In re Pittman
549 B.R. 614
| Bankr. E.D. Pa. | 2016Background
- Debtor and brother co-owned residential property in Philadelphia; unpaid taxes led to a municipal tax sale where Purchaser bid $13,100 and a sheriff’s deed was acknowledged Dec. 30, 2013.
- Under Pennsylvania MCTLA §7293(a) the prior owner has a nine‑month post‑acknowledgment right to redeem.
- Debtor filed Chapter 13 on Sept. 23, 2014 (before the nine‑month redemption period expired) and proposed a plan treating the purchaser’s redemption payment as a secured claim to be paid in installments over 36 months.
- Purchaser filed (and amended) a secured proof of claim for the redemption amount and opposed plan confirmation, arguing (1) he holds absolute title and no modifiable “claim,” (2) redemption must be paid in full within the statutory period, and (3) debtor should have filed a Rule 6008/state petition to redeem.
- The City and Purchaser objected to confirmation; the bankruptcy court held hearings, received briefs, and took the matter under advisement.
Issues
| Issue | Purchaser's Argument | Debtor's Argument | Held |
|---|---|---|---|
| Whether purchaser holds absolute title so property is not estate property | Purchaser: tax‑sale deed gives absolute title subject only to statutory right to redeem; debtor has no estate interest | Debtor: tax‑sale purchaser holds defeasible/inchoate title; debtor retains equity of redemption and estate interest | Held: Purchaser holds defeasible title; debtor’s equitable interest is property of the estate under §541(a) (state law recognition of redemption right governs) |
| Whether purchaser’s post‑sale right to payment is a "claim"/secured claim under the Code | Purchaser: no obligation exists until debtor elects to redeem; thus no claim subject to §1322(b)(2) | Debtor: purchaser’s statutory right to payment is an enforceable, secured claim (contingent/unmatured) under §101(5) and §506 | Held: Purchaser’s right to payment is a (contingent) secured claim; filing of a proof of claim further supports allowance |
| Whether §108(b) forbids treating redemption payments as payable over time in a Chapter 13 plan | Purchaser: §108(b) limits timing and state law requires lump‑sum payment within redemption period; plan cannot extend state‑law redemption timing | Debtor: §1322(b)(2) expressly permits modification of secured claims; §108(b) should be reconciled (debtor must elect within §108(b) period but may pay over time under §1322) | Held: Court reconciles statutes — debtor must timely elect to redeem within deadlines, but may pay the redemption amount over time under §1322(b)(2) as a secured claim |
| Whether debtor was required to file a Rule 6008 motion or a state petition to redeem rather than treat claim in plan | Purchaser: debtor should have used Rule 6008 or state petition/removed action to exercise redemption | Debtor: Rule 6008 applies to Chapter 7/tangible personal property; Chapter 13 plan treatment disposing of the secured claim is permissible | Held: No Rule 6008/state petition requirement; Chapter 13 plan treatment is a proper way to modify/pay the secured redemption claim |
Key Cases Cited
- United States v. Whiting Pools, 462 U.S. 198 (U.S. 1983) (§541 broad sweep of estate property)
- Butner v. United States, 440 U.S. 48 (U.S. 1979) (state law defines property interests)
- In re Grossman’s, 607 F.3d 114 (3d Cir. 2010) (broad construction of "claim" under §101(5))
- In re LaMont, 740 F.3d 397 (7th Cir. 2014) (Chapter 13 plan can dispose of secured claims; §108(b) does not negate §1322 rights)
- First Nat'l Fid. Corp. v. Perry, 945 F.2d 61 (3d Cir. 1991) (§1322(b)(2) not limited by §108(b) in redemption context)
- In re Hammond, 420 B.R. 633 (Bankr. W.D. Pa. 2009) (purchaser at tax sale holds defeasible title; prior owner retains redemption rights)
- In re Terry, 505 B.R. 660 (Bankr. E.D. Pa. 2014) (allowing redemption payments through Chapter 13 plan)
- Davenport v. Pa. Dep't of Pub. Welfare, 495 U.S. 552 (U.S. 1990) (claim characterized as enforceable obligation)