Debtor and State Bank of Cross Plains (“State Bank”) executed a mortgage on real property containing the Debtor's homestead and business workshop in 2014. They renewed the Note in 2018. Debtor defaulted by failing to pay the required balloon payment. He then filed a Chapter 13. He had no unsecured debt and the only debt he defaulted on was the balloon payment. The parties agreed the Plan must pay State Bank's claim in full over the life of the Plan. The Plan provided, on account of State Bank's claim, monthly payments followed by an eventual refinance and balloon payment before the end of the Plan. State Bank objected to the Plan on three grounds: (1) the Debtor lacked the income necessary to make Plan payments whether or not the balloon payment was allowed; (2) the balloon payment was an impermissible modification of State Bank's claim; and (3) a future refinance was too speculative. The Court confirmed the Plan over State Bank's objection. The Plan was feasible. While the Debtor had good months and bad months, the good months more than compensated for the bad months. Given the unique facts of the case, notably the Debtor's substantial equity in the real property collateral, the Court found the balloon payment was permissible under sections 1322(b)(2) and 1325(a)(5). Further, a future refinance and balloon payment was not unduly speculative given the Debtor's equity and quality job outlook.
11 U.S.C. § 1322(b)(2) -- Modification of Rights of Secured Claimants
11 U.S.C. § 1325(a)(5) -- Providing for Curing of Default
11 U.S.C. § 1325(a)(6) -- Feasibility