In Re: JUDITH LACY BOZEMAN

Case Type:
Consumer
Case Status:
Reversed and Rendered
Citation:
21-10987 (11th Circuit, Jan 10,2023) Published
Tag(s):
Ruling:
A mortgage lien survives confirmation and consummation of a chapter 13 plan, notwithstanding anything to the contrary in the plan. Sidestepping the problem created by the confirmation of a plan that violates 11 U.S.C. § 1325(a)(1) and jurisprudential rules about the finality of confirmed plans, the Court of Appeals ruled that 11 U.S.C. § 1322(b)(2) and precedent were sufficient to establish that the mortgage lien survived, unimpaired, even though the lender failed to object to confirmation of a plan that improperly treated the mortgage debt as having been paid in full.
Procedural context:
A mortgage lender whose lien was deemed satisfied following the successful completion of a chapter 13 plan timely appealed the bankruptcy court's order and the district court's order that affirmed the bankruptcy court's order.
Facts:
Before entering bankruptcy, Judith Lacy Bozeman obtained a high-interest loan from Mortgage Corporation of the South ("MCS"). The loan was secured by a lien on Bozeman's home. Bozeman filed a chapter 13 petition and proposed a plan (as amended, the "Plan") that elected to treat MCS's claim as fully secured and provided that the claim would be paid in full under the Plan. MCS timely filed a proof of claim for its arrearages, which were substantially less than the entire mortgage debt. The Plan was confirmed, without objection by MCS. About a year later, MCS moved to dismiss Bozeman's case because Bozeman had fallen behind on her Plan payments. The parties settled, and MCS withdrew its motion. About two years after the Plan was confirmed, the chapter 13 trustee filed notice that Bozeman had made all Plan payments. The trustee's notice stated that MCS' entire mortgage debt had been paid. MCS objected the next day and moved for relief from the automatic stay, explaining that Bozeman had paid nothing towards the principal owed on the mortgage loan. Three months later, Bozeman asked the bankruptcy court to release MCS' mortgage lien on her home. Following an evidentiary hearing, the bankruptcy court granted Bozeman's motions to be discharged from her bankruptcy and to have MCS' mortgage lien deemed satisfied.
Judge(s):
ROSENBAUM and TJOFLAT, Circuit Judges, and MOODY, District Judge

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