dkt. #12-2, p. 7, transaction no. 46609102.

17. On December 13, 2024, Debtor Ramos González withdrew $397.00 from Debtors’

shares account with Cooperativa. See Cooperativa Proposed Fact ¶ 11; Maldonado Affidavit ¶

13. See also Shares History, dkt. #12-1, p. 7, transaction no. 46734282, and dkt. #12-2, p. 7,

transaction no. 46734282; Withdrawal of Shares Request, dkt. #12-1, p. 9, and dkt. #12-2, p. 8,

and dkt. #12-2, pp. 10-11.

18. On July 21, 2025, the court entered an Order Granting Modification of Plan After

Confirmation (dkt. #92), approving the Chapter 13 Plan dated 06/24/2025 (the “PCM”, Bankr.

Case No. 23-02251, dkt. #90) which proposes the same treatment for Cooperativa outlined in the

prior confirmed Plan. See Bankr. Case No. 23-02251, dkt. #90, Part 3, item 3.5; Part 5, item 5.1;

and Part 8, item 3.

19. Both the confirmed Plan and the approved PCM treat Cooperativa’s claim as

secured. See Plan, Bankr. Case No. 23-02251, dkt. #61, Part 3, item 3.5; PCM, Bankr. Case No.

23-02251, dkt. #90, Part 3, item 3.5.

20. Both the confirmed Plan and the approved PCM provide for the surrender of the

collateral that secures Cooperativa’s claim, specifically “Coop. Roosevelt Road, shares”;

termination of the stay under 11 U.S.C. § 362(a) upon confirmation; and for any allowed

1 unsecured claim resulting from the disposition of the collateral to be paid pro rata from the funds

2 remaining after disbursements have been made to all other creditors provided for in such Plan or

3 PCM. See Plan, Bankr. Case No. 23-02251, dkt. #61, Part 3, item 3.5 and Part 5, item 5.1; PCM,

4 Bankr. Case No. 23-02251, dkt. #90, Part 3, item 3.5, and Part 5, item 5.1.

5 21. At all relevant times following the Petition Date, Cooperativa has not withheld or

6 placed any restrictions on Debtors’ access to their accounts. See Cooperativa Proposed Fact ¶

7 10; Maldonado Affidavit ¶ 12. See also Shares History, dkt. #12-1, 12-2; Withdrawal of Shares

8 Request(s), dkt. #12-1, 12-2.

9 22. At all relevant times following the Petition Date, the Debtors have continued

10 unrestricted, full and complete access to their savings and shares accounts with Cooperativa. See

11 Cooperativa Proposed Fact ¶ 11; Maldonado Affidavit ¶ 13. See also Shares History, dkt. #12-1,

12 12-2; Withdrawal of Shares Request(s), dkt. #12-1, 12-2.

13 Position of the Parties

14 Cooperativa avers that although its amended claim (POC #3-2) was filed as unsecured and

15 without a right of set-off, the confirmed Plan provided secured treatment for the claim via the

16 surrender of collateral and termination of the stay. Cooperativa argues that the only setoff

17 Cooperativa pursued was on December 3, 2024, eight (8) months after confirmation. Therefore,

18 there was no violation of the automatic stay by Cooperativa under 11 U.S.C. § 362(a), willful or

19 otherwise. With respect to the claims under Section 1666(h) of the FCBA, which bars a creditor

20 from taking any action to “offset” a credit card holder's indebtedness to the creditor card issuer

21 unless the offset is authorized in writing by the cardholder, Cooperativa argues that upon

22 confirmation of the Plan, Cooperativa accepted the surrender of a portion of the collateral that

23 secured its Master Card debt claim against the Debtor-Plaintiffs, as expressly permitted under

24 such Plan. Because the Debtor-Plaintiffs authorized Cooperativa’s “offset” in writing, and the

25 parties are subject to the federal confirmation order permitting the surrender of collateral to

26 Cooperativa, 15 U.S.C § 1666h(a) was not violated by Cooperativa.

1 In its Opposition to Summary Judgment, the Debtor-Plaintiffs argue that Cooperative

2 applied a post-petition setoff of approximately $451.18 against Debtor-Plaintiffs’ deposit account

3 to satisfy an alleged prepetition credit card debt, and deprived Debtor-Plaintiffs of access to their

4 funds without legal authorization and despite having actual knowledge of the bankruptcy case.

5 They argue that the forgoing constitute actual injury under 11 U.S.C. § 362(k). Debtor-Plaintiffs

6 argue that Section 3.5 of the confirmed Plan “is expressly conditional and presupposes the

7 existence of collateral that actually secures the creditor’s claim. Here, however … no such

8 collateral existed. Cooperativa’s original Proof of Claim asserting secured status was objected to,

9 and Cooperativa thereafter amended its Proof of Claim, reclassifying the claim as unsecured …

10 As a result, there was no collateral securing Cooperativa’s claim to surrender, and Section 3.5

11 could not operate to confer secured status or authorize any disposition of funds” (dkt. #23, p. 9).

12 “Because Cooperativa’s alleged secured claim was never allowed as secured, and was instead

13 amended and reclassified as unsecured, Cooperativa never held an Allowed Secured Claim within

14 the meaning of the Plan. Under the Plan’s own express terms, any treatment contemplated under

15 Section 3.5 was therefore inoperative as to Cooperativa, and the Confirmed Plan did not transform

16 Cooperativa into a secured creditor or authorize any setoff or unilateral application of Debtors’

17 funds” (id., pp. 9-10). Because “[a] confirmed plan is binding under 11 U.S.C. § 1327(a) only as

18 to the treatment of allowed claims, [] it cannot be used to override or circumvent the allowance

19 procedure mandated by §§ 501 and 502” (id., p. 12). Consequently, “ “[a] Chapter 13 plan may

20 treat secured claims, but it cannot transform an unsecured claim into a secured one, nor can it

21 operate as an independent source of lien creation or enforcement authority” (id., p. 13) (italics

22 original). “Because Cooperativa never held an Allowed Secured Claim, it lacked any legal basis

23 to act as a secured creditor or to exercise unilateral control over estate property” (id., p. 14).

24 With respect to the claims under Section 1666(h) of the FCBA, the Debtor-Plaintiffs argue

25 that “[a] confirmed Chapter 13 plan cannot authorize conduct that a federal consumer protection

26 statute expressly prohibits. The FCBA imposes independent statutory limits on a card issuer’s

27 conduct, and those limits are not displaced by plan confirmation under § 1327(a). Confirmation

1 binds parties to the treatment of allowed claims; it does not immunize creditors from compliance

2 with nonbankruptcy federal law” (id., pp. 16-17). Consequently, the Debtor-Plaintiffs posit that

3 the “conditional plan language” in the confirmed Plan is not “a blanket authorization to offset

4 consumer deposit accounts, despite the absence of a valid security interest and despite the FCBA’s

5 express prohibition” (id., p. 17).

6 In its Reply (dkt. #31), Cooperativa avers that Debtor-Plaintiffs arguments rest on a

7 fundamental misreading of the confirmed Plan as POC #3-2 constitutes an allowed claim, and the

8 Plan expressly calls for the surrender of the collateral, and on mischaracterization of applicable

9 bankruptcy law because the claims allowance process does not override plan confirmation.

10 Cooperativa further posits that Debtor-Plaintiffs reliance on Part 8 is misplaced as that provision

11 addresses distributions and payments under the plan, not the surrender of collateral under Section

12 3.5. And, that the claims allowance process cannot be weaponized to override confirmed plan

13 provisions. Cooperative further argues that the Plan constitutes “written authorization” under §

14 1666h(a)(1). In their Sur-Reply (dkt. #38), the Debtor-Plaintiffs largely repeat their earlier

15 arguments.

16 Applicable Law and Analysis

17 (A) Summary Judgment Standard under Fed. R. Civ. P. 56

18 Under Fed. R. Civ. P. 56, made applicable to adversary proceedings under Fed. R. Bankr.

19 P. 7056, summary judgment is appropriate when “the movant shows that there is no genuine

20 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.

21 Civ. P. 56(a). See also Fed. R. Bankr. P. 7056; Celotex Corp. v. Catrett, 477 U.S. 317, 322-332

22 (1986); In re Colarusso, 382 F.3d 51 (1st Cir. 2004); Alicea v. Wilkie, 2020 WL 1547064, 2020

23 U.S. Dist. LEXIS 57213 (D.P.R. 2020).

24 “The summary-judgment procedure authorized by Rule 56 is a method for promptly

25 disposing of actions in which there is no genuine dispute as to any material fact or in which only

26 a question of law is involved.” Charles A. Wright, Arthur R. Miller, & Mary K. Kane, 10A Federal

27 Practice and Procedure § 2712 (4th ed., West 2022). “Rule 56 provides the means by which a

1 party may pierce the allegations in the pleadings and obtain relief by introducing outside evidence

2 showing that there are no fact issues that need to be tried.” Id. (footnotes omitted). “[S]ummary

3 judgment is not a substitute for the trial of disputed fact issues. Accordingly, the court … is

4 empowered [only] to determine whether there are issues to be tried.” Id. (footnotes omitted). See

5 also Bernier v. Treasury Dep't (In re Bernier), 2022 WL 17096264, at *5, 2022 Bankr. LEXIS

6 3283, at *17-18 (Bankr. D.P.R. 2022) (“the court may only determine whether there are issues to

7 be tried, and it is improper if the existence of a material fact is uncertain.”).

8 “A dispute is 'genuine' if the evidence about the fact is such that a reasonable jury could

9 resolve the point in favor of the non-moving party.” Thompson v. Coca-Cola Co., 522 F.3d 168,

10 175 (1st Cir. 2008), quoting Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.1996). See also

11 Andino-Oquendo v. Federal National Mortgage Association, 2023 WL 2245072, at *1, 2023 U.S.

12 Dist. LEXIS 34375, at *2 (D.P.R. 2023), quoting Alicea, 2020 WL 1547064, at *2, 2020 U.S.

13 Dist. LEXIS 57213, at *4. A fact is material only if it is determinative of the outcome of the

14 litigation. See Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir. 1975), cert. denied, 425 U.S. 904

15 (1976); Maymí v. P.R. Ports Auth., 515 F. 3d 20, 25 (1st Cir. 2008); In re Financial Oversight

16 and Management Board for Puerto Rico, 650 B.R. 334, 353 (D.P.R. 2023), quoting Vineberg v.

17 Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008) (“Material facts are those that ‘possess[ ] the capacity

18 to sway the outcome of the litigation under the applicable law,’ and there is a genuine factual

19 dispute where an issue ‘may reasonably be resolved in favor of either party.’ ”).

20 When considering a petition for summary judgment, the court must review the evidence

21 in the light most favorable to the nonmoving party. See Thompson, 522 F.3d at 172, citing

22 Franceschi v. United States VA, 514 F.3d 81, 83 (1st Cir. 2008). The moving party invariably

23 bears both the initial as well as the ultimate burden in demonstrating its legal entitlement to

24 summary judgment. See Adickes v. Kress & Co., 398 U.S. 144, 157 (1970); López v. Corporación

25 Azucarera de Puerto Rico, 938 F.2d 1510, 1516 (1st Cir. 1991); Alicea, 2020 WL 1547064, at *2,

26 2020 U.S. Dist. LEXIS 57213, at *4. It is essential that the moving party explain its reasons for

27 concluding that the record does not contain any genuine issue of material fact in addition to

1 making a showing of support for those claims for which it bears the burden of trial. See Bias v.

2 Advantage International, Inc., 905 F.2d 1558, 1560–61 (D.C. Cir. 1990), cert. denied, 498 U.S.

3 958 (1990).

4 To that end, L. Civ. R. 56(b) requires a movant to include a separate, short, and concise

5 statement of material facts and to support each factual assertion with a citation to the evidentiary

6 record. See L. Civ. R. 56(b), (e). “The court may disregard any statement of fact not supported

7 by a specific citation to record material properly considered on summary judgment,” and “shall

8 have no independent duty to search or consider any part of the record not specifically referenced

9 in the parties’ separate statement of facts.” L. Civ. R. 56(e).

10 The moving party cannot prevail if any essential element of its claim or defense requires

11 trial. See López, 938 F.2d at 1516. In addition, the moving party is required to demonstrate that

12 there is an absence of evidence supporting the nonmoving party's case. See Celotex, 477 U.S. at

13 325; Prokey v. Watkins, 942 F.2d 67, 72 (1st Cir. 1991); Daury v. Smith, 842 F.2d 9, 11 (1st Cir.

14 1988). In its opposition, the nonmoving party must show genuine issues of material facts

15 precluding summary judgment; the existence of some factual dispute does not defeat summary

16 judgment. See Kennedy v. Josephthal & Co., Inc., 814 F.2d 798, 804 (1st Cir. 1987); Kauffman

17 v. Puerto Rico Telephone Co., 841 F.2d 1169, 1172 (1st Cir. 1988); Hahn, 523 F.2d at 464. A

18 party may not rely upon bare allegations to create a factual dispute but is required to point to

19 specific facts contained in affidavits, depositions, and other supporting documents which, if

20 established at trial, could lead to a finding for the nonmoving party. See Over the Road Drivers,

21 Inc. v. Transport Insurance Co., 637 F.2d 816, 818 (1st Cir. 1980). The moving party has the

22 burden to establish that it is entitled to summary judgment; no defense is required where an

23 insufficient showing is made. See López, 938 F.2d at 1517. The nonmoving party need only

24 oppose a summary judgment motion once the moving party has met its burden. See Adickes, 398

25 U.S. at 159.

26 (B) The Claims Allowance Process and the Binding Effect of Plan Confirmation on Claims

1 Sections 501 and 502 of the Bankruptcy Code govern the filing and allowance of claims

2 in bankruptcy proceedings. See 11 U.S.C. §§ 501, 502. Section 501(a) and Section 502(a)

3 provides that “[a] creditor … may file a proof of claim”, 11 U.S.C. § 501(a), which “is deemed

4 allowed, unless a party in interest ... objects.” 11 U.S.C. § 502(a).

5 In the context of a case under Chapter 13 of the Bankruptcy Code, a secured creditor is

6 not required to file a proof of claim or participate in the bankruptcy process to protect its lien

7 because the same passes through the bankruptcy process unaffected. See In re Alonso, 525 B.R.

8 195, 204 (Bankr. D.P.R. 2015), citing Dewsnup v. Timm, 502 U.S. 410, 417 (1992), In re

9 Galindez, 514 B.R. 79, 91 (Bankr. D.P.R. 2014), and 11 U.S.C. § 506(d). However, to the extent

10 a secured creditor wants to partake in the plan distributions, it must file a proof of claim. See id.

11 Section 1327(a) of the Bankruptcy Code, which addresses the effects of plan confirmation,

12 provides as follows:

The provisions of a confirmed plan bind the debtor and each creditor, whether or

14 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.

16 11 U.S.C. § 1327(a).

17 “Section 1327(a) is a strong statement: The terms of a confirmed plan are legal obligations

18 of the debtor and all creditors without regard to whether the plan provides for the creditor's claim

19 and without regard to whether the creditor participated in the confirmation process.” In re

20 Galindez, 514 B.R. 79, 89 (Bankr. D.P.R. 2014) (citations omitted). “Plan confirmation is a final

21 order, with res judicata effect, and is imbued with the strong policy of favoring finality.” Id.,

22 quoting Factors Funding Co. v. Fili (In re Fili), 257 B.R. 370, 373 (1st Cir. BAP 2001). “Absent

23 timely appeal, the confirmed plan is res judicata and its terms are not subject to collateral attack.

24 The res judicata effect of confirmation may be eliminated only if confirmation is revoked or if

25 the case is later dismissed or converted to another chapter.” Id. (citations omitted).

26 The Bankruptcy Appellate Panel for our First Circuit has discussed the binding effect of

27 a confirmed plan under Section 1327(a) and stated as follows:

[O]nce a bankruptcy plan is confirmed, the debtor and each creditor are bound by

2 its terms. As the First Circuit has explained, confirmation of a Chapter 13 plan

customarily is res judicata as to all issues that were or could have been decided

3 during the confirmation process. There must be finality to a confirmation order so

that all parties may rely upon it without concern that actions that they may later

4 take could be upset because of a later change or revocation of the order. The United

States Supreme Court has emphasized that plan confirmation orders are final and

binding regardless of pre-confirmation rights held by creditors. See United Student

6 Aid Funds, Inc. v. Espinosa, [559 U.S. 260] (2010).

7 The binding effect of confirmation has led courts to conclude that once a plan is

confirmed, a creditor's rights and interests are defined within the boundaries of the

8 plan, and proceedings that are inconsistent with the confirmed plan are improper,

even if they fall within an exception to the automatic stay.8 As one commentator

has stated:

Because creditors are limited to those rights that they are afforded

by the plan, they may not take actions to collect debts that are

12 inconsistent with the method of payment provided for in the plan.

They may not exercise prepetition rights they may have had to

13 collect a debt by setoff, foreclosure or otherwise. The automatic stay

of section 362(a) usually remains in effect as to collection efforts on

virtually all prepetition debts until the case is closed or dismissed or

15 until a discharge order is entered. Even actions that would be

permitted by an exception to the automatic stay can be barred by the

16 terms of a confirmed plan.

4–1327 Collier Bankruptcy Manual, at ¶ 1327.02[1][b] (emphasis added). Thus, it

18 is clear that all creditors are bound by a confirmation order and that even actions

that would be permitted by an exception to the automatic stay (such as the

interception of tax refunds to pay domestic support obligations as authorized by §

20 362(b)(2)(f)) may be prohibited under a confirmed plan.

21 New Hampshire v. McGrahan (In re McGrahan), 459 B.R. 869, 874-875 (1st Cir. BAP 2011)

22 (citations omitted). See also Galindez, 514 B.R. at 97.

23 In Galindez, supra, this court concluded that the provisions contained in

24 a confirmed plan (or a post-confirmation modified plan) trump the contrary provisions of an

25 allowed amended proof of claim so long as the secured creditor whose claim is subject to

26 modification has been duly noticed, as follows:

The second approach labeled as the “the chapter 13 plan process over the claims

process” or “emphasis on the res judicata effect of a confirmed plan” proposes that

2 the chapter 13 plan confirmation under § 1327 is sufficient to modify a secured

creditor's lien through a plan. … [I]f [a] secured creditor has been duly noticed of

3 the proposed chapter 13 plan, notwithstanding that it has filed a discrepant proof of

claim, then the secured creditor's failure to object to the plan can result in a

4 modification of its claim and lien. See In re Gordon, 2011 Bankr.Lexis 3848, at

*22; In re Pence, 905 F.2d 1107 (7th Cir.1990); In re Ramey, 301 B.R. 534, 545

(Bankr.E.D.Ark.2003) (“The principles of res judicata should be applied except in

6 cases where the notice to the creditor of the plan treatment of the lien is so

insufficient that it violates due process of law”); In re Searcy, 333 B.R. 617, 623

7 (Bankr.D.Mass.2005) (“... provisions in an adequately noticed Chapter 13 plan

which modify the rights of a secured creditor are the functional equivalent of a

8 claims objection under § 502(a). It does not matter, substantively, which route the

debtor takes so long as the creditor is informed of the itinerary and has an adequate

opportunity to respond to either by defending its proof of claim or by pressing an

10 objection to the plan.”).

…

11 This court adopts the second approach, which emphasizes the binding effect of a

confirmed plan provided that the due process requirements of reasonable and actual

12 notice were satisfied. This view is aligned with the Espinosa decision, which

supports the principle of finality of plan confirmation orders. Confirmation of a

chapter 13 plan affords it res judicata effect and therefore prevents relitigation of

14 matters that either were raised or could have been raised prior to confirmation.

15 After carefully analyzing the pertinent jurisprudence, the commentators and the

relevant sections of the Bankruptcy Code, this court concludes that the stage of the

16 bankruptcy process in which the inconsistency between the claims allowance

process and the binding effect of the plan arises is critical and essential in

determining which should prevail. Also, the sufficiency of the notice of the

18 treatment provided to a secured creditor before plan confirmation must afford

reasonable time for the creditor to object to the plan. Thus, timing and due notice

19 are key to the binding effect of a confirmed plan and the finality of plan

confirmation orders. On the other hand, if a discrepant secured proof of claim is

20 filed before the plan confirmation, then the debtor or Trustee should object the same

as part of the claims allowance/disallowance process and before the entry of the

confirmation order. The conflict between the claims allowance process and the plan

22 confirmation process oftentimes occurs when the plan gets confirmed prior to the

claims bar date and the creditor files after plan confirmation a timely proof of claim.

23 It behooves the debtor or the chapter 13 trustee to object the secured proof of claim

prior to confirmation to avoid the friction between the claims allowance process

and the plan confirmation process.

25 514 B.R. at 95-98 (citations omitted, italics original).

26 In this case, Cooperativa originally filed a partially secured proof of claim. See POC #3-

27 1. Following the Debtor-Plaintiffs’ objection, Cooperativa amended its claim solely to reclassify

1 it as wholly unsecured; the amount of the claim ($726.79) remained unchanged. See POC #3-2.

2 Because no party objected to POC #3-2, the amended claim is deemed allowed pursuant to 11

3 U.S.C. § 502(a). Notwithstanding Cooperativa’s allowed claim being wholly unsecured, the

4 Debtor-Plaintiffs elected to provide for POC #3 as secured claim under both the Plan and

5 subsequent PCM. Specifically, both the Plan and PCM identify the claim as secured by “Coop.

6 Roosevelt Road, shares”. See Plan, Bankr. Case No. 23-02251, dkt. #61, Part 3, item 3.5; PCM,

7 Bankr. Case No. 23-02251, dkt. #90, Part 3, item 3.5. Now, the Debtor-Plaintiffs contend that

8 Part 8 of the Plan and PCM qualify or condition the treatment afforded to Cooperativa under Part

9 3. See Plan, Bankr. Case No. 23-02251, dkt. #61, Part 8, item 3; PCM, Bankr. Case No. 23-02251,

10 dkt. #90, Part 8, item 3.

11 The court is not persuaded by the Debtor-Plaintiffs interpretation of Part 8. As explained

12 above, where a creditor receives adequate notice, the treatment set forth in a confirmed plan (or

13 a post-confirmation modified plan) trump the contrary provisions of an allowed proof of claim.

14 Here, the Debtor-Plaintiffs themselves elected to treat Cooperativa’s claim as secured and

15 expressly identified their shares at Cooperativa as the collateral securing that claim. The

16 confirmed Plan and approved PCM therefore define Cooperativa’s rights with respect to that

17 collateral.

18 In reliance on the finality of the confirmation order and on the treatment prescribed in the

19 Plan and PCM, including the surrender of the collateral identified by the Debtor-Plaintiffs as

20 securing Cooperativa’s claim, Cooperativa collected $451.18 from the Debtor-Plaintiffs’ shares

21 account. See Cooperativa Proposed Fact ¶ 8; Maldonado Affidavit ¶ 10; Shares History, dkt. #12-

22 1, p. 7, transaction no. 46609102, and dkt. #12-2, p. 7, transaction no. 46609102. To the extent

23 that Cooperativa collected funds constituting the collateral surrendered under the confirmed Plan

24 and approved PCM, that collection was consistent with the confirmed treatment of its claim and

25 cannot constitute a violation of the automatic stay.

26 The present record, however, raises a genuine dispute as to whether the entire $451.18

27 collected by Cooperativa constituted collateral subject to surrender under the Plan and PCM. The

1 Debtor-Plaintiffs scheduled the Cooperativa shares at $299.00 and disclosed Cooperativa’s claim

2 as secured by shares valued at $299.00.2 See Bankr. Case No. 23-02251, dkt. #1, Schedule A/B,

3 p. 12, item no. 17 (disclosing Coop. Roosevelt Road shares totaling $299.00); Schedule D, p. 27,

4 item no. 2.2 (disclosing claim of $549.58, secured by shares valued at $299.00). Thus, although

5 the confirmed Plan and approved PCM authorized Cooperativa to proceed against the surrendered

6 shares collateral, a material factual issue remains regarding the amount and scope of that

7 collateral, including whether Cooperativa’s collection of $451.18 exceeded the value of the shares

8 identified by the Debtor-Plaintiffs in their schedules and Plan treatment. Summary judgment as

9 to Count I is therefore not appropriate.

10 (C) The Bankruptcy Code and the FCBA

11 The Truth in Lending Act (“TILA”), which promotes “the informed use of credit”, Pub.

12 L. No. 90-321, 82 Stat. 146 (1968), was amended via the FCBA, to create more protections against

13 “inaccurate and unfair credit billing and credit card practices” Pub. L. No. 93-495, 88 Stat. 1500

14 (1974) (codified as amended at 15 U.S.C. § 1666-1666j), including a prohibition on offsets. See

15 15 U.S.C. § 1666h. Specially, the FCBA provides that “[a] card issuer may not take any action to

16 offset a cardholder’s indebtedness arising in connection with a consumer credit transaction under

17 the relevant credit card plan against funds of the cardholder held on deposit with the card issuer.

18 Id. § 1666h(a); 12 C.F.R. § 226.12(d)(1).” Johnson v. Bank of Am., Inc., 2021 WL 4307148, at

19 3, 2021 U.S. Dist. LEXIS 182624 (D.N.M. 2021) (emphasis omitted).

20 The FCBA contains an exception to the offset prohibition under which a card issuer may

21 offset to satisfy a debt where:

(1) such action was previously authorized in writing by the cardholder in

23 accordance with a credit plan whereby the cardholder agrees periodically to pay

debts incurred in his open end credit account by permitting the card issuer

24 periodically to deduct all or a portion of such debt from the cardholder's deposit

account, and

27 2 The court may take judicial notice of its own docket. See LeBlanc v. Salem (In re Mailman Steam Carpet Cleaning

Corp.), 196 F.3d 1, 8 (1st Cir. 1999) (“The bankruptcy court appropriately took judicial notice of its own docket.”).

(2) such action with respect to any outstanding disputed amount not be taken by the

card issuer upon request of the cardholder.

2 15 U.S.C. § 1666h(a)(1)-(2).

3 Regulation Z, which implements 15 U.S.C. § 1666h, nevertheless provides that a card

4 issuer may offset a cardholder’s indebtedness “if it obtains or enforces a consensual security

5 interest in the funds.” In re Lyon, 2010 WL 3777827, at 6-7, 2010 Bankr. LEXIS 3374 (Bankr.

6 D. Ariz. 2010) (italics original). See also 12 C.F.R. § 226.12(d)(2). “To qualify for the exception

7 stated in § 226.12(d)(2), a security interest must be affirmatively agreed to by the consumer and

8 must be disclosed in the issuer's account-opening disclosures under § 226.6. The security interest

9 must not be the functional equivalent of a right of offset; as a result, routinely including in

10 agreements contract language indicating that consumers are giving a security interest in any

11 deposit accounts maintained with the issuer does not result in a security interest that falls within

12 the exception in § 226.12(d)(2).” In re Ocasio Delgado, 2025 WL 2231167, at *2 (Bankr. D.P.R.

13 Aug. 5, 2025), citing Martino v. Am. Airlines Fed. Credit Union, 121 F. Supp. 3d 277 (D. Mass.

14 2015).

15 Here, the parties dispute whether Cooperativa’s collection of funds from the Debtor-

16 Plaintiffs’ shares account constitutes an impermissible offset under the FCBA or, instead, the

17 enforcement of a consensual offset pursuant to the confirmed Plan and approved PCM. The

18 parties further dispute whether the Plan and PCM, considered together with the underlying

19 account and credit-card agreements, satisfy the requirements of the written-authorization

20 exception set forth in 15 U.S.C. § 1666h(a)(1)–(2).

21 Resolution of Count II necessarily requires a review of the underlying account and credit-

22 card agreement, as well as a determination of whether Cooperativa’s collection efforts conformed

23 to the treatment prescribed by the confirmed Plan and approved PCM. The record presently does

24 not permit that determination. Although POC #3-2 includes a Retail Installment Sale Contract,

25 Revolving Credit Plan, and Credit Card Agreement (“Contrato de Venta al Por Menor a Plazos[,]

26 Plan de Cuentas Rotativas [y] Contrato de Tarjeta de Credito”), the same is in the Spanish

27 language. See POC #3-2, p. 5. To the extent a certified English translation has not been filed, the

1 || underlying account and credit-card agreement is not properly before the court.> Consequently, the

2 court cannot consider the agreement’s terms in determining whether the requirements of 15

3 U.S.C. § 1666h(a)(1)-(2), or the consensual-security-interest exception recognized by Regulation

4 ||Z, have been satisfied. Moreover, and as discussed above, a genuine dispute of material fact

5 || remains as to whether the $451.18 collected by Cooperativa exceeded the value and scope of the

6 || shares collateral surrendered under the Plan and PCM. That unresolved factual issue also bears

7 || directly on whether Cooperativa’s conduct falls within a recognized exception to the FCBA’s

8 || prohibition against offsets. Accordingly, summary judgment as to Count II is not appropriate.

9 Conclusion

10 For the reasons stated herein, the Motion for Summary Judgment (dkt. #11) is DENIED.

11 || The initial scheduling conference shall be rescheduled via separate order.

12 IT IS SO ORDERED.

13 In San Juan, Puerto Rico, this 15" day of September 2026.

ique S. Lamoutte

United States Bankruptcy Judge

23 ||? “It is well settled that the law incontrovertibly demands that federal litigation in Puerto Rico be conducted in

English”, in accordance with 48 U.S.C. § 864. Banco Popular de P.R. v. Santiago-Salicrup, 630 B.R. 374, 378 (D.P.R.

24 |} 2021), citing Estades-Negroni v. Assocs. Corp. of N. Am., 359 F. 3d 1, 2-3 (1st Cir. 2004). See also 48 U.S.C. § 864

(“All pleadings and proceedings in the United States District Court for the District of Puerto Rico shall be conducted

25 || in the English language.”); L. Civ. R. 5(c) (“All documents not in the English language which are presented or filed,

whether as evidence or otherwise, must be accompanied by a certified translation into English...”); P.R. LBR 9070-

26 || 1c) GALL Exhibits and documentary evidence in Spanish or other language shall be fully translated to the English

language by a certified translator.”); In re Bernier, 2022 WL 17096264, at *6-7, 2022 Bankr. LEXIS 3283, at *17-

27 18 (Bankr. D.P.R. 2022) (holding that documents not in the English language should not be considered).

Consequently, this court will only consider the merits of those documents filed in the English language.

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