476 B.R. 405
D. Vt.2012Background
- Debtor Galaske’s real property includes residence and automotive shop; Chase holds a mortgage on the property.
- Galaske filed a Chapter 13 petition on Oct 6, 2011 and proposed a plan that modifies Chase’s secured claim.
- Plan provides monthly payments and a 30-year amortization at 4.25% for the Chase claim, outside the plan.
- Chase objected, arguing plan violates §1322(b)(2) by modifying a residential mortgage, under §1322(d)’s five-year limit, and raises ambiguities about payments and pre-petition arrears.
- Bankruptcy Court confirmed the plan despite objections; Chase appealed, challenging the five-year cap and the modification structure; the court reversed and remanded.
- This appeal concerns whether the plan improperly extends modified payments beyond five years and whether the plan’s math satisfies §1325, with remand80 to consider the latter.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the plan modify Chase’s secured claim beyond five years? | Chase argues §1322(d) caps modified payments at five years. | Galaske contends plan term can exceed five years with creditor consent. | Yes; plan impermissibly extends modified payments beyond five years; remand justified. |
| Is the modification coupled with cure/maintain permissible under §1322(b)(2) and (5)? | Chase asserts mixing modification with cure/maintain is improper. | Galaske asserts modification and cure/maintain can be combined. | Court held the combination improperly mixed §1322(d) and §1322(b)(5); invalid as confirmed. |
Key Cases Cited
- In re Nosek, 544 F.3d 34 (1st Cir. 2008) (modification rights under §1322(b)(2) and limits of §1322(d))
- In re Enewally, 368 F.3d 1165 (9th Cir. 2004) (cure and maintain vs. modification restrictions under §1322(b)(5))
- Sapos v. Provident Institution of Sav., 967 F.2d 918 (3d Cir. 1992) (avoid mixing cured and maintained payments; plan compliance standard)