472 B.R. 126
Bankr. S.D. Florida2012Background
- Debtor seeks to extend mortgage payments to Aurora beyond plan term and to treat arrears under 1322(b)(5).
- Property securing Aurora loan is not Debtor’s principal residence; value determined at $90,500 with secured claim that amount.
- Aurora’s claim bifurcated under 506(a) into $90,500 secured and $44,623.27 unsecured.
- Plan must address maintenance of payments under 1322(b)(5) for the secured claim and cure of arrears.
- Court explains how to compute maintenance payments under a fluctuating (ARM) rate while preserving bifurcation.
- Arrearage $21,019.08 must be paid within plan and applied to reduce Aurora’s secured claim, not in addition to it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| How to calculate maintenance payments under 1322(b)(5) for an ARM with bifurcated claim | Debtor argues for maintained payments based on prepetition terms and current rate applied to allowed secured claim. | Aurora argues arrearage separate; maintenance of payments not tied to bifurcated balance. | Maintenance payments calculated on full loan balance, not bifurcated amount, with future rate changes. |
| Treatment of the arrearage under 1322(b)(5) relative to the secured claim | Arrearage should be paid to reduce the secured claim along with regular payments. | Arrearage must be paid separate from and in addition to the secured claim. | Arrearage must be paid in installments and applied to reduce the secured claim, not in addition to it. |
| Classification of Aurora's deficiency claim after 506(a) bifurcation | Deficiency should remain unsecured but treated in context with plan. | Deficiency already unsecured cannot be elevated by arrears payments. | Aurora's deficiency claim treated as unsecured. |
| Whether the plan may extend payments beyond the plan term while curing defaults within a reasonable time | Debtor relies on 1322(b)(5) to maintain payments after plan term. | Term limits apply; extension allowed only with cure within reasonable time. | Plan must cure arrears within a reasonable time and maintain payments; extension allowed under 1322(b)(5). |
| Whether re-amortization or recalculation of payments constitutes maintenance of payments | Re-amortization reflects ongoing obligation and complies with 1322(b)(5). | Re-amortization alone is not maintenance of payments; depend on terms. | Re-amortization does not equal maintenance of payments; calculation must start from loan balance and terms. |
Key Cases Cited
- Elibo, In re, 447 B.R. 359 (Bankr. S.D. Fla. 2011) (permits using 1322(b)(2) and 1322(b)(5) to treat non-homestead real property mortgage)
- Ferreira, Fed. Nat'l Mortg. Ass’n v. Ferreira, 223 B.R. 258 (D.R.I. 1998) (sections 1322(b)(2) and 1322(b)(5) interplay in mortgage treatment)
- In re Enewally, 368 F.3d 1165 (9th Cir. 2004) (debtor may not combine 1322(b)(2) with 506(a) and 1322(b)(5) in some circumstances)
- In re Cruz, 152 B.R. 866 (Bankr. S.D.N.Y. 1993) (arrears treatment under 1322(b)(5) not additive to secured claim)
- Nobelman v. Am. Sav. Bank, 508 U.S. 324 (1993) (modification of rights under 1322(b)(2); bifurcation concepts)