Case Summary:
Chapter 13 debtors entered into loan modification agreement with creditor, and creditor moved for court approval of the agreement. The Court first noted various deficiencies in the loan modification documents. Under § 1322(b)(2), a chapter 13 debtor cannot unilaterally rewrite the terms of a home loan, although the creditor can agree to different treatment. Although that agreement could be reviewed (and approved) in the context of plan confirmation or as the resolution of an actual dispute, there is no statute or rule which requires judicial approval of the terms of such a loan modification. Even if it was construed to constitute a reaffirmation agreement, the debtors’ reaffirmation of a debt secured by real property does not require court approval. The creditor’s request essentially acted as a petition for an advisory opinion or comfort order. The bank’s motion was denied.
Statute/Rule References:
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
Key Terms:
Loan Modification