Bullard v. Hyde Park Savings Bank (In re Bullard)

Bullard v. Hyde Park Savings Bank (In re Bullard), No. 12-054 (B.A.P. 1st Cir. May 24, 2013)
The B.A.P. affirmed the bankruptcy court's order, finding that the Debtor's "hybrid" plan was not confirmable. The plan proposed to modify several of Hyde Park Bank's (the secured creditor) rights by reducing the amount of principal secured by a mortgage on the Debtor's property via sections 506(a) and 1322(b)(2) and by shortening the term of the note. Applying section 1325(a)(5), the B.A.P. found that the Debtor's plan may be confirmed if either the secured creditor (1) accepts the plan, (2) the Debtor surrenders the property, or (3) the secured creditor retains the lien securing the property and receives “the value, as of the effective date of the plan, of property to be distributed under the plan on account of such claim is not less than the allowed amount of such claim.” As such, the B.A.P., found that the Debtor's plan did not satisfy the requirements of section 1325(a)(5), because it did not fall under one of the three options. In particular, under the third option, the plan did not guarantee that the distribution on account of the secured claim equal the present dollar value of the home as of the confirmation date, and that distribution on account of the claim occur within five years. Additionally, in a discussion of the interplay between sections 1328 and 1325, the B.A.P. found that the combining sections 1322(b)(2) and (5) results in a plan that does not satisfy the requirements of section 1325(a)(5)(B)(i)(I), and is, therefore, uncomfirmable.
Procedural context:
Louis B. Bullard (the "Debtor") appealled the order of the United States Bankruptcy Court for the District of Massachusetts denying confirmation of his third amended chapter 13 plan.
The Debtor's third amended chapter 13 plan was a "hybrid" plan which sought to take advantage of the modification provisions of section 1322(b)(2) and the cure and maintain provisions of section 1322(b)(5). The Debtor's plan proposed to bifurcate Hyde Park Savings Bank's secured claim - reducing the secured portion of the claim to the value of the collateral and paying the balance as a unsecured claim. Additionally, the plan proposed that the secured portion of the claim would be paid beyond the plan's term under section 1322(b)(5). The bankruptcy court ruled that the Debtor's hybrid plan was not confirmable.
Haines, Tester, and Godoy

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