Although the debtor’s confirmed chapter 13 plan included a provision for release of the mortgage lien upon payment of the lender’s claim, the bankruptcy court erred in releasing the lien when the claim was for arrearages only, there remained outstanding principle at the end of the plan, and the mortgagee challenged release of the lien prior to discharge. Mortgage Corp. of the South v. Bozeman, No.21-10987 (11th Cir. Jan. 10, 2023). Read More
Tag Archive: 1322(b)(2)
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Plan Confirmation Does Not Defeat Antimodification Provision
Posted by NCBRC - January 16th, 2023
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Modification of Pawn Contract
Posted by NCBRC - July 1st, 2021
Where the debtor entered bankruptcy prior to the maturation date of her pawn contract, she had an ownership interest in her pawned vehicle, the lender was a lienholder, and the pawn contract could be modified under section 1322(b). TitleMax of Alabama, Inc. v. Womack, 2021 WL 1343051 (M.D. Ala. April 9, 2021) (case no. 2:20-cv-416). Read More
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Bankruptcy Court Discusses Novel Argument Contesting Cram Down of Totally Unsecured Mortgage
Posted by NCBRC - August 5th, 2019
In 2004 the Debtors purchased their home with a $209,000.00 purchase money deed of trust held by Bayview Loan Servicing (Bayview). In 2006 the Debtors obtained a second mortgage from Madison Management Services (Madison). In 2017, the Debtors and Bayview entered into a loan modification agreement that provided for a new principal balance of $257,566.94.
The Debtors filed a chapter 13 bankruptcy. Bayview filed a claim indicating total indebtedness of $255,741.64. Madison filed a claim for $141,323.78. The stipulated value of Debtors’ is between $250,000.00 to $254,000.00.
Subsequently the Debtors filed a motion to avoid the second lien because it was completely unsecured.
Madison countered that its lien was not totally unsecured. Under Maryland state law, when a mortgage is refinanced to increase the principal balance, the amount of the increased balance is given lien priority as of the date of the loan modification, not the date of the original loan. Therefore, Bayview effectively has two effective dates for its liens. The balance owed at the time of the refinance has priority as of 2004, and another lien (in the amount of the increased balance) with priority as of 2017. Therefore, when calculating whether Madison’s lien is totally unsecured the court should take Bayview’s first lien (approximately $207,000), then Madison’s lien ($141,323.78), then the balance of the Bayview’s increased lien ($48,566.94). Since Madison’s lien is no longer totally unsecured, its lien is protected by the anti-modification provision in 11 U.S.C. @ 1322(b)(2).
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Debtors’ Manufactured Home Was Personal Property Under Iowa Law
Posted by NCBRC - March 8th, 2019
The Eighth Circuit found no clear error in the bankruptcy court’s finding that, under Iowa common law, the chapter 13 debtors’ manufactured home was personal property and therefore the debt it secured was not subject to section 1322(b)’s anti-modification provision. The Paddock, LLC v. Bennett, No. 18-2098 (Feb. 28, 2019).
Benjamin and Teresia Bennett purchased a manufactured home from Paddock, and placed it on a lot owned by Paddock under a 990-year lease. In their chapter 13 bankruptcy, the Bennetts proposed to bifurcate the debt secured by the manufactured home into secured and unsecured portions under section 506(a)(1). Paddock objected arguing that the home was real property and the interest was subject to the anti-modification provision of section 1322(b). The bankruptcy court found that, under Iowa law, the home was personal property and confirmed the plan. In re Bennett, 2017 WL 1417221 (Bankr. N.D. Iowa Apr. 20, 2017). The Bankruptcy Appellate Panel affirmed. In re Bennett, 584 B.R. 15 (B.A.P. 8th Cir. 2018). Read More
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Condominium Act Reprioritizes Lien
Posted by NCBRC - March 4th, 2016
The New Jersey Condominium Act reprioritizes the condominium association’s lien making it partially secured and subject to the anti-modification provision of section 1322(b). Whispering Woods Condominium Assoc. v. Rones, No. 15-4271 (D. N.J. Feb. 17, 2016). Read More
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Effect of Foreclosure Sale on Right to Cure and Maintain
Posted by NCBRC - March 17th, 2014
A couple recent cases deal with application of the automatic stay when the debtor files his bankruptcy petition in the no-man’s-land between a foreclosure sale and the legal transfer of title through recordation. TD Bank v. LaPointe, No. 13-29 (B.A.P. 1st Cir. Feb. 24, 2014) and In re Comer, No. 13-12148 (Bankr. E.D. Tenn. March 10, 2014). Read More
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Tax Purchaser Claim May Be Modified in Chapter 13
Posted by NCBRC - January 13th, 2014
In a chapter 13 bankruptcy filed prior to the expiration of the redemption period, a real property tax purchaser’s claim is treated as a secured claim which may be modified in the plan. Alexandrov v. LaMont (In re LaMont), No. 13-1187 (7th Cir. Jan. 7, 2014). Read More
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8th Cir. BAP Allows Strip Off in No-Discharge 13
Posted by NCBRC - August 29th, 2011
Today the Bankruptcy Appellate Panel for the Eighth Circuit reversed a Minnesota Bankruptcy Court in Fisette v. Keller, No. 11-6012, and that a debtor may strip off wholly underwater junior mortgages when the debtor is not eligible for a discharge in chapter 13. Prior to Fisette, the bankruptcy courts in the District of Minnesota had disallowed the strip of of underwater mortgages even when the debtor was eligible for a discharge. See the decision here.
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HAVEN Act Guide
The Honoring American Veterans in Extreme Need Act of 2019 (“HAVEN Act”) excludes certain benefits paid to veterans or their family members from the definition of current monthly income (“CMI”) found in the Bankruptcy Code. The HAVEN Act amends § 101(10A) of the Bankruptcy Code and supplements the 2005 amendments to the Code that excluded other government benefits, such as social security income.
This Guide provides an overview of the HAVEN Act identifies benefits that are excluded, and answers frequently asked questions.
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