Sunday, September 8, 2013

Chapter 13 Antimodification Provision Despite Security Interest in Escrow Account

Miami Personal Bankruptcy Lawyer Jordan E. Bublick has over 25 years of experience in filing chapter 13 and chapter 7 bankruptcy cases. His office is in Miami at 1221 Brickell Ave., 9th Fl., Miami and may be reached at (305) 891-4055.  

By its opinion dated June 29, 2007, the court in In re Lunger, ___ B.R. ___, 2007 WL 1970807 (Bkrtcy.M.D.Pa.)(Thomas J.) held that the lien that the residential mortgage lender took on the tax escrow account which is an item of personal property under state law, did not affect its status as a creditor whose lien was secured "solely" by an interest in real property that was the chapter 13 debtor's principal residence under BAPCPA's expansive definition of "debtor's personal residence." Section 1322(b)(2)

The debtor argued that the mortgagee's taking of a lien on the escrow account allowed the mortgage to be modified as it was no longer secured solely by an interest in real property that was the debtor's principal residence. The court noted that it had previously held in In re Donadio, 269 B.R. 336 (Bankr.M.D.Pa.2001), that in Pennsylvania the escrow accounts represented separate property of the debtor independent of the debtor and independent of the real property.  The court explained that in 2005 while BAPCPA did not alter section 1322(b)(2), it did define the term "debtor's principal residence" which was not previously statutorily defined. Section 101(13A).