You win, for now, the judge told him. But the train wreck is coming.
The lender’s lawyer complained, unsuccessfully it turned out, that the mortgage payment had increased from the payment at confirmation. The plan simply provided a number that reflected the mortgage payment at the commencement of the case.
Contractually, the debtor was now significantly underpaid to the contract payment schedule.
Held: the confirmed plan controlled and the mortgage lender was not entitled to relief from stay. Regardless of the contractual payment schedule, a confirmed plan was binding.
But, at plan completion, the debtor will be significantly in default if he adheres to the payments in the plan. Worse, there will be no stay and no impediment to initiation of foreclosure.
The advice from the bench was clear: debtor’s counsel would do well to find a catch up formula if the debtor expected to avoid immediate default at discharge.
I’m surprised I haven’t seen or experienced this before. The results seem logical and the fact pattern all too common with adjustable mortgages.
I don’t have personal experience I can call on, but I’m thinking I would propose language like this to provide for on going mortgage payments:
$current payment figure, or such other amount as provided by contract
Anyone have a different approach?
Image courtesy of elfwood.com.