January 18, 2010
D.C. Judge Rules Chapter 13 Debtor may Bifurcate Secured Claim on What was Her Residence Until She Moved
In re Roemer, --- B.R. ---, 2009 WL 5101762 (Bkrtcy.D.C. Dec, 2009)
Issue: Can the chapter 13 debtor here bifurcate a secured claim on property that was her residence until she moved out before filing her petition?
Judge Ronald Swartz,
This chapter 13 debtor seeks to bifurcate a secured claim on real property. The property was her home until some unstated number of months before she filed her case. The loan documents provide that she will live in the property for “at least one year.” She lived there about two years before she moved. The court ruled that the debtor is permitted to bifurcate the claim. He said that as of the date of the filing, the property was not her home. As to the “mortgage date test,” i.e., are courts supposed to determine the issue of residence as of the date the mortgage is executed or not, the judge said that the terms of the mortgage prevail. The bank here by contract agreed that its anti-modification protection would last only one year. “Here, the mortgage instrument granted a security interest in property that after one year was not required to be occupied as the debtor's principal residence, and accordingly the mortgage instrument was not limited to being a security interest in the debtor's principal residence. Section 1322(b)(2) does not protect the mortgage from modification.”
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