447 B.R. 359
Bankr. S.D. Florida2011Background
- Debtor Cesar A. Elibo filed a Chapter 13 petition; property is non-homestead investment at 5686 Elder Dr, West Palm Beach, FL; Deutsche Bank holds a first mortgage; property valued at $88,339 with a §506(a) split: secured $88,339 and unsecured $111,661; pre-petition payments were $1,346.35 at 7.25% and arrears totaled $25,727.79; Debtor proposed amended plan paying $487.81 at 5.25% extending beyond five-year term to pay the secured claim in full; Debtor seeks to modify the claim under §1322(b)(2) and extend payments under §1322(b)(5).
- Creditor argues §1322(b)(2) and §1322(b)(5) cannot be used together to pay beyond the plan term; proposes cure only within five years and keep pre-petition terms; asserts if §1322(b)(5) used, arrears must be cured and terms maintained as per original contract.
- Court valued property and bifurcated claim; held §1322(b)(2) and §1322(b)(5) are not mutually exclusive but modification of interest rate with extension beyond plan is not permitted under §1322(b)(5); extension permitted only if payments are maintained at original terms; if extending term, must cure defaults and maintain pre-petition rate; otherwise plan cannot be confirmed.
- Debtor may file a further amended plan within 14 days; the motion to extend beyond the plan is denied; creditor’s fees for responding and objecting to confirmation are denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May §1322(b)(2) and §1322(b)(5) be used together to modify the claim and extend beyond the plan? | Elibo argues both subsections can be used concurrently. | Deutsche Bank argues they are mutually exclusive. | Not mutually exclusive, but interest-rate modification plus extension beyond plan violates §1322(b)(5). |
| Can the debtor extend the secured claim payments beyond the five-year plan term? | Proposed extended cure and maintenance under §1322(b)(5). | Extension requires maintaining payments under original terms and cannot alter rate via §1322(b)(5). | Extension beyond five years allowed only if maintenance is under original terms; otherwise not permitted. |
| What must the debtor do to pay the secured claim over longer than five years? | Keep same payments at reduced rate under planned extension. | Must cure arrears and maintain original rate if extending; otherwise cannot. | If extending, must cure defaults and maintain pre-petition payments and rate; otherwise not allowed. |
Key Cases Cited
- Nobleman v. American Savings Bank, 507 U.S. 324 (U.S. 1993) (modification of rights under §1322(b)(2); 5-year limit under §1322(d))
- In re Ferreira, 223 B.R. 258 (D.R.I. 1998) (bifurcation may modify rights while §1322(b)(5) allows maintenance beyond plan)
- McGregor, 172 B.R. 718 (D. Mass. 1994) (support for combining §1322(b)(2) and §1322(b)(5) under maintenance)
- In re Stivender, 301 B.R. 498 (Bankr. S.D. Ohio 2003) (§1322(b)(5) exception to 5-year plan term)
- In re Enewally, 368 F.3d 1165 (9th Cir. 2004) (mutual exclusivity of §1322(b)(2) and §1322(b)(5) argued by some courts)