Monica D. Jones

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
MONICA D. JONES,
Debtor.
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Case No. 07-00376
(Chapter 13)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER RE DEBTOR’S MOTION TO MODIFY PLAN
The debtor has filed a motion to modify her plan to provide
that the postpetition default on the second deed of trust held by
Greenpoint Mortgage (as well as prepetition arrears provided for
by her original plan) will be cured via payment by the trustee
making payments to Greenpoint under the debtor’s modified plan.
The court previously entered a consent order between the debtor
and Greenpoint which provides that the debtor is to make cure
payments for a postpetition arrears owed Greenpoint Mortgage
starting on January 20, 2008, and on the 20th of each month
thereafer at the rate of $1,355.67 per month. 	It is not clear
whether those arrears are under the first or the second deed of
trust.
The Memorandum Decision and Order below is hereby
signed. Dated: February 4, 2008.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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I
Greenpoint has not agreed to the debtor’s motion to modify
her plan, but 11 U.S.C. § 1322(b)(2) does not require such
consent.
A.
Section § 1322(b)(2) provides that a plan may not modify the
rights of a holder of a claim secured by only a security interest
in real property that is the debtor’s principal residence.
However, § 1322(b)(5) provides that notwithstanding § 1322(b)(2),
a plan may provide “for the curing of any default within a
reasonable time and maintenance of payments while the case is
pending” (if the last payment on the claim is due after the
debtor’s last plan payment is due).
In the past, I interpreted the “maintenance of payments”
requirement of § 1322(b)(5) as meaning that upon filing a case, a
debtor is to maintain payments on her home mortgage, in other
words, that this particular aspect of the anti-modification
provision of § 1322(b)(2) is not modified by § 1322(b)(5).
However, under that view of the statute, a debtor may utilize §
1322(b)(5) to cure her prepetition defaults because those are not
payments to be maintained, but instead payments already in
default.
However, the weight of authority is now to the contrary,
reasoning that § 1322(b)(5) does not purport to limit itself to
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cures of prepetition defaults, and that the “maintenance of
payments” language refers to maintaining payments that come due
after those that are in default. 	See Green Tree Accept., Inc. v.
Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994). 	Accord,
e.g., In re Nichols, 440 F.3d 850, 857 (6th Cir. 2006); Mendoza
v. Temple-Inland Mortg. Corp. (In re Mendoza), 111 F.3d 1264,
(5th Cir. 1997); In re Binder, 224 B.R. 483, 486 (Bankr. D. Colo.
1998). 	At least until more thorough briefing of the issue in
some later case convinces me to the contrary, I now view those
decisions as properly stating the law. 	They permit a plan, in
appropriate circumstances (such as one payment missed by only one
day), to address the cure of postpetition defaults.
Nevertheless, as explored below, the spirit of § 1322(b)(5) still
embodies a policy that debtors should generally continue to make
regular home mortgage payments as they come due postpetition.
B.
Even under Hoggle, utilization of § 1322(b)(5) to cure
postpetition default should be permitted only when warranted by
the circumstances and the requirements for confirmation or
modification of a plan. 	The power ought not be utilized in a way
that renders the “maintenance of payments” requirement a hollow
one by permitting indefinite deferral of that obligation until
late in the life of the case. 	Permitting a plan to provide for
the cure of postpetition defaults would amount to a post-default
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re-writing of the debtor’s mortgage obligations. 	That result
could not be achieved directly by a plan, confirmed at the outset
of the case, calling for the debtor prospectively to be given the
right to delay making future monthly payments, and the right to
cure such delayed payments over a short period of time. 	Such a
plan would violate the “maintenance of payments” requirement of §
1322(b)(5). 	In that light, a court should bear in mind these
points (among others) before confirming a plan calling for the
cure of postpetition defaults:
• 	A debtor ought not be permitted to default on paying
the home mortgage only because she intends to deal with
such defaults under a plan instead of remaining
current. 	Such a failure may amount to an act of bad
faith warranting denial of confirmation of such a plan.
• 	Even when the failure is not deliberate, the debtor
bears the burden of establishing an ability to make the
cures under the plan (despite having missed payments
postpetition) and that the proposed cure period is a
reasonable period of time.
• 	Because mortgagees look to home mortgage payments as
producing a relatively regular stream of income, the
cure period should be relatively short, particularly
because a postpetition default is usually on top of
prepetition defaults that are also being cured under
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the plan. 	A debtor who by filing bankruptcy was given
the opportunity to cure prepetition defaults under a
plan ought not worsen the mortgagee’s position by
adding insult to existing injury by piling on
additional (that is, postpetition) defaults that result
in an unreasonable period of time before all arrears
are cured.
• 	To make the cure period short in order to be reasonable
may particularly be the case when the mortgage did not
provide for interest to compensate the mortgagee for
delay in the making of mortgage payments. 	See 11
U.S.C. § 1322(e) (cure amount governed by mortgage and
nonbankruptcy law).
• 	The courts should be careful, in particular, in
requiring the debtor to demonstrate compliance with the
requirements of 11 U.S.C. § 1329 before permitting
modification of a plan to address postconfirmation
defaults on a home mortgage. 	See In re Binder, 224
B.R. at 486-88.
Here, Greenpoint has not objected to modification of the plan.
Nevertheless, if the modification relates to the deed of trust
addressed by the consent order regarding relief from the
automatic stay, the motion did not give fair notice that the
debtor was seeking to modify that consent order.
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II
Failure of a debtor to comply with the terms of a plan
provision calling for maintenance of home mortgage payments can
be grounds for relief from the automatic stay. 	In re Binder, 224
B.R. at 490. 	Although the debtor might seek to modify the plan
and thereby moot the grounds of the motion for relief from the
automatic stay, there is an alternative. 	The court may address
curing of the arrears in an order disposing of the motion for
relief from the automatic stay. 	Such an order avoids the
necessity of the debtor’s seeking to modify her confirmed plan to
address the postpetition defaults. 	Typically, such an order
gives the debtor a period of time to cure postpetition defaults
while maintaining regular payments, and provides for a lifting of
the automatic stay if, after notice of a default in complying
with the orders terms, the debtor does not cure that default
within, say, 14 days.
Implicit in such an order is a recognition that it would be
unreasonable for the debtor perpetually to run up defaults only
to be given, once again, an opportunity to cure the defaults.
Modification of such orders is seldom granted because it is
implicit in the order that the debtor might become unable to make
payments, and that there has to be an end at some point to the
mortgagee’s rights being altered through extending further cure
rights to the debtor. 	In other words, a default by the debtor
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likely was a foreseeable possibility, thus making relief from the
order inappropriate.
III
Here, there already was a consent order addressing a motion
for relief from the automatic stay filed by Greenpoint that was
based on the debtor’s postpetition defaults. 	If that order dealt
with the second deed of trust, that raises the following
concerns. 	It is not clear whether the debtor intends that, upon
confirmation of her modified plan, the consent order will
continue to be effective: the terms of the modified plan do not
contain such a provision. 	Granting the motion to modify the
debtor’s plan arguably could result in a modification of the
consent order. 	The debtor’s motion to modify did not give fair
notice of her intention to modify the consent order. 	Moreover,
it does not address whether the increased payments under the
modified plan will be sufficient to comply with the terms of the
consent order.
It is accordingly
ORDERED that within 21 days after entry of this order, the
debtor shall file a memorandum addressing the court’s concerns in
part III, above (for example, by explaining that the relief from
stay motion addressed the first, not the second, deed of trust),
or an agreed order endorsed by Greenpoint, or a supplemental
motion to modify the consent order regarding Greenpoint’s motion
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8	O:\Judge Temp Docs\Jones (Monica D) Mem Decsn & Order re Mtn to Modify Plan.wpd
for relief from the automatic stay, or a motion to modify the
confirmed plan in a different way.
[Signed and dated above.]
Copies to: Debtor; Debtor’s attorney; Chapter 13 Trustee; Carrie
Ward, Esq.
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