Bullard v. Hyde Park Savings Bank
494 B.R. 92
1st Cir. BAP2013Background
- Bullard files for Chapter 13 and proposes a hybrid plan to bifurcate Hyde Park Savings Bank's secured claim under § 506(a) and § 1322(b)(2).
- Plan would reduce the secured portion to the property value and pay the unsecured portion a dividend over 60 months, while continuing payments on the secured portion beyond the plan term.
- Hyde Park holds a mortgage on Bullard's multi-unit residential property; value and current payments are not contested, but the plan seeks to alter the rights defined by the note and mortgage.
- Bankruptcy court rules the hybrid plan is not confirmable under the Code; Bullard appeals.
- The panel discusses the conflict between § 1322(b)(2) modification and § 1322(b)(5) cure and maintain, and the five-year limitation in § 1322(d).
- The court ultimately affirms the bankruptcy court, holding hybrid plans cannot be confirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can § 1322(b)(2) and § 1322(b)(5) be combined in a plan? | Bullard argues plan can modify rights and maintain payments beyond term. | Court should treat the two provisions as mutually exclusive in this context. | No; combination is not permissible. |
| Does a hybrid plan satisfy § 1325(a)(5) when a secured creditor objects? | Hyde Park's lien can be retained with continued payments and cure. | Plan impermissibly bifurcates and extends beyond five years, failing § 1325(a)(5). | Plan cannot satisfy § 1325(a)(5) with objection. |
| Does § 1328 discharge exclude Hyde Park's debt if § 1322(b)(5) is used? | Plan provides for the debt via cure and maintenance, so discharge should occur. | § 1328 excludes debts provided for under § 1322(b)(5); lien remains. | Debt not discharged; lien persists due to § 1322(b)(5) treatment. |
| Is the plan consistent with the five-year limit in § 1322(d)? | Maintenance of payments allows extending beyond plan term. | Extension beyond five years is barred when the plan uses § 1322(b)(5) with a modified secured claim. | Five-year limit applies; plan impermissible. |
Key Cases Cited
- Rake v. Wade, 508 U.S. 464 (U.S. 1993) (interprets 'provided for' in § 1328(a) in context of cure and maintenance)
- Nobelman v. Amar. Sav. Bank, 508 U.S. 324 (U.S. 1993) (unitary debt; modification cannot keep secured and unsecured terms separate)
- Shamus Holdings, LLC v. LBM Fin., LLC (In re Shamus Holdings, LLC), 642 F.3d 263 (1st Cir. 2011) (statutory interpretation starts with text; confirms approach to § 1325/§1322 interactions)
- Rockwood v. SKF USA Inc., 687 F.3d 1 (1st Cir. 2012) (clear error/de novo standards; standard of review in bankruptcy appeals)
- In re Bullard, 475 B.R. 304 (Bankr. D. Mass. 2012) (priorMass. Mass. decision describing hybrid plan characteristics)