Creditor Dells Land & Cattle Company, LLC ("DLCC"), filed an objection to Debtor's plan claiming that confirmation should be denied because the Plan modified the rights of claimholders whose interest was secured by a principal residence in violation of section 1322(b). The property at issue was a duplex, where Debtors occupied one unit and rented out the other unit. The Plan provided payment of $120,000 plus interest and a final balloon payment to DLCC. The Court addressed whether DLCC's claim could be modified through the Plan and whether the Plan was feasible. The Court held that the anti-modification provision did not apply, reasoning section 1322(b) controls only property that is exclusively a debtor's principal residence and not that merely includes or contains a principal residence. The Court noted that even if a balancing test was used under section 1322(b), the property would still be characterized as commercial. Debtors formed an LLC with the sole purpose of starting a commercial housing rental service at the time they acquired the duplex. Still, the Plan could not be confirmed because it was not feasible. Debtors had no room in their budget for savings and did not provide evidence of their ability to make the end-of-plan balloon payment.
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
11 U.S.C. § 1325 -- Confirmation of Plan