Larry Hurlburt v. Juliet Black

Summary

The Fourth Circuit en banc held that 11 U.S.C. § 1322(c)(2) permits Chapter 13 debtors to bifurcate undersecured home mortgage loans that mature before the plan’s final payment into secured and unsecured components and “cram down” the unsecured portion, overruling its prior decision in *Witt v. United Cos. Lending Corp. (In re Witt)*, 113 F.3d 508 (4th Cir. 1997). The court reasoned that the plain text of § 1322(c)(2) authorizes modification of claims—not just payment schedules—and that the provision’s reference to § 1325(a)(5) confirms Congress intended to allow stripdown of qualifying short-term residential mortgages. This decision aligns the Fourth Circuit with every other circuit that has addressed the issue, reversing the district court’s judgment that had relied on *Witt* to bar bifurcation.

Holdings

1. The plain text of § 1322(c)(2) authorizes modification of such claims, not just the payment schedule, including through bifurcation and cram down.

Questions Presented

1. Whether 11 U.S.C. § 1322(c)(2) authorizes modification of a homestead mortgage claim, including bifurcation and cram down, when the last payment on the original payment schedule is due before the final payment under the plan, or only authorizes modification of the payment schedule.

Disposition

reversed_and_remanded