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- Title
THE “CURE” TO THE HOMEOWNER’S BANKRUPTCY BUUES: AN ANALYSIS OF A HOMEOWNER’S ABILITY TO CURE HIS MORTGAGE DEFAULT UNDER § 1322(B)(5) OF THE BANKRUPTCY CODE.
- Authors
GLOVER, ANDRIANA
- Abstract
Chapter 13 bankruptcy is often defaulted homeowners’ only avenue to avoid foreclosure and remain in home. Debtors seeking to save their homes usually rely on § 1322(b)(5) which provides that a debtor may “cure” a default. Many mortgage lenders object to debtors' plans proposing to cure the mortgage default on the grounds that the plan is modification of their rights, forbidden by § 1322(b)(2). The Bankruptcy Code neither defines “cure” nor “modification, ” leaving it up to the courts to draw the line between what constitutes a permissible cure and a forbidden modification. The Circuit courts interpret the curative powers broadly: granting the debtor the ability to provide provisions in his plan that would restore him to his pre-default conditions. However, in a recent decision, the Fourth Circuit split from the other circuits ’ interpretation. The Fourth Circuit narrowed the scope of the debtor’s curative powers to allow the debtor to only decelerate the mortgage debt and continue making his monthly mortgage payments. The Fourth Circuit erred in interpreting the curative provisions so narrowly. The court failed to thoroughly apply tools of statutory interpretation and address key points in its analysis. A correct and thorough interpretation of the statute supports a broad interpretation of the curative powers, unrestricted by the anti-modification provision in § 1322(b)(2). To avoid further error in the courts, Congress should amend the Code to include a provision that defines a cure as a debtor’s ability to nullify the consequences of default and restore the debtor to his predefault conditions. Subsequently, Congress should amend the anti-modification provision in § 1322(b)(2) to include that a cure of a default under paragraphs (3) and (5) of this subsection is not a modification of the creditor’s rights for purposes of this section.
- Subjects
UNITED States. Bankruptcy; HOMEOWNERS; MORTGAGE loan default; UNITED States. Congress; DEBTOR &; creditor; NOBELMAN v. American Savings Bank (Supreme Court case)
- Publication
Emory Bankruptcy Developments Journal, 2017, Vol 34, Issue 1, p89
- ISSN
0890-7862
- Publication type
Article