In re Stone, Bankruptcy No. 381-02081.

• Decision Date: 21 May 1982
• Docket Number: Bankruptcy No. 381-02081.
• Citation: 27 BR 8
• Parties: In re Glen Sterling STONE, Virginia Lee Baird Stone, Debtors.
• Court: U.S. Bankruptcy Court — District of Oregon

27 B.R. 8 (1982)

In re Glen Sterling STONE, Virginia Lee Baird Stone, Debtors.

Bankruptcy No. 381-02081.

United States Bankruptcy Court, D. Oregon.

May 21, 1982.

John H. Durkheimer, Portland, Or., for Stone.

Roger F. Anderson, Tigard, Or., for Stokes.

MEMORANDUM OPINION RE: ACCELERATION

HENRY L. HESS, Jr., Bankruptcy Judge.

At the hearing upon confirmation of the debtor's second amended plan Lyle E. Stokes and Eleanor I. Stokes objected to confirmation upon the ground that prior to the filing of the debtors' petition which instituted their chapter 13 case, Stokes had instituted a foreclosure suit to foreclose the contract for the purchase of real property and in such suit elected to accelerate the entire balance owing upon the contract in accordance with a provision of the contract providing for such acceleration and that the debtor's plan fails to call for payment in full of such balance during the term of the plan. The debtor contended that acceleration does not become effective until a decree of foreclosure is entered and that therefore the debtor in a chapter 13 case may, prior to such a foreclosure decree make a provision for payment of the defaults which occurred prior to the chapter 13 petition and continue payments to become due in the future in accordance with the terms of the contract.

Oregon cases have held that notice of acceleration, as distinguished from notice of forfeiture, may be given for the first time in a complaint to foreclose a land sale contract. Kincaid v. Fitzwater, 257 Or. 170, 474 P.2d 742 (1970), rehrg. den. 257 Or. 170, 477 P.2d 712 (1970), Renard v. Allen, 237 Or. 406, 391 P.2d 777 (1964), Smith v. Owen, 208 Or. 154, 300 P.2d 423 (1956). It appears from these cases that such acceleration is effective no later than the entry of a decree of foreclosure. It is obvious that such an acceleration would not be effective if the purchaser were successful in a contention that the contract was not in default or a contention that the seller had waived, through prior conduct the right to insist on strict performance by the purchaser. In a case in which the purchaser asserted such defense to acceleration, the right to accelerate would not become finally effective until an order or decree of the court was obtained.

In a chapter 13 case the court must be concerned not only with the rights of the parties under state law but their rights under the Bankruptcy Code as well. There is a split of authority as to the effect of a prepetition declaration of acceleration upon the right of the debtor to make provision for the curing of prepetition defaults and continue payments upon sums due in the future without acceleration. Some cases have held that a prepetition declaration of acceleration prevents the debtor from curing defaults and continuing payments in accord with the terms of the security agreement. In re La Paglia, 7 BCD 333, 3 CBC 2d 717, 8 B.R. 937 (Bkrtcy.E.D.N.Y.1981), In re Williams, 7 BCD 946, 4 CBC 2d 1028, 11 B.R. 504 (Bkrtcy.S.D.Tex.1981), In re Allen, 8 BCD 945, 17 B.R. 119 (Bkrtcy.N.D.Ohio 1981). Other cases have held that the debtor has the right to do so up until the time of a decree of foreclosure by the nonbankruptcy court. In re Sapp, 11 B.R. 188 (Bkrtcy.S. D.Ohio 19...