MEMORANDUM OF DECISION DENYING CONFIRMATION OF CHAPTER 13 PLAN
The matter before the Court is the confirmation of the Second Amended Chapter 13 Plan (“plan”) of Bonnie and Mark Less-man, the debtors herein. Among the assets listed in debtors’ joint Chapter 13 petition, is a vacation home located in Tunck-hannock, Pennsylvania (the “Premises”). The First Bank of Pittson, Pennsylvania (the “Bank”) is debtors’ largest creditor holding a claim in the approximate sum of $79,400.00. That claim is secured by a properly perfected first mortgage on the Premises. Debtors were in default under the mortgage prepetition due to their failure to make mortgage payments totalling approximately $8,700 (“Prepetition Arrear-ages”). By reason of that default, the Bank accelerated the amount due under the mortgage and commenced an action in Pennsylvania state court to foreclose the mortgage. Debtors seek to reinstate the mortgage under their plan pursuant to § 1322(b)(5) of the Bankruptcy Code (“Code”). To that end, they propose to pay off the Prepetition Arrearages over the sixty month life of the plan 1 and to make current mortgage payments at the contractual rate set forth in the mortgage outside the plan. Included in those current mortgage payments are arrearages that have accrued postpetition and will continue to accrue through the confirmation of the plan which total at least $7,300 (“Postpetition Arrearages”).
The Bank objects to confirmation on five grounds. The first three are predicated on alleged violations of 11 U.S.C. § 1322(b)(5). First, the Bank contends that the Postpetition Arrearages must be paid in full as a condition to confirmation. Second, it argues that even if those arrearages can be cured in post-confirmation installment pay
As more fully set forth herein, we find that the plan violates 11 U.S.C. § 1322(b)(5). 2 As such, the plan cannot be confirmed because debtors have not met their burden of showing that the plan satisfies § 1325(a)(1) of the Code. We need not and do not consider whether the plan runs afoul of §§ 1325(a)(3) or (a)(6).
Section 1325 of the Code governs the confirmation of a Chapter 13 plan. Debtors bear the burden of proving that the requirements of that section have been satisfied.
In re Packham,
If reinstated, the Bank’s mortgage will mature in the year 2014. Accordingly, the Bank argues that to comply with the directive in § 1322(b)(5) that the plan provide for the “maintenance of payments while the case is pending”, debtors must cure the Postpetition Arrearages as a condition to confirming the plan. We disagree. Courts have not read such a requirement into the statute and instead have found that the section permits the curing of postpetition, preconfirmation defaults through payments under a plan.
See, e.g., In re Thomas,
What constitutes a reasonable cure period for purposes of § 1322(b)(5) is determined by the facts and equities of each case.
See, e.g., In re Taddeo,
(1) the nature and repayment period of the original obligation;
(2) the nature of the property held as security;
(3) debtors’ repayment record;
(4) the amount and reason for the arrear-age;
(5) the availability of debtors’ discretionary income to cure default;
(6) the ability of debtors to meet the obligations of their plan and to continue current payments on their installment obligations;
(7) whether debtors are putting forth their best effort to cure default; and
(8) the necessity of the asset to an effective rehabilitation of debtors.
See, e.g., In re Chavez,
Debtors’ repayment record is dismal: they were ten months in arrears on the mortgage when they commenced this case and they have made no postpetition payments to the Bank. Their amended schedule of expenditures reveals that they are devoting one hundred percent of their estimated discretionary income to the plan leaving no income cushion to cure any defaults under the plan. Significantly, the Premises is debtors’ vacation home which they have not shown to be necessary to their reorganization and rehabilitation. Although the Bank’s expectations under its mortgage (which does not mature until 2014) will not be materially altered if debtors are permitted to cure the Prepetition
Based on the foregoing, we find that the plan cannot be confirmed. The Bank is directed to settle an order consistent with the foregoing.
Notes
. By order of this Court dated March 24, 1993, debtors were authorized pursuant to 11 U.S.C. § 1322(c) to extend their plan to sixty months.
. This memorandum of decision constitutes our findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52, as made applicable to this contested matter by Bankruptcy Rules 7052 and 9014. Our subject matter jurisdiction of this motion is predicated on 28 U.S.C. §§ 1334(b) and 157(a), and the "Standing Order of Referral of Cases to Bankruptcy Judges of the United States District Court for the Southern District of New York”, dated July 10, 1984 (Ward, Acting C.J.). This contested matter is a core proceeding. See 28 U.S.C. § 157(b)(2)(L).
. Because the Bank’s claim is not secured by a lien on real property that is the debtors’ principal residence, debtors could seek to modify the Bank’s claim pursuant to § 1322(b)(2) of the Code.
See
11 U.S.C. § 1322(b)(2);
In re Taddeo,
. Indeed, debtors’ First Amended Chapter 13 Plan provided for just that treatment of the Postpetition Arrearages.