Minnesota Bankruptcy Case: Chapter 13 Debtor May Not Cram Down On a Creditor Who or Holds Home Mortgage Even If There is No Actual Value to Secure It
The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.
Minnesota Bankruptcy Case:
In re Loban, 426 B.R. 805 (Bankr. D. Minn. 4/2/2010) (O’Brien, J.).
Chapter 13 Debtor May Not Cram Down on a Creditor Who Holds Home Mortgage Even if There is No Actual Value to Secure it
The court ruled on the debtor’s plan confirmation and his objection to the claim of BAC Home Loans Servicing, L.P, which was a claim for a second mortgage on the debtor’s home. The debtor, Loban, objected to BAC’s claim on the basis that the first mortgage is under-secured, leaving no equity for the second mortgage. The court held that 11 U.S.C. § 506(a) does not apply to claims secured only by a lien on a debtor’s principal residence. 11 U.S.C. § 1322(b)(2); In re Hughes, 402 B.R. 325 (Bankr. D. Minn. 2009). Although BAC did not object to the treatment of its claim as unsecured or respond to the debtor’s objection, the court found that the plan failed to comply with a self-executing requirement and could not be confirmed. United Student Aid Funds, Inc. v. Espinosa, 130 S.Ct. 1367 (2010).
Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.