In re Seidel, Bankruptcy No. 383-00235
Decision Date | 10 June 1983 |
Docket Number | Bankruptcy No. 383-00235,383-00892. |
Citation | 31 BR 262 |
Parties | In re Robert S. SEIDEL, Charlotte A. Baggerman, Debtors. In re Nazih I. GIRGIS Lillian B. Girgis, Debtors. |
Court | U.S. Bankruptcy Court — District of Oregon |
Magar E. Magar, Portland, Or., for debtors.
Timothy Vanagas and Joy Abele, Portland, Or., for claimants.
Both of the above cases present the same legal question. In each case the debtors have filed a petition for relief under chapter 13 of 11 U.S.C. In each case the final "balloon" payment upon a contract or mortgage secured solely by the principal residence of the debtors had become due prior to the filing of the petition in bankruptcy. The debtors in each case have filed chapter 13 plans calling for an extension of time within which to pay monthly installments and the balloon payment over a period of time extending beyond the final maturity date provided in the contract or mortgage. In each case the affected creditor has objected to confirmation of the plan.
In the case filed by Seidel and Baggerman the debtors are represented by Magar E. Magar and the affected creditor is represented by Timothy J. Vanagas. In the case filed by Girgis the debtors are represented by Magar E. Magar and the affected creditors are represented by Joy D. Abele.
11 U.S.C. § 1322 provides in relevant part as follows:
The parties cite two cases thought to be controlling. One is In re Taddeo, 685 F.2d 24 (2nd Cir.1982) and the other is In re Fontaine, 27 B.R. 614 (9th Cir. Appellate Panel, 1982). Fontaine deals with the same question here involved. Taddeo, although not determinative of the present question, is nevertheless instructive.
Fontaine reaches the correct result by holding that § 1322(b)(5) concerns only curing of defaults on "long term debt" as defined therein as one "on which the last payment is due after the date on which final payment under the plan is due." Fontaine should not, however, be understood to hold that an agreement providing for a final payment in the nature of a balloon payment may not be a long term debt nor that § 1322(b)(5) cannot be utilized where such a balloon payment has not yet become due at the time of the filing of the petition in bankruptcy. Whether a debtor's plan which attempts to utilize § 1322(b)(5), can be confirmed depends on whether or not the plan attempts to modify the terms of a security agreement as well as cure prepetition defaults.
Taddeo correctly distinguishes the curing of a default from a modification of the agreement.
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