I read it on the Internet: it must be so.
Or not. I found another Victoria Ring blooper this week, thanks to a friend on her email list. Ms. Ring, a paralegal who trains other paralegals (and lawyers, I fear) delightedly tells her LinkedIn group that debtors in California can not only cram down the mortgages on their homes, but they can reduce the monthly payments consistent with the altered mortgage.
Funny, I hadn’t heard news so momentous. According to Ms. Ring:
The client had a home that carried a mortgage of $402,500; however, the home was appraised at only $178,000. This is a common occurrence in California….For the case I worked on this past week, when the debtors income and expense information was entered into Schedule I and J of the bankruptcy petition, the Chapter 13 Plan calculator in the software told us the debtor did not have enough disposable income to pay the current mortgage payment of $2,500. However, by reducing the mortgage payment to only $1,500; the debtor would be able to afford to stay in his home. (The mortgage payment was reduced because the home was crammed down from $402,000 to $178,000).
How do we account for the provisions of 1322(b)(2) on this scenario?
(b) Subject to subsections (a) and (c) of this section, the plan may—
(2) modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence,
This trainer of professionals doesn’t explain why the Bankruptcy Code doesn’t apply in California, or point us to a decision breaking ranks with the otherwise consistent line of cases that follow the provisions of the statute. I wish what she reports was the law, but it isn’t.
Now, I can see a couple of ways something like what she recounts could be so. Perhaps the “home” the debtor has isn’t his principal residence. Perhaps, it is a junior mortgage that has been stripped off. (Or perhaps Enewally was overruled while I slept).
But in Ms. Ring’s gleeful announcement that the legal world has shifted, we’re dealing either with imprecision, at best, or woeful ignorance at worst. If you hold yourself out as one who instructs others, you owe it to your students to be both correct and precise. How, otherwise, do they learn how bankruptcy law works?
I try to console myself, through clenched teeth, that free speech is priceless, and the free flow of information on the internet is, largely, a treasure. But some of what flows on the internet is sludge. Watch where you step.