487 B.R. 44
Bankr. D. Mass.2013Background
- Debtor Joyce May-berry filed a voluntary Chapter 13 petition on August 26, 2011 and proposed a Chapter 13 Plan on September 19, 2011.
- The Plan encumbers Debtor's residence with a Wells Fargo mortgage and contemplates no payment toward approximately $29,000 in prepetition arrears, instead treating ongoing payments as principal/interest or adequate protection or via a future modification.
- Wells Fargo filed a notice of appearance on August 31, 2011 and has not timely objected to the Plan.
- The Chapter 13 Trustee moves to dismiss under § 1307(c)(1) arguing that failing to address the arrears constitutes unreasonable delay prejudicial to creditors, and urging objections under §§ 1322(b)(2) and 1325(a)(3)/(7).
- Debtor argues Wells Fargo assented by silence, that she is current on plan and adequate protection payments, and that dismissal is unwarranted.
- The court denies the Trustee’s motion, concluding Wells Fargo has accepted the Plan's treatment, the modification approach is permissible, and dismissal would not promote the debtor's fresh start or creditor protection.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to fully account for prepetition arrears constitutes unreasonable delay prejudicial to creditors. | Trustee contends delay under 1307(c)(1) due to arrears not addressed. | May-berry argues no prejudice; Wells Fargo assented; current plan performance. | No dismissal; no unreasonable delay prejudicial to creditors. |
| Whether plan modification of a secured claim affected by a mortgage on the debtor's principal residence is permissible with creditor consent or acquiescence. | Trustee relies on prohibition under 1322(b)(2) unless creditor agrees for modification. | Debtor argues modification via Wells Fargo's consent/ silence allows confirmation under 1325(a)(5)(A). | Plan may be confirmed; creditor consent via lack of objection suffices. |
| Whether Wells Fargo’s lack of timely objection signals assent to the Plan's treatment of its claim. | Trustee treats lack of objection as consent to modification terms. | Debtor asserts absence of objection indicates agreement to treatment. | Wells Fargo’s non-objection supports confirmation of the Plan. |
Key Cases Cited
- In re Euliano, 442 B.R. 177 (Bankr. D. Mass. 2010) (prepetition arrears cure must be timely; delay can be prejudicial)
- In re Flynn, 402 B.R. 437 (1st Cir. BAP 2009) (consent may be inferred from creditor failure to object)
- In re Wofford, 449 B.R. 362 (Bankr. W.D. Wis. 2011) (consent to plan treatment can permit modification of secured claim)
- In re Wilcox, 438 B.R. 428 (Bankr. D. Colo. 2010) (modification principles for claims secured by principal residence)
- In re Smith, 409 B.R. 1 (Bankr. D. N. H. 2009) (cases supporting consideration of creditor treatment and confirmation)
- Sapos v. Provident Inst. of Sav., 967 F.2d 918 (3d Cir. 1992) (cure timelines and plan duration considerations in reorganization)