§ 82.1     Prepetition Defaults—When is Property “Sold” at Foreclosure?
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 82.1, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

The power in § 1322(b)(3) to cure or waive any default1 and the power in § 1322(b)(5) to cure default and maintain payments on long-term debts2 are not without limits. Many debtors have tested the limits of these powers by waiting to file a Chapter 13 case to save a homestead literally moments before (and sometimes after) the mortgage holder sells the house on the steps of the courthouse. The courts are not in agreement on the point in the deterioration of a home mortgage after which the debtor cannot cure default under § 1322(b)(3) or § 1322(b)(5).3 Congress tried and failed to clear up the confusion in the Bankruptcy Reform Act of 1994.4

[2]

Prior to the 1994 amendments, there was agreement that a Chapter 13 debtor could cure default and reinstate a home mortgage if the creditor had only accelerated the debt before the petition.5 Curing default was permitted even though the mortgage had been reduced to a judgment of foreclosure before the petition.6 Most courts prohibited Chapter 13 debtors from rehabilitating a home mortgage if the foreclosure sale occurred before the petition.7 A few decisions, some later reversed, held that a foreclosure sale did not necessarily cut off a Chapter 13 debtor’s power to cure default, especially if the petition was filed before expiration of redemption rights under state law.8 Differences in redemption laws from state to state affected the point after which the power to cure default was not available.9

[3]

Despite more than a hundred reported decisions,10 no consensus emerged in the pre-1994 debate about the limits on a Chapter 13 debtor’s power to cure prepetition mortgage defaults. The U.S. Court of Appeals for the Tenth Circuit, in Jim Walter Homes, Inc. v. Spears (In re Thompson),11 observed there were three fundamentally different approaches to determining whether curing (or waiving) defaults under § 1322(b)(3) or § 1322(b)(5) was available. The Sixth Circuit, in Federal Land Bank of Louisville v. Glenn (In re Glenn),12 adopted a bright-line rule: without regard to state law or contract, a Chapter 13 plan could cure defaults under § 1322(b)(5) as long as no foreclosure sale occurred prior to the petition. In contrast, in the Third Circuit13 and Seventh Circuit,14 the courts were instructed to look to state law to determine whether a sufficient interest remained in the debtor at the petition to support curing default under § 1322(b)(3) or (b)(5). The Third and Seventh Circuit approach lead to inconsistent outcomes based on inconsistent state laws and to outcomes that changed over time as state courts and legislatures changed state mortgage law. In Thompson, the Tenth Circuit disclaimed reliance on either the bright-line approach or the state law approach, holding instead that “[t]he right to cure in bankruptcy should resemble its state law analogue, but should not be stifled by archaic property and mortgage law concepts.”15

[4]

A rule focused on the words in the Code might tie the power to cure defaults to the existence of a claim. Section 1322(b)(5) permits a Chapter 13 plan to provide for the curing of “any” default on “any . . . secured claim on which the last payment is due after the date on which the final payment under the plan is due.” If the mortgage holder has the requisite secured claim, § 1322(b)(5) is available to cure any default. The power to cure or waive default in § 1322(b)(3) applies to “any” default. Section 1322(b)(3) is more broadly worded than § 1322(b)(5). It is arguable (barely) that § 1322(b)(3) allows a Chapter 13 debtor to cure or waive defaults with respect to relationships that would not give rise to a claim for bankruptcy purposes. At the very least, the powers to cure defaults in § 1322(b)(3) and in § 1322(b)(5) are not lost until the mortgage holder no longer has a claim against the debtor or against property of the estate. The existence of a claim is a federal question. State law is relevant only to determine whether the mortgage holder has a “right to payment” or a “right to an equitable remedy.”16

[5]

The bright-line approach of the Sixth Circuit has the significant advantage of producing certainty in all Chapter 13 cases by fixing a federal rule for the limits on the power to cure defaults. The bright-line approach respects the principle that the power to cure defaults has as its predicate the existence of a claim—it is the law of most states that a mortgage holder has a right to payment, an equitable remedy, and/or a lien at least until a foreclosure sale. However, the bright-line rule may not go far enough if applicable state law gives the debtor rights in the mortgaged property after a foreclosure sale. Because many state redemption laws permit borrowers to reestablish ownership and use rights in property after a foreclosure sale, the bright-line approach sometimes restricts the power to cure default more than other provisions of the Bankruptcy Code would suggest.

[6]

“Curing or waiving of any default” appears in a similar context in § 1123 of Chapter 11.17 In Chapter 11 cases, the phrase means that the debtor can repair the “triggering” events and return a debtor-creditor relationship to its predefault condition. When a Chapter 11 debtor cures defaults, “any consequences of the default” are nullified.18

[7]

It is not always obvious when curing default is nullifying consequences of default and when curing default is re-creating a debtor-creditor relationship that no longer exists. If everything that happens after a default is a consequence of the default, then it is difficult to define any reasonable limits on the power to cure defaults through a plan. If there are some consequences of default that put an end to the power to cure default itself, then the limits on the power to cure default depend on what consequences have occurred. These are philosophical undertakings about which reasonable people can disagree.

[8]

If “curing or waiving any default” is applied too literally, the only limit to the powers in § 1322(b)(3) and (b)(5) would be the maximum capacity of the debtor to tender performance under a plan. This could lead to absurd outcomes in some Chapter 13 cases. For example, one early consequence of default might be acceleration by the mortgage holder. A slightly less immediate consequence might be a judgment of foreclosure. Traveling down the chain of consequences, foreclosure sale is certainly a consequence of default in many jurisdictions. So is a sale by the mortgage holder to a third party months or years after the mortgage holder acquires the property at the foreclosure sale. Is a sale by the mortgage holder to a stranger a consequence of default that can be nullified in a Chapter 13 case? The sensible answer has to be that there is a point in the time line after which the consequence is so tenuously related to the default that it cannot be nullified in a Chapter 13 plan.

[9]

The Bankruptcy Reform Act of 1994 tackled the uncertain limits on the powers to cure default under § 1322(b)(3) and (5). Section 301 of the 1994 Act amended § 1322(c)(1) to provide:

(c) Notwithstanding subsection [1322](b)(2) and applicable nonbankruptcy law—
(1) a default with respect to, or that gave rise to, a lien on the debtor’s principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.19

The legislative history of the 1994 Act contains these explanations of the new section:

        Section 1322(b)(3) and (5) of the Bankruptcy Code permit a debtor to cure defaults in connection with a chapter 13 plan, including defaults on a home mortgage loan. Until the Third Circuit’s decision in Matter of Roach, 824 F.2d 1370 (3d Cir. 1987), all of the Federal Circuit Courts of Appeal had held that such right continues at least up until the time of the foreclosure sale. See [Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir. 1985), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985)]; [In re Clark,] 738 F.2d 869 (7th Cir. 1984), cert. denied, 474 U.S. 849 (1985) [sic]. The Roach case, however, held that the debtor’s right to cure was extinguished at the time of the foreclosure judgment, which occurs in advance of the foreclosure sale. This decision is in conflict with the fundamental bankruptcy principle allowing the debtor a fresh start through bankruptcy.
        This section of the bill safeguards a debtor’s rights in a chapter 13 case by allowing the debtor to cure home mortgage defaults at least through completion of a foreclosure sale under applicable nonbankruptcy law. However, if the State provides the debtor more extensive “cure” rights (through, for example, some later redemption period), the debtor would continue to enjoy such rights in bankruptcy.20
        Section 301 will preempt conflicting state laws, and permit homeowners to present a plan to pay off their mortgage debt until the foreclosure sale actually occurs.21
        The bill helps individual debtors by . . . allowing chapter 13 debtors to cure foreclosure judgments at least through the time of foreclosure on the property.22
[10]

New § 1322(c)(1) answers some questions raised in the cases discussed above and raises a few old questions in a new context. Section 1322(c)(1) limits the power of a Chapter 13 debtor to cure mortgage defaults under § 1322(b)(3) and (5) by reference to whether the residence has been “sold at a foreclosure sale that is conducted in accordance with nonbankruptcy law.”23 In Chapter 13 cases filed after October 22, 1994,24 if the case is filed before the residence is sold at a foreclosure sale, then the power to cure defaults under § 1322(b)(3) and (5) is available, notwithstanding the antimodification provisions in § 1322(b)(2).25 The contrary cases decided under prior law are overruled.26

[11]

Section 1322(c)(1) carries over an old concept without embellishment: a default with respect to a lien on the debtor’s principal residence “may be cured under [§ 1322(b)(3)] or [§ 1322(b)(5)]” if the residence has not been sold at a foreclosure sale. New § 1322(c)(1) seems not to be an effort by Congress to expand or restrict the powers to cure default under §§ 1322(b)(3) and 1322(b)(5)—the new section only attempts to define when those powers are available. This should mean that pre-1994 cases defining what it means to “cure” a default remain good law.27

[12]

On interesting facts, the U.S. Court of Appeals for the Fourth Circuit has signaled that the cure permitted by § 1322(b)(5) remains a powerful tool. In Litton v. Wachovia Bank,28 in a prior Chapter 13 case, a settlement agreement with Wachovia Bank required the debtor to pay $55,000 and Wachovia would then refinance its loans. The debtor failed to make the payment. The prior case cratered. The debtor filed a new Chapter 13 case. The plan in the second case proposed to make the $55,000 payment to Wachovia and reinstate the settlement agreement. Wachovia objected that the new plan was not a cure of the prior default but a modification of its rights under the prior order. The Fourth Circuit disagreed, giving this broad assessment of the power to cure default in a Chapter 13 case:

[A] “cure” merely reinstates a debt to its pre-default position, or it returns the debtor and creditor to their respective positions before the default. . . . [T]he Littons’ only default, under the terms of the 2000 Order, was their failure to make the Initial Payment. By providing for terms of payment virtually identical to those required by the 2000 Order, the Plan simply sought to return the 2000 Order to its pre-default condition. . . . Under these circumstances, the Plan does not propose a “modification” of the 2000 Order. Rather, . . . the Plan constitutes a “cure” under the Bankruptcy Code, in that it seeks to restore the “status quo ante.”29
[13]

Then there is the obvious question of interpretation of § 1322(c)(1): when is a debtor’s principal residence “sold at a foreclosure sale . . . conducted in accordance with applicable nonbankruptcy law”? Some states have judicial foreclosure sales; some states have nonjudicial foreclosures, with and without sales. Is the residence sold when the hammer falls at the auction, or at some later point, for example, when consideration is exchanged or a trustee’s deed is delivered or recorded? Is the foreclosure sale over if the contract or state law allows the debtor some form of redemption? Are tax sales the same as foreclosure sales for § 1322(c)(1) purposes? If a state court would grant equitable relief from the foreclosure sale, can the debtor cure default under § 1322(c)(1)? Is execution upon a lien the same as foreclosure when the lien is not the result of a traditional home mortgage?30

[14]

There are significant inconsistencies between the language of new § 1322(c)(1) and the legislative history quoted above. Senator Grassley states that the new section “will preempt conflicting state laws.”31 The section says that the power to cure default expires when a principal residence is “sold at a foreclosure sale that is conducted in accordance with nonbankruptcy law.”32 Congressman Brooks states, “However, if the State provides the debtor with more extensive ‘cure’ rights (through, for example, some later redemption period), the debtor would continue to enjoy such rights in bankruptcy.”33 It is hard to find Congressman Brooks’s “however” in the language of new § 1322(c)(1). As demonstrated above, before the 1994 Act many courts struggled to determine whether state redemption statutes affected the powers to cure defaults in § 1322(b)(3) and (5).34 Is a principal residence “sold at a foreclosure sale” if applicable nonbankruptcy law permits the debtor some period of time after the actual sale (whenever that is) within which to redeem the property?

[15]

There was hope that the 1994 amendments would clarify the point in the deterioration of a home mortgage after which a Chapter 13 debtor cannot cure defaults. The reported cases present a chaos of inconsistent interpretations and outcomes reminiscent of the pre-1994 mess that § 1322(c)(1) was supposed to resolve. “Sold at a foreclosure sale” has been interpreted by a majority of the reported decisions to mean a “gavel rule”—the Chapter 13 debtor’s right to cure default expires when the auctioneer or sheriff bangs the gavel on the last bid.35 Several courts have read new § 1322(c)(1) to permit curing of defaults until “confirmation” or other approval of the foreclosure sale by a state court or other tribunal.36 Some courts find that new § 1322(c)(1) permits curing default until the delivery or filing of a trustee’s deed, certificate of sale or other memorandum satisfying the statute of frauds.37 One court found the end of a Chapter 13 debtor’s power to cure default under new § 1322(c)(1) at the expiration of the “upset bid” procedure under state law.38 Payment of the purchase price—after the gavel but before judicial confirmation—was the death knell for § 1322(c)(1) purposes according to an Arizona bankruptcy court.39 The courts in Maine, Vermont and Connecticut have had great fun debating when property is sold in accordance with “strict foreclosure” laws that do not include conducting a sale at all.40

[16]

The reported decisions with respect to land sales contracts and contracts to make a deed41 seem to say that a state court judgment declaring forfeiture of the debtor’s rights is necessary before there has been anything sufficiently like a foreclosure sale to preclude curing default through the Chapter 13 case. Not surprisingly, there is no consensus on what state court procedure is required nor is it clear what conclusion must be reached before the Chapter 13 petition is filed.42

[17]

Chapter 13 debtors have a knack for filing the petition after the courthouse steps part of a foreclosure sale or tax sale but before expiration of the redemption period under contract or state law. A plain reading of § 1322(c)(1) reveals no specific reference to redemption periods. The muddled legislative history quoted above suggests that “applicable nonbankruptcy law” includes the redemption period and can extend the power to cure default past the courthouse steps. Or, put another way, a right of redemption could be viewed as part of the foreclosure sale process for § 1322(c)(1) purposes so a Chapter 13 filing during the redemption period preserves the debtor’s powers to cure default under § 1322(b)(3) and (b)(5).

[18]

Not surprisingly, the reported decisions are all over the landscape with respect to the effect of a redemption period on the power to cure default under § 1322(c)(1). Many of the “gavel rule” cases cited above were filings during a redemption period in which the courts found that the foreclosure sale was “conducted” before the petition without regard to the redemption period. Many other cases cited above hold that filing during the redemption period triggers the whole range of curative rights available to Chapter 13 debtors under § 1322(c)(1), (b)(3) and (b)(5).

[19]

But perhaps most troublesome is the growing group of reported decisions that shuffle bankruptcy and state law concepts together to produce this distorted outcome: a filing after the gavel but during the redemption period draws into the Chapter 13 estate only the debtor’s “right of redemption” which can only be exercised in strict compliance with state law—including tender of full payment within whatever time period provided by state law (sometimes, extended 60 days by § 108(b)).43 By this approach, the debtor’s powers to cure default are neutralized because the consequence of default—sale before the petition—left the debtor with a redemption right that cannot be undone.

[20]

To the senior citizens in the Chapter 13 bar, this is a familiar refrain. The pre-1994 curing default cases44 traveled this same road. And more recently, so are some of the decisions dealing with prepetition car repossessions.45

[21]

A right of redemption is not different from what remains of a borrower’s contractual rights after the lender has declared default and accelerated a note. Curing default means undoing the events that led to the sale, acceleration and so forth—putting the parties back to their positions at the moment before the default.

[22]

The courts holding that a redemption right can’t be “cured” are asking the wrong question: if the foreclosure sale has not been “conducted in accordance with applicable nonbankruptcy law,”46 then the Chapter 13 debtor affirmatively can cure the default however that default is now manifested. Undoing the sale that led to the redemption period is not different from undoing the acceleration that led to the sale.

[23]

These courts could be saying that the sale is over—done, completed, kaput—and the redemption period is not an aspect of the sale. But they don’t say so, and this may not be an honest reading of applicable nonbankruptcy law. If state law says that the sale is subject to redemption, is the sale “conducted” when the petition interrupts the redemption period? When state law requires delivery of a trustee’s deed or confirmation by a state court, many of the decisions cited above easily conclude that the foreclosure sale has not been “conducted in accordance with applicable nonbankruptcy law” when the Chapter 13 petition interrupts the process after the gavel but before delivery of the deed or entry of the court order. The issue is: does state law include redemption as a step in the foreclosure sale process? If so, a Chapter 13 petition during the redemption period preserves the debtor’s right to cure the default that led to the consequence of an (incomplete) sale at foreclosure.

[24]

Reciting that the right of redemption came into the Chapter 13 estate does not answer the question, it only states the predicate. It is the “default with respect to, or that gave rise to, a lien on the debtor’s principal residence” that may be cured under § 1322(b)(3) or (b)(5) if the residence has not yet been sold at a foreclosure sale conducted in accordance with applicable nonbankruptcy law.47 The debtor need not “cure” the redemption right; the debtor can cure the default that led to the sale in the first instance. Courts focused on redemption are missing the point—if redemption is part of the foreclosure sale process, the debtor can go back to the beginning and cure the original default through the Chapter 13 plan.

[25]

One reported bankruptcy court decision finds that even when the foreclosure sale has been completed before the Chapter 13 petition, if a state court would grant the debtor equitable relief from that sale, § 1322(c)(1) empowers the debtor to also cure default through a plan. In In re Boone,48 Conseco completed the foreclosure sale before the petition but continued sending the debtor monthly statements. Conseco was aware of the Chapter 13 case because it demanded payments to Conseco or to the bankruptcy trustee “according to the terms of your bankruptcy plan.” The debtor sent payments to Conseco after the Chapter 13 petition, and the payments were accepted. The bankruptcy court held that Conseco was equitably estopped to assert that the debtor had no interest in the property for § 1322(c)(1) purposes.

[26]

These cases interpreting § 1322(c)(1) are doing exactly what many of the pre-1994 decisions did to § 1322(b)(5)—looking to state law to determine when a Chapter 13 debtor’s right to cure default in a home mortgage expires. Section 1322(c)(1) is ambiguous with respect to the role of state law in fixing the limits on curing default. The introductory sentence directs, “Notwithstanding . . . applicable nonbankruptcy law,” signaling a purely federal rule to follow. The last phrase of the section describes a foreclosure sale “conducted in accordance with applicable nonbankruptcy law,” an equally clear incorporation of state law into the (new) federal rule. One district court attempted to sort out this ambivalence:

Section 1322(c)(1) did, in fact, change the cutoff point for curing a mortgage default. Prior to the enactment of this section, the cutoff period was determined according to Section 1322(b)(5). . . . That “provision bases the right to cure upon the terms of the claim,” and courts that analyzed this section focused on the rights of the parties with respect to the mortgage . . . . Section 1322(c) changes that focus because it directs that the time period for curing default is to be determined “notwithstanding . . . applicable nonbankruptcy law.” . . . The legal relationship between parties to a mortgage is not of any concern under Section 1322(c) because it involves considerations of nonbankruptcy law. . . . The section is concerned only with the time when the foreclosure sale is complete, and in Illinois, that time does not occur until the sale has been confirmed by a court.49
[27]

The “federal rule” that produced some consistency in some circuits under prior law50 looks to be out the window. The fit between state law and the Bankruptcy Code is no better now than it was before 1994—state law typically sheds little light on when a debtor’s principal residence is “sold at a foreclosure sale” for purposes of curing default through a Chapter 13 plan. It is inevitable that different state foreclosure laws will produce nonuniformity regarding the limits on curing mortgage defaults in cases filed after October 22, 1994. The 1994 amendment to § 1322(c)(1) grabs failure from the clutches of a good idea.

[28]

Also unanswered is the question whether the foreclosure sale limit in § 1322(c)(1) applies to short-term mortgages that are now manageable under § 1322(c)(2). As discussed elsewhere,51 the Bankruptcy Reform Act of 1994 also amended § 1322(c)(2) to permit a Chapter 13 debtor to pay a short-term mortgage in full during the life of the plan consistent with § 1325(a)(5). Unfortunately, new § 1322(c)(1) does not cross-reference new § 1322(c)(2). There is legislative history that Congress intended these two new subsections to work together.52 At least one court has concluded that the 1994 amendments to § 1322(c) permit a Chapter 13 debtor to pay a short-term mortgage in full through the plan if the debtor has not suffered a foreclosure sale before the petition.53 If new § 1322(c)(1) and (c)(2) work together, interesting further questions are presented whether new § 1322(c)(2) permits Chapter 13 debtors to provide for payment consistent with § 1325(a)(5) of a long-term home mortgage that was accelerated before the petition or reduced to a prepetition foreclosure judgment.54


 

1  See § 115.1 [ Curing Default, Waiving Default, Maintaining Payments and Combinations ] § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations.

 

2  See § 129.1 [ Overview: General Rules for Saving Debtor’s Home ] § 81.1  Overview: General Rules for Saving Debtor’s Home.

 

3  The curing default cases are collected geographically in App. I. The effect of a prepetition foreclosure judgment on a Chapter 13 debtor’s powers to cure defaults is discussed further in § 144.1 [ Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)? ] § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.

 

4  See below in this section.

 

5  See, e.g., Downey Sav. & Loan Ass’n v. Metz (In re Metz), 820 F.2d 1495 (9th Cir. 1987); Foster Mortgage Corp. v. Terry, 780 F.2d 894 (11th Cir. 1985), Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 114, 88 L. Ed. 2d 119 (1985); Grubbs v. Houston First Am. Sav. Ass’n, 730 F.2d 236 (5th Cir. 1984) (en banc); Di Pierro v. Cullen (In re Taddeo), 685 F.2d 24 (2d Cir. 1982); In re Nelson, 59 B.R. 417 (B.A.P. 9th Cir. 1985); In re Clark, 738 F.2d 869 (7th Cir. 1984); In re Thorsted, 157 B.R. 5 (Bankr. E.D. Va. 1993) (The power to cure defaults under § 1322(b)(5) includes the power to decelerate a residential mortgage. The “last date on which the final payment is due under the plan” for purposes of § 1322(b)(5) refers to the last payment that would have been due under the original mortgage note had it not been accelerated, not the due date that resulted after acceleration.). See App. I.

 

6  See, e.g., Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985); In re Clark, 738 F.2d 869 (7th Cir. 1984); Boromei v. Sun Bank, 92 B.R. 516 (M.D. Fla. 1988); In re Hollins, 150 B.R. 53 (Bankr. D. Or. 1993); In re Lumpkin, 144 B.R. 240 (Bankr. D. Conn. 1992); In re O’Neal, 142 B.R. 411 (Bankr. D. Or. 1992); In re Hurt, 136 B.R. 859 (Bankr. D. Or. 1992); In re Tucker, 131 B.R. 245 (Bankr. D. Me. 1991); In re Telson, 121 B.R. 662 (Bankr. S.D. Fla. 1990); Sciortino v. Mortgage Default Servs., Inc. (In re Sciortino), 120 B.R. 369 (Bankr. E.D. Pa. 1990); In re Thomas, 115 B.R. 305 (Bankr. E.D. Okla. 1990); In re Eynetich, 98 B.R. 966 (Bankr. D. Neb.), aff’d sub nom. United States v. Eynetich, 845 F.2d 1028 (8th Cir. 1988); Newton County Bank v. Mueller, 18 B.R. 851 (Bankr. W.D. Ark. 1982). See App. I. See also § 144.1 [ Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)? ] § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.

 

7  See, e.g., Commercial Fed. Mortgage Corp. v. Smith (In re Smith), 85 F.3d 1555 (11th Cir. 1996) (Adopting Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), in Chapter 13 cases filed before October 22, 1994, debtor cannot cure defaults and maintain payments with respect to a mortgage that suffered a foreclosure sale before the petition notwithstanding that the debtor preserved the statutory right of redemption under Alabama law. Right of redemption became property of the Chapter 13 estate but can be exercised only by making a lump-sum payment within one year of the foreclosure sale.); Boyd v. United States (In re Boyd), 11 F.3d 59 (5th Cir. 1994) (Chapter 13 debtor cannot reinstate a home mortgage through a Chapter 13 plan where foreclosure sale was conducted 33 months before the petition, a trustee’s deed has been recorded, and eviction of the debtor has been ordered. Although the Chapter 13 plan was confirmed without objection, at the petition the debtor had no interest remaining in the property that had been foreclosed upon, and thus the confirmed plan had no effect on the rights of the foreclosing creditor.); Goldberg v. Tynan (In re Tynan), 773 F.2d 177 (7th Cir. 1985); Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985); Oregon v. Hurt (In re Hurt), 158 B.R. 154, 160 (B.A.P. 9th Cir. 1993) (“We agree with the majority of circuits that have concluded the foreclosure sale is the correct point to cutoff the right to cure under § 1322(b)(5). . . . The estate theory developed by the Tenth Circuit in [Jim Walter Homes, Inc. v. Spears (In re Thompson), 894 F.2d 1227 (10th Cir. 1990)] promotes the most logical and reasonable analysis.” Opinion contains careful discussion of the “pragmatic” theory adopted by the Sixth Circuit in Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), the “state law” theory discussed by the Seventh Circuit in [In re Clark, 738 F.2d 869 (7th Cir. 1984)] and the “estate” theory developed by the Tenth Circuit in Thompson.); Oregon Dep’t of Veterans Affairs v. Braker (In re Braker), 125 B.R. 798 (B.A.P. 9th Cir. 1991) (Disapproving of In re Ivory, 32 B.R. 788 (Bankr. D. Or. 1983), Chapter 13 debtor cannot cure defaults and reinstate a mortgage, under Oregon law, when mortgage foreclosure sale occurred two days before petition, notwithstanding Oregon statutory redemption period of 180 days after sale. Prepetition foreclosure sale prevents application of § 1322(b)(5) because redemption cannot revive the mortgage, it can only pay the debt. “Curing” mortgage defaults after a foreclosure sale would create new rights in the debtor not contemplated by the Bankruptcy Code.); Boromei v. Sun Bank, 92 B.R. 516, 517, 518 (M.D. Fla. 1988) (Court adopts rationale of Sixth Circuit in Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985) and “selects the date of the foreclosure sale as the termination date for the debtor’s exercise of his right to cure and reinstate his mortgage.” Acknowledging that Florida mortgage law holds that a foreclosure judgment effects a merger of the mortgage lien into the final judgment, nonetheless court noted that “reliance on state law to determine whether a debtor may cure a mortgage default under § 1322 of the Bankruptcy Code is misplaced.”); In re McKinney, 174 B.R. 330, 334–38 (Bankr. S.D. Ala. 1994) (Disagreeing with In re Ragsdale, 155 B.R. 578 (Bankr. N.D. Ala. 1993), upon foreclosure sale, debtor loses all right to reinstate a home mortgage under § 1322(b)(5) or (b)(3); the debtors’ only remedy is to exercise the statutory right of redemption by paying the mortgage within one year in a lump sum. “Foreclosure marks the end of the mortgagor’s equitable right of redemption. . . . The mortgagee is no longer a secured creditor of the debtor. . . . After the foreclosure there is a merger of legal and equitable titles. . . . Upon sale, a mortgagor has a one-year period to regain the property according to statutory means. . . . [U]nder Alabama law, the only way to redeem the property is through a cash payment of the full amount of the mortgage debt. . . . Section 1322(b)(5) only allows the cure of defaults in ‘secured claims’ which exist at the time of the bankruptcy case and Jim Walter Homes, Inc. had none. Also, the debtors only have a statutory right of redemption upon which payment is due in cash within one year. Assuming such a right is a claim, the debtors cannot use § 1322(b)(5) to cure or maintain payments on this claim either. Section 1322(b)(5) only allows the cure of unsecured claims if the final payment is due after the end of the plan. . . . If § 1322(b)(3) does apply, it can only apply . . . to mortgages which mature during the life of the plan since they are the only ones not specifically covered by § 1322(b)(5). . . . Ragsdale . . . does not comport with Alabama property law or the wording of § 1322(b).”); In re Bozeman, 174 B.R. 328, 329 (Bankr. M.D. Ala. 1993) (Chapter 13 debtor cannot redeem property subject to prepetition foreclosure sale with payments over the life of the Chapter 13 plan. Foreclosure sale occurred on May 12; petition was filed on May 13. “[T]he statutory right of redemption under Alabama law is property of the estate. . . . The debtor proposes to use the provisions of 11 U.S.C. §§ 1322(b)(2) and 1322(b)(5) to cure the arrearage both pre- and post-petition in her plan upon the setting aside of the foreclosure and a reinstatement of the mortgage. . . . Debtor cannot cure after foreclosure. A so-called ‘cure’ under § 1322(b)(5) is not available to the debtors here because § 1322(b)(5) permits cure where the last payment is due on the debt claimed after the date on which the last payment under the plan is due. Here there is no last payment due at all. Foreclosure has concluded the question of payments. Nor is there a default to cure. The foreclosure has cured the default, in effect. . . . The one remaining property interest which the debtor does have is his statutory right of redemption. . . . To allow debtor to exercise the statutory right in bankruptcy by stretching out payments over five years is nowhere authorized in the Code. It is a property right, but it is strictly limited by the terms of its statutory grant.”); In re Gordon, 161 B.R. 459, 461 (Bankr. E.D. Ark. 1993) (Arkansas Chapter 13 debtor cannot cure default and reinstate home mortgage after foreclosure judgment and sale and delivery of commissioner’s deed prior to petition. Applying Justice v. Valley Nat’l Bank, 849 F.2d 1078 (8th Cir. 1988), “the cure provision of section 1322(b) is not applicable after the contractual mortgage relationship between the debtor and the mortgagee terminates pursuant to state law. . . . [A] real estate mortgage is extinguished after both the foreclosure of the mortgage and the sale of the mortgaged property.” Debtor failed to prove any remaining exemption right under applicable Arkansas law.); In re Detter, 141 B.R. 221, 222–23 (Bankr. M.D. Ala. 1991) (Foreclosure sale two hours before filing defeats Chapter 13 debtor’s right to cure defaults under § 1322(b). Foreclosure sale under Alabama law vests legal title in the mortgagee. The mortgagee has the right to possession. The only interest remaining in the debtor is the statutory right to redeem the property. “Statutory rights of redemption are ‘mere personal privileges and not property or property rights.’ . . . The bank has no secured claim on which any default may be cured. The bank has absolute ownership of the residence subject to the debtors’ statutory right to redeem the property.”); In re Telson, 121 B.R. 662 (Bankr. S.D. Fla. 1990) (Court abandons In re Chambers, 27 B.R. 687 (Bankr. S.D. Fla. 1983), and cites Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985) from Sixth Circuit with approval; Chapter 13 debtor may cure default on a mortgage even if the debt has been accelerated and a judgment of foreclosure has been entered, provided that no foreclosure sale has taken place at the petition.); In re Beaty, 116 B.R. 112, 115 (Bankr. N.D. Ill. 1990) (Under new Illinois mortgage foreclosure law, Chapter 13 debtor’s right to cure default and reinstate a home mortgage is cut off by foreclosure sale, notwithstanding fact that sale had not been confirmed at the filing. “[T]he sale substantially changes the rights of both the debtor and the mortgagee.”); Leggett v. Morgan (In re Morgan), 115 B.R. 399 (Bankr. M.D. Ga. 1990) (Chapter 13 debtor cannot reinstate mortgage when foreclosure sale took place at 10:30 a.m., a successful bidder gave an “official check” to the mortgage company at approximately 10:45 a.m., and the petition was filed at 11:40 a.m. Debtor’s residence was “not property of the estate when the bankruptcy petition was filed” notwithstanding that no deed had been delivered or recorded.); Sanders v. Amsouth Mortgage Co. (In re Sanders), 108 B.R. 847 (Bankr. S.D. Ga. 1989) (Section 1322(b)(5) was not available when the foreclosure sale occurred the day before the Chapter 13 petition but the deed was executed and delivered after the petition. Under Georgia law, a regularly conducted foreclosure extinguishes the right of redemption, leaving no property interest to cure.); Ghosh v. Financial Fed. Sav. & Loan Ass’n, 38 B.R. 600 (Bankr. E.D.N.Y. 1984); Weinberger v. Wallace, 31 B.R. 64 (Bankr. D. Md. 1983). See App. I.

 

8  See Commercial Fed. Mortgage Corp. v. Smith, 170 B.R. 708 (N.D. Ala. 1994) (Citing In re Ragsdale, 155 B.R. 578 (Bankr. N.D. Ala. 1993), with approval, debtor can cure default after prepetition foreclosure sale, where debtor preserved statutory right of redemption and proposes to “redeem” the property by paying arrearages through the plan and maintaining the regular mortgage payments “outside” the plan. This result is consistent with the holding of the Eleventh Circuit in Green Tree Acceptance, Inc. v. Hoggle (In re Hoggle), 12 F.3d 1008 (11th Cir. 1994).), rev’d, 85 F.3d 1555 (11th Cir. 1996) (Adopting Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), in Chapter 13 cases filed before October 22, 1994, debtor cannot cure defaults and maintain payments with respect to a mortgage that suffered a foreclosure sale before the petition notwithstanding that the debtor preserved the statutory right of redemption under Alabama law. Right of redemption became property of the Chapter 13 estate but can be exercised only by making a lump-sum payment within one year of the foreclosure sale.); In re Ragsdale, 155 B.R. 578, 583, 585, 586–87 (Bankr. N.D. Ala. 1993) (Applying Alabama law, Chapter 13 debtor can cure defaults and reinstate the original payment term of a real estate mortgage notwithstanding prepetition foreclosure and sale of the property to the mortgagor where Chapter 13 case is filed during the one-year statutory redemption period. Court rejects the Sixth Circuit’s approach in Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), because “although a foreclosure sale is common to all cases, a debtor’s rights after foreclosure vary from state to state, but are subject to protection by this Court. In many cases, the debtor will have a right to redeem, which will be lost under the Sixth Circuit’s approach.” There is no doctrine of merger under Alabama law, and thus “real property subject to a note that has been accelerated is sold without resort to the courts and the obtaining of a judgment of foreclosure and remains subject to a debtor’s right to redeem for a period of one year. . . . The Eleventh Circuit has indicated that the Alabama statutory right of redemption is a property right within the jurisdiction of the bankruptcy court.” Citing DiPiero v. Cullen (In re Taddeo), 685 F.2d 24 (2d Cir. 1982), with approval, “it cannot be successfully argued that foreclosure is not a ‘consequence of default.’ Under the Taddeo reasoning, then, a foreclosure may be nullified. . . . [C]ure may be allowed even after a foreclosure sale has occurred but when a statutory period of redemption remains [because of] the decision of the Supreme Court in Wright v. Union Central Life Ins. Co., 304 U.S. 502, 58 S. Ct. 1025, 82 L. Ed. 1490 (1938). In that case, the Supreme Court construing a provision of the former Bankruptcy Act that allowed debtors to maintain their residences, found absolutely no distinction between a debtor in default and a debtor holding a right of statutory redemption. . . . In a state with a statutory right of redemption, such as Alabama, the prerequisite to a completed sale would be the running of the redemption period. . . . [T]he ‘last payment’ language of Section 1322(b)(5) refers to the date of the last payment of the original note rather than the date the accelerated debt is due.”), rev’d by Commercial Fed. Mortgage Corp. v. Smith, 85 F.3d 1555 (11th Cir. 1996); Secretary of Veteran Affairs v. Dickerson (In re Dickerson), 130 B.R. 110, 112 (Bankr. S.D. Ala. 1991) (Citing Jim Walter Homes, Inc. v. Saylors (In re Saylors), 869 F.2d 1434 (11th Cir. 1989), court confirms plan that cures arrearages and repays mortgage notwithstanding prepetition foreclosure sale and transfer of title. “Under Alabama law, a debtor has both an equitable right of redemption until a foreclosure sale occurs, and a statutory right of redemption. . . . Therefore, the [prepetition] foreclosure sale and the subsequent warranty deed transferred title . . . subject to the Debtors’ redemptive rights.”); In re Eynetich, 98 B.R. 966 (Bankr. D. Neb.), aff’d sub nom. United States v. Eynetich, 845 F.2d 1028 (8th Cir. 1988) (Mortgage in Nebraska not extinguished until confirmation of foreclosure sale. Chapter 13 debtor can decelerate and cure defaults if case is filed during redemption period.). See also Hickman v. Union Nat’l Bank (In re Hickman), 156 B.R. 243 (Bankr. W.D. Ark. 1993) (Although mortgage company probably had valid objections to confirmation of a plan that proposed to cure default and maintain payments on a mortgage that had been accelerated and the property sold pursuant to a nonjudicial foreclosure before the filing of the petition, the mortgage company’s failure to object to confirmation of the plan and the mortgage company’s filing of a proof of claim asserting merely a security interest, rather than ownership of the property, left the mortgage company bound by confirmation of the plan to accept regular mortgage payments and to allow the debtor’s continued residence in the property pursuant to a sort of leasehold during the life of the Chapter 13 plan.); In re Sabec, 137 B.R. 659 (Bankr. W.D. Mich. 1992) (Because purchaser at sale failed to strictly comply with the Michigan Tax Act, tax purchaser’s interest in debtor’s real property is not indefeasible title but rather is only a lien that can be modified under § 1322(b)(2).); Sciortino v. Mortgage Default Servs., Inc. (In re Sciortino), 120 B.R. 369 (Bankr. E.D. Pa. 1990) (Applying Pennsylvania law and applicable federal guidelines, power to cure continues through entry of a foreclosure judgment, continues at least until one hour prior to commencement of bidding at a sheriff’s sale, and may even apply after a sheriff’s sale.).

 

9  See, e.g., Jim Walter Homes, Inc. v. Spears (In re Thompson), 894 F.2d 1227, 1230–31 (10th Cir. 1990) (Deceleration is an allowed curing of default under § 1322(b)(3) and is not an impermissible modification under § 1322(b)(2). Without fully adopting the “bright-line cutoff” approach of the Sixth Circuit in Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), and rejecting the “state law” approach of the Third and Seventh Circuits in In re Roach, 824 F.2d 1370 (3d Cir. 1987) and Clark v. Federal Land Bank (In re Clark), 738 F.2d 869 (7th Cir. 1984), Tenth Circuit holds: “If a state allows mortgagors the right to redeem until a foreclosure sale, we do not consider it trampling upon state law to allow the cure provisions of § 1322(b) to extend to the date of the foreclosure sale. . . . The right to cure in bankruptcy should resemble its state law analogue, but should not be stifled by archaic property and mortgage law concepts. . . . [B]ecause the debtors filed their Chapter 13 petition during the equitable period of redemption before foreclosure sale, they had a right to cure the default on their home mortgage through their Chapter 13 plan.”); Goldberg v. Tynan (In re Tynan), 773 F.2d 177 (7th Cir. 1985); In re Simcock, 152 B.R. 7, 9 n.4 (Bankr. D. Me. 1993) (Clarifying In re Tucker, 131 B.R. 245 (Bankr. D. Me. 1991), Chapter 13 debtor can cure defaults on a home mortgage and reinstate the mortgage pursuant to § 1322(b)(5) until expiration of the 90-day statutory redemption period under Maine law. That 90-day period begins to run upon entry of the state foreclosure judgment, and it is extended for 60 days following the filing of a Chapter 13 petition by § 108(b). However, the debtors’ failure to either redeem the property or to file a “good faith, feasible plan” within the extended redemption period entitles the foreclosure judgment holder to relief from the stay. “To the extent that Tucker has been misconstrued to allow a debtor to cure up until the foreclosure sale itself, that interpretation is expressly overruled herein.”); In re Detter, 141 B.R. 221, 222–23 (Bankr. M.D. Ala. 1991) (Foreclosure sale two hours before filing defeats Chapter 13 debtor’s right to cure defaults under § 1322(b). Foreclosure sale under Alabama law vests legal title in the mortgagee. The mortgagee has the right to possession. The only interest remaining in the debtor is the statutory right to redeem the property. “Statutory rights of redemption are ‘mere personal privileges and not property or property rights.’ . . . The bank has no secured claim on which any default may be cured. The bank has absolute ownership of the residence subject to the debtors’ statutory right to redeem the property.”); In re Tucker, 131 B.R. 245 (Bankr. D. Me. 1991) (Citing Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), Chapter 13 debtor in Maine can cure mortgage defaults and reinstate current payments, notwithstanding foreclosure judgment prior to petition, “so long as a final order terminating the equity of the redemption has not yet been entered.” Under Maine law, debtor has a 90-day redemption period after foreclosure.); Sanders v. Amsouth Mortgage Co. (In re Sanders), 108 B.R. 847 (Bankr. S.D. Ga. 1989) (Section 1322(b)(5) was not available when the foreclosure sale occurred the day before the Chapter 13 petition but the deed was executed and delivered after the petition. Under Georgia law, a regularly conducted foreclosure extinguishes the right of redemption, leaving no property interest to cure.); In re Eynetich, 98 B.R. 966 (Bankr. D. Neb.), aff’d sub nom. United States v. Eynetich, 845 F.2d 1028 (8th Cir. 1988) (Mortgage in Nebraska not extinguished until confirmation of foreclosure sale. Chapter 13 debtor can decelerate and cure defaults if case is filed during redemption period.); In re Schnupp, 64 B.R. 763 (Bankr. N.D. Ill. 1986); In re Thomas, 59 B.R. 758 (Bankr. N.D. Ohio 1986); In re Langguth, 52 B.R. 572 (Bankr. N.D. Ill. 1985); In re Smith, 43 B.R. 313 (Bankr. N.D. Ill. 1984); Ghosh v. Financial Fed. Sav. & Loan Ass’n, 38 B.R. 600 (Bankr. E.D.N.Y. 1984); James B. Nutter & Co. v. Taylor, 21 B.R. 179 (Bankr. W.D. Mo. 1982). See App. I.

 

10  See App. I.

 

11  894 F.2d 1227 (10th Cir. 1990).

 

12  760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985).

 

13  In re Roach, 824 F.2d 1370 (3d Cir. 1987).

 

14  Goldberg v. Tynan (In re Tynan), 773 F.2d 177 (7th Cir. 1985); Clark v. Federal Land Bank (In re Clark), 738 F.2d 869 (7th Cir. 1984).

 

15  894 F.2d at 1231.

 

16  See 11 U.S.C. § 101(5), which defines “claim” to mean:

(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.

 

17  11 U.S.C. § 1123(a)(5)(G) permits a Chapter 11 debtor to provide for the “curing or waiving of any default.”

 

18  See Great W. Bank & Trust v. Entz-White Lumber & Supply, Inc. (In re Entz-White Lumber & Supply, Inc.), 850 F.2d 1338, 1340, 1342 (9th Cir. 1988). See also In re Chateaugay Corp., 150 B.R. 529 (Bankr. S.D.N.Y. 1993); In re Tri-Growth Centre City Ltd., 136 B.R. 848 (Bankr. S.D. Cal. 1992); In re Countrywood Inv. Group, Ltd., 117 B.R. 338 (Bankr. M.D. Tenn. 1990).

 

19  11 U.S.C. § 1322(c)(1), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 301, 108 Stat. 4106 (1994). See also § 144.1 [ Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)? ] § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.

 

20  140 Cong. Rec. H10,769 (section-by-section analysis by Congressman Brooks).

 

21  140 Cong. Rec. S14,462 (remarks by Sen. Grassley).

 

22  140 Cong. Rec. H10,771 (remarks by Congressman Synar).

 

23  11 U.S.C. § 1322(c)(1).

 

24  11 U.S.C. § 1322(c)(1), as amended by § 301 of the Bankruptcy Reform Act of 1994, is effective with respect to bankruptcy cases filed after October 22, 1994. See Pub. L. No. 103-394, § 702, 108 Stat. 4106 (1994).

 

25  See In re Chang, 185 B.R. 50, 53 (Bankr. N.D. Ill. 1995) (“In the 1994 amendments to the Bankruptcy Code, Congress provided that, ‘notwithstanding subsection (b)(2) and applicable non-bankruptcy law,’ a Chapter 13 debtor may cure a default with respect to a lien on his or her principal residence until the property is sold at a foreclosure sale. 11 U.S.C. § 1322(c)(1). . . . Since the property in question here has not been sold by foreclosure sale, Debtors continue to have such rights.”). See also In re Jefferson, 263 B.R. 231 (Bankr. N.D. Ill. 2001) (Debtor who occupies a condominium unit as his principal residence can cure prepetition defaults in maintenance assessments through the plan under § 1322(c)(1) because the condominium association had not pursued foreclosure prior to the petition.).

 

26  In re Chang, 185 B.R. at 53 (“The changes made by this section . . . also overrule the result in First Nat’l Fidelity Corp. v. Perry, 945 F.2d 61 (3d Cir. 1991) . . . The statute now makes clear that judicial sale is the bright line that cuts off a debtor’s rights, not foreclosure judgment.”). See App. I.

 

27  See above in this section, and see § 115.1 [ Curing Default, Waiving Default, Maintaining Payments and Combinations ] § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations. See also App. I.

 

28  330 F.3d 636 (4th Cir. 2003).

 

29  330 F.3d at 644–45.

 

30  The question whether judgment liens, statutory liens, and other nonconsensual liens are “security interests” for purposes of the protection from modification in § 1322(b)(2) is discussed in § 119.2 [ Statutory Liens and Judgment Liens, Including Foreclosure Judgments ] § 80.2  Statutory Liens and Judgment Liens, Including Foreclosure Judgments.

 

31  140 Cong. Rec. S14,462 (remarks by Sen. Grassley). See above in this section.

 

32  11 U.S.C. § 1322(c)(1), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 301, 108 Stat. 4106 (1994) (emphasis added).

 

33  140 Cong. Rec. H10,769 (section-by-section analysis by Congressman Brooks).

 

34  See above in this section and see App. I.

 

35  See Colon v. Option One Mortgage, No. 02 C 1441, 2002 WL 1263986, at *1–*2 (N.D. Ill. June 6, 2002) (unpublished) (“Three district judges and two bankruptcy judges have held that the right to cure under 11 U.S.C. § 1322(c)(1) continues until the state court confirms the sale of the subject property. . . . One district judge and several bankruptcy judges have reached the opposite conclusion; in their view a debtor’s right to cure evaporates once a buyer who is willing and able to purchase the subject property is identified, usually as the highest bidder at a court-ordered auction. . . . [W]e agree with the view that a debtor’s right to cure is extinguished once the property is sold at a judicial sale, not when the sale is confirmed by the trial court. Although confirmation is not a mere formality in the state arena, its significance to federal concerns is too minimal to justify extending the period for cure to that point.”), aff’d, 319 F.3d 912 (7th Cir. 2003) (Although state courts have interpreted the Illinois Mortgage Foreclosure Act to require a court confirmation hearing before a foreclosure sale is complete, because the debtor lost her right to redeem before the Chapter 13 case was filed, it was not an abuse of discretion to grant relief from the stay to permit the mortgage holder to ask the state court to confirm the prepetition foreclosure sale.); Commercial Fed. Mortgage Corp. v. Smith (In re Smith), 85 F.3d 1555, 1558 (11th Cir. 1996) (In dicta in a footnote, “if we were to apply the amended version of section 1322, the foreclosure sale of Smith’s property most likely would have cut off his ability to cure the default on his mortgage. See In re Sims, 185 B.R. 853, 867 (Bankr. N.D. Ala. 1995).”); McCarn v. WYHY Fed. Credit Union (In re McCarn), 218 B.R. 154, 160–62 (B.A.P. 10th Cir. 1998) (Whether applying the “unambiguous” language of § 1322(c)(1) or Wyoming law, Chapter 13 debtor cannot cure defaults where foreclosure sale occurred before the petition and only the debtor’s right of redemption came into the estate. “The language of section 1322(c)(1) is clear and unambiguous in establishing the date of the actual foreclosure sale as the cut-off for curing a mortgage default under section 1322(b) . . . . Some courts have held that section 1322(c)(1) is ambiguous, requiring an analysis of when property is ‘sold’ or when the sale is ‘complete’ under applicable nonbankruptcy law. . . . [W]e do not agree that section 1322(c)(1) is ambiguous. But, even if we were to turn to Wyoming law to determine when the sale occurred, we find that the bankruptcy court did not err in concluding that the property was ‘sold’ or the sale was ‘complete’ on the date of the foreclosure sale. . . . A right of redemption is an interest of the debtor in property . . . . This right is separate from the ability to ‘cure’ a default in a chapter 13 plan under section 1322(b). A ‘cure,’ as allowed under section 1322(b), ‘leaves most of the terms of the underlying loan agreement in effect and merely allows the debtor to reverse any acceleration of the loan, caused by default, so that the debtor can ‘catch up’ on the defaulted amounts while maintaining current payments.’ . . . The right to redeem property on the other hand, does not allow the debtor to reverse acceleration on the loan and catch up payments, but rather requires the debtor to pay the purchaser of the property the sum that it paid at a foreclosure sale plus interest in costs within a stated period of time. . . . The effect of redemption, at least in Wyoming, is to terminate the underlying mortgage, thus leaving nothing to ‘cure.’”); Cottrell v. United States (In re Cottrell), 213 B.R. 33, 43 (M.D. Ala. 1997) (Debtor cannot cure default where petition was filed on May 10, but foreclosure auction was conducted on May 9; “it is irrelevant when the certificate of sale was completed or the foreclosure deed executed, so long as the auction sale was completed the day prior to Cottrell’s bankruptcy petition.”); In re Jay, No. 02-21010, 2002 WL 31941459, at *5 (Bankr. D. Idaho Dec. 31, 2002) (unpublished) (Applying Idaho law, § 1322(c)(1) is not available when foreclosure sale was completed the day before the Chapter 13 petition notwithstanding that trustee’s deed was recorded after the petition. “Debtors’ interest in the residence on the date of filing consisted of only (1) possession and (2) bare legal or record title . . . . Debtors’ continued possession, as the deed of trust grantors, following the conclusion of the foreclosure sale which under [Idaho law] terminated and foreclosed their interests in the property, is a severely circumscribed sort of claim. The successful purchaser at a duly scheduled and regularly held foreclosure sale is entitled to issuance of a trustee’s deed and to obtain possession of the property.”); Martin v. USDA Rural Hous. Serv. (In re Martin), 276 B.R. 552 (Bankr. N.D. Miss. 2001) (Section 1322(c)(1) is no help to a Mississippi Chapter 13 debtor when foreclosure sale was conducted before the petition notwithstanding that foreclosure deed was recorded postpetition.); In re Townsville, 268 B.R. 95, 117–20 (Bankr. E.D. Pa. 2001) (“I believe the phrase ‘through completion of a foreclosure sale under applicable nonbankruptcy law,’ as used by Congress, must be interpreted to mean, not completion of the entire foreclosure sale process since none of the courts of appeal had utilized such date in construing the cutoff point for the right to cure under § 1322(b), but the event of the foreclosure sale (i.e., the auction). . . . [U]nder the law of Pennsylvania, property is sold at a foreclosure sale on the date the sale is held.” Bankruptcy court rejects argument that the foreclosure sale was not “conducted in accordance with applicable nonbankruptcy law” when sheriff continued the sale by oral announcement and then published an arguably ambiguous date for the continued sale.); In re Danaskos, 254 B.R. 416, 418 (Bankr. N.D. Ill. 2000) (Notwithstanding three contrary district court opinions from the Northern District of Illinois, “this Court will adhere to its prior holding that a Debtor’s right to reinstate a mortgage is cut off by the sale, and not by confirmation of that sale.”); In re Mangano, 253 B.R. 339, 344–45 & n.2 (Bankr. D.N.J. 2000) (“This Court is of the opinion that ‘the phrase “sold at a foreclosure sale” in Code § 1322(c)(1) refers to the auction itself, and that the debtor has no right thereafter to cure a default under that section.’” Property was sold at a sheriff’s sale before the petition. Debtor failed to exercise the extended redemption right during the 60 days after the petition. “Under New Jersey law, the only way in which a debtor can cure a default after foreclosure sale is through redemption. . . . If, however, a debtor fails to exercise his or her statutory right of redemption, he or she loses all title, right and interest in the property. . . . At that point it is too late for the debtor to cure arrearages, under a chapter 13 plan.”); In re Cook, 253 B.R. 249, 252 (Bankr. E.D. Ark. 2000) (The 1999 amendments to the Arkansas nonjudicial foreclosure statute approved the result in In re Bland, 227 B.R. 163 (Bankr. E.D. Ark. 1998), and overruled the result in In re Tomlin, 228 B.R. 916 (Bankr. W.D. Ark. 1999); nonjudicial foreclosure sale was complete when the high bid was accepted, notwithstanding that a deed had not been delivered and the debtor remained in possession. “[T]he high bid was accepted on May 16, 2000, one day prior to the filing of the bankruptcy petition. Thus, on May 16, 2000, under Arkansas law, the debtor’s redemption rights ceased, and sale was final for purposes of the Bankruptcy Code. . . . [W]hen the chapter 13 case was filed on May 17, 2000, the debtor did not possess any rights under Arkansas law with regard to the property. . . . [H]e may not include it in his reorganization case.”); In re Bobo, 246 B.R. 453, 456–58 (Bankr. D.D.C. 2000) (“[T]he Bankruptcy Code is unambiguous with respect to the meaning of § 1322(c)(1) in the case of a District of Columbia foreclosure under a deed of trust: the right to cure terminates upon the auctioneer’s declaring the highest bidder at an auction sale. . . . The additional steps of obtaining court approval, awaiting the expiration of any cure period under nonbankruptcy law, paying the purchase price, and recording the deed may be necessary to consummate the sale, but that does not alter the fact that the purchaser’s right to acquire the property has intervened—that the property has been sold at a foreclosure sale—to the detriment of the debtor. . . . [T]he statute refers to the property being sold at, not after or pursuant to, a foreclosure sale. Common parlance draws a distinction between the property being ‘sold at a foreclosure sale’ and the later consummation of that sale and satisfaction of all contingencies required to prevent defeasance of the sale (such as any required court approval of the sale, or expiration of any right of cure that exists after the sale and prior to court approval of the sale, or expiration of any right of redemption). . . . State law must be consulted to determine whether there have been steps to qualify as a ‘foreclosure sale’ within the meaning of § 1322(c)(1) and to determine whether those steps comported with state law requirements. But federal law, including the policies it embraces, determines whether the state law steps suffice to result in the property having been sold ‘at a foreclosure sale.’ . . . [Section] 1322(c)(1) should be interpreted in a fashion that encourages confidence in the state foreclosure auction process. Interpreting § 1322(c)(1) as allowing a cure after the foreclosure sale is held would tend to depress the price obtained at foreclosure sales.”); In re Denny, 242 B.R. 593, 596–97 (Bankr. D. Md. 1999) (Applying Maryland law, debtor can cure default under § 1322(c)(1) until gavel falls at foreclosure sale; purchaser at prepetition foreclosure sale is entitled to relief from the stay to seek ratification. “Giving effect to the plain language of the statute, this court finds that the phrase ‘sold at a foreclosure sale’ takes its common and ordinary meaning and refers to the actual date of the sale. . . . [T]he date of the sale marks the termination of debtor’s cure rights under Section 1322(c)(1) . . . . [U]nder Maryland law, unlike other states, debtor has no additional time to redeem the property after the auction.”); In re Crawford, 232 B.R. 92, 96–98 (Bankr. N.D. Ohio 1999) (Debtor cannot cure default on home mortgage when sheriff conducted sale and accepted highest bid before the petition notwithstanding that court had not confirmed sale and entire purchase price was not yet paid. Under Ohio law, sheriff did not have authority to convey the property until the entire purchase price was paid and an order confirming the sale was entered. Under Ohio law, the debtor had a right to redeem the property until the sale was confirmed. “This Court agrees with the courts which find that the language of § 1322(c)(1) is not ambiguous. . . . [A] straightforward reading of the first clause is that the cut-off point is when the gavel comes down on the last bid at the foreclosure sale. . . . [A] debtor’s right to cure ends when the sheriff accepts a bid at the foreclosure auction, so long as the sale has been properly conducted under state law. . . . If Congress had intended for state law to control, however, it could easily have said that a debtor has a right to cure a mortgage default until the foreclosure sale is final under state law.”); In re Hric, 208 B.R. 21, 25 (Bankr. D.N.J. 1997) (Agreeing with In re Simmons, 202 B.R. 198 (Bankr. D.N.J. 1996), and In re Little, 201 B.R. 98 (Bankr. D.N.J. 1996), and disagreeing with In re Ross, 191 B.R. 615 (Bankr. D.N.J. 1996), “sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law” “refers to the event of the auction as the ‘sale’ and distinguishes the ‘sale’ from the delivery of the deed.” That mortgage holder bought property at a foreclosure sale before the petition but no sheriff’s deed was delivered entitles mortgage holder to relief from the stay to complete foreclosure. The debtors’ right of redemption expired under New Jersey law as extended by § 108(b) when the debtor did not tender foreclosure judgment in full within 60 days of the petition.); In re Simmons, 202 B.R. 198, 202–05 (Bankr. D.N.J. 1996) (Agreeing with In re Ziyambe, 200 B.R. 790 (Bankr. D.N.J. 1996), and In re Little, 201 B.R. 98 (Bankr. D.N.J. 1996), the right to cure default ends under § 1322(c)(1) with respect to a New Jersey mortgage when the sheriff declares a sale to a high bidder; filing during the 10-day redemption period does not preserve right to cure defaults under § 1322(b)(5). Although § 1322(c)(1) is ambiguous, “[w]hen the House Report and Senator Grassley’s comments are read in conjunction with the language of section 1322(c)(1) it is apparent that the phrase ‘sold at a foreclosure sale’ refers to the event of sale. . . . Grassley’s comments are only sensibly understood as referencing the point at which the residence is sold to another party. . . . [A] residence is sold at a foreclosure sale when the sheriff declares that the property is sold to a high bidder. . . . [T]he delivery of the deed is a mere ministerial act which is not the substantial part of the judicial sale, and, when given, relates back to the sale. . . . [B]y commencement of the case, the debtor merely extended the state law time period for redemption [10 days] by sixty days.”); Krawczyk v. United States (In re Krawczyk), 201 B.R. 589, 590, 591 (Bankr. N.D. Ga. 1996) (Citing Commercial Federal Mortgage Corp. v. Smith (In re Smith), 85 F.3d 1555 (11th Cir. 1996), and In re Sims, 185 B.R. 853 (Bankr. N.D. Ala. 1995), § 1322(c) does not allow a Chapter 13 debtor to cure defaults after a prepetition tax sale of real property. Tax sale was held on March 25, 1996. Certificate of sale was delivered to the purchaser before the petition. One-hundred-eighty-day redemption period under 26 U.S.C. § 6337 would expire during the Chapter 13 case. “The legislative history shows that Congress enacted § 1322(c) to create a brightline test for the date of termination of a debtor’s right to cure and reinstate. . . . The date which Congress chose was the date of the sale, regardless of whether title actually passed before, at or after such sale. In the instant case, the tax sale . . . occurred before Debtors’ petition was filed. Therefore, 11 U.S.C. § 1322(c) cannot act to extend the 180-day redemption period. Only 11 U.S.C. § 108 could apply to extend the redemption period.”); In re Little, 201 B.R. 98, 104–05 (Bankr. D.N.J. 1996) (Rejecting In re Ross, 191 B.R. 615 (Bankr. D.N.J. 1996), and In re Macavia, No. 95-34118 (Bankr. D.N.J. Oct. 19, 1995) (unpublished), “in New Jersey, a Chapter 13 debtor may cure a default and reinstate a residential mortgage following the entry of a foreclosure judgment but only prior to the conduct of a sheriff’s sale, notwithstanding the fact that the actual delivery of the sheriff’s deed to the successful purchaser has not been accomplished before the bankruptcy filing. . . . [T]he debtors’ state law right of redemption, to the extent that it exists when a bankruptcy petition is filed is extended for 60 days beyond the commencement of the bankruptcy proceeding by operation of Section 108 of the Bankruptcy Code. . . . Such redemption is accomplished by the payment in full of the mortgage indebtedness, costs of foreclosure and costs of sale.”); In re Ziyambe, 200 B.R. 790, 794–97 (Bankr. D.N.J. 1996) (Disagreeing with In re Ross, 191 B.R. 615 (Bankr. D.N.J. 1996), and In re Macavia, No. 95-34118 (Bankr. D.N.J. Oct. 19, 1995) (unpublished), New Jersey Chapter 13 debtor loses the power to cure defaults once the foreclosure sale has been conducted without regard to actual delivery of the sheriff’s deed to the successful purchaser. The sheriff conducted foreclosure sale on February 20, 1996. Debtors filed Chapter 13 petition on February 21. No sheriff’s deed was issued to the successful purchaser before the petition. “[T]he termination date of the right to cure a default through a Chapter 13 plan under § 1322(c)(1) is the date of the sheriff sale of the mortgaged property. While the debtors retained their state law right of redemption after filing their Chapter 13 petition within 10 days following the sale, they cannot extend that right of redemption under a Chapter 13 plan that is filed after a foreclosure sale beyond the 10 day state law redemption period as extended an additional 60 days by operation of 11 U.S.C. § 108(b). . . . The Illinois foreclosure process [in McEwen v. Federal National Mortgage Ass’n, 194 B.R. 594 (N.D. Ill. 1996),] is notably different than that of New Jersey. A foreclosure sale under Illinois law does not occur until it is confirmed by the court. . . . Under New Jersey law, however, title to the property is indefeasibly vested in the successful bidder unless objection to the sale is filed within ten days. . . . [T]he debtors filed their petition on February 21, 1996. The state law redemption period expired on March 1, 1996. However, because Section 108(b) of the Code applies, the debtors had until April 21, 1996 to redeem their residence. Such redemption is accomplished by the payment in full of the mortgage indebtedness, costs of foreclosure and costs of sale.”); In re Christian, 199 B.R. 382, 387–88 (Bankr. N.D. Ill. 1996) (Residence is sold in accordance with applicable Illinois mortgage foreclosure law when the judicial sale occurs, not at court order confirming the sale. Judicial sale of debtor’s residence occurred after dismissal of confirmed Chapter 13 case. After order of dismissal was vacated, Citibank moved state court to confirm the judicial sale. Debtor moved for sanctions for violating the automatic stay; Citicorp moved for relief from the stay. Declining to follow McEwen v. Federal National Mortgage Ass’n, 194 B.R. 594 (N.D. Ill. 1996), “the ‘foreclosure sale’ in the present case took place prior to the time of the Dorsey Christian’s bankruptcy filing, [sic] Section 1322(c)(1) does not allow his plan to cure the arrearage in his mortgage to Citibank. . . . [T]he question of when a foreclosure sale is ‘final’ under state law does not determine when a debtor’s residence has been ‘sold at a foreclosure sale’ under Section 1322(c)(1) of the Bankruptcy Code.” Citibank violated stay by seeking confirmation of the sale in state court after reinstatement of Chapter 13 case. However, because the debtor could not cure defaults on the mortgage after the sale, equity favored annulment of the stay to validate Citicorp’s actions.); In re Sims, 185 B.R. 853, 863–67 (Bankr. N.D. Ala. 1995) (Section 1322(c)(1) as amended by the Bankruptcy Reform Act of 1994 prohibits an Alabama debtor from curing default where foreclosure sale occurred prior to the petition notwithstanding that statutory redemption is still available. “This Court is persuaded that the [In re Ragsdale, 155 B.R. 578 (Bankr. N.D. Ala. 1993),] analysis is the correct analysis of the law prior to the Reform Act. Chief Judge Mitchell’s analysis and Judge Hancock’s adoption of such analysis are in accord with the strong public policy of the Bankruptcy Code of allowing debtors to keep their homes and truly obtain a chance at a fresh start. . . . The Court finds, however, that the Reform Act has, in effect, codified the holding of In re McKinney, [174 B.R. 330 (Bankr. S.D. Ala. 1994),] and those cases like it which adopt a ‘bright line’ test to cut off the right to cure, rather than carefully protect and preserve the state law property rights of chapter 13 debtors . . . . This Court finds [11 U.S.C. § 1322(c)(1)] clear and unambiguous. Subsection (c)(1) is a specific limitation on the exceptions provided in subsections (b)(3) and (b)(5) to the general prohibition against modifying the rights of a holder of a claim secured ‘by a security interest in real property that is the debtor’s principal residence’ . . . . Section 1322(c)(1) does not limit ‘applicable nonbankruptcy law’ to state law . . . . However, foreclosure of real property is governed by state law, and a determination of when such property is ‘sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law’ is determined under state law. . . . Under Alabama law . . . [u]pon a foreclosure sale of the mortgaged property the legal title vests in the purchaser. . . . The purchaser’s legal title is subject to the mortgagor’s one year statutory right of redemption from the date of the foreclosure sale. . . . Alabama law treats the foreclosure sale as complete when the foreclosure deed is executed. . . . In the case at bar [the mortgage holder] held a foreclosure sale on May 19, 1995. . . . [T]he debtor could redeem the property until May 18, 1996. . . . At the time of the actual sale, the debtor lost the ability to reinstate the mortgage . . . under 11 U.S.C. Section 1322(b). This is the result mandated by Congress in the Reform Act under Section 1322(c)(1). . . . This result is not in accord with the public policy behind chapter 13 and behind the Bankruptcy Code . . . . Section 1322(c)(1) does not abrogate the right of the debtor to cure the default under Alabama law after a foreclosure sale through her statutory right of redemption . . . . [A]fter the foreclosure sale the only way the debtor can ‘cure’ the default is to exercise her statutory right of redemption through a lump sum payment which includes the principal, interest, and certain other charges.”); In re Chang, 185 B.R. 50, 53 (Bankr. N.D. Ill. 1995) (The 1994 amendments to § 1322(c) permit Chapter 13 debtors to cure defaults and to modify certain short-term mortgages at any time before a foreclosure sale. Mortgage ballooned on November 1, 1994. Chapter 13 petition was filed on March 3, 1995. Plan proposed to pay the outstanding balance of $185,000 with 9% interest over the term of the plan. “In the 1994 amendments to the Bankruptcy Code, Congress provided that, ‘notwithstanding subsection (b)(2) and applicable non-bankruptcy law,’ a Chapter 13 debtor may cure a default with respect to a lien on his or her principal residence until the property is sold at a foreclosure sale. 11 U.S.C. § 1322(c)(1) . . . . Since the property in question here has not been sold by foreclosure sale, Debtors continue to have such rights. . . . The changes made by this section . . . also overrule the result in First Nat’l Fidelity Corp. v. Perry, 945 F.2d 61 (3d Cir. 1991) . . . The statute now makes clear that judicial sale is the bright line that cuts off a debtor’s rights, not foreclosure judgment.”).

 

36  See McEwen v. Federal Nat’l Mortgage Ass’n, 194 B.R. 594, 596 (N.D. Ill. 1996) (Illinois foreclosure sale is not completed for purposes of § 1322(c)(1) until sale is confirmed by state court. Judicial sale on January 13, 1995. Before sale was confirmed by Illinois state court, debtor filed and proposed to cure default and maintain payments on mortgage. Bankruptcy court held that confirmation of the judicial sale was “simply a ministerial act”; thus power to cure expired before the petition. District court disagreed. “[A] foreclosure sale has not been conducted until the judicial sale has been confirmed by the court.”), probably overruled by Colon v. Option One Mortgage, 319 F.3d 912 (7th Cir. 2003); In re Fothergill, 293 B.R. 263 (Bankr. S.D. Fla. 2003) (Applying Florida law, real property was sold at a foreclosure sale, and state court issued Certificate of Sale and Certificate of Title before the petition; curing defaults is not available under § 1322(c)(1).); In re Brown, 282 B.R. 880 (Bankr. E.D. Ark. 2002) (Because foreclosure is not complete under Arkansas law until confirmation of the sale by a court, Chapter 13 petition filed after sale but before order confirming sale draws the property into the bankruptcy estate where the debtor can cure defaults.); In re Spencer, 263 B.R. 227, 231 (Bankr. N.D. Ill. 2001) (Acknowledging “considerable disagreement” among the bankruptcy and district judges in Illinois regarding § 1322(c)(1), “the Illinois courts have repeatedly enounced that a foreclosure sale is not complete until an order confirming the sale has been entered. Until the foreclosure sale is completed by entry of an order confirming the sale, the Bankruptcy Code affords the debtor a right to cure the arrearage.”), probably overruled by Colon v. Option One Mortgage, 319 F.3d 912 (7th Cir. 2003); In re Newburn, No. 00 B 18249, 2001 WL 101733, at *2–*6 (Bankr. N.D. Ill. Feb. 6, 2001) (unpublished) (Confirmed plan cannot reinstate mortgage when property was sold at foreclosure sale confirmed by Illinois state court prior to the Chapter 13 petition. “[A]ll judges in this district agree that once the sale of the property is confirmed by the state court, a debtor no longer has any right to cure a mortgage default under § 1322(c)(1). . . . The only asset relating to this property that the debtor possessed at the time she filed her petition was the right to redeem. . . . [T]he special right to redeem does not provide the debtor with any basis for reviving her mortgage, and cannot transform real property sold to Beneficial before the petition was filed into property of the estate.” Mortgage holder protested treatment of its claim through the plan at the confirmation hearing, and “the language of the plan is wholly insufficient to revive the debtor’s terminated interest in the property . . . . [T]he court will not interpret § 1327(a) in a manner that would divest a party of its ownership rights and recreate an extinguished mortgage and ownership rights in the debtor, all in direct contravention of Illinois law and § 1322(c)(1).”); In re Faulkner, 240 B.R. 67, 69 (Bankr. W.D. Okla. 1999) (Applying Oklahoma law, foreclosure sale was not complete because Chapter 13 case was filed before confirmation of auction by state court. “For over half a century, Oklahoma decisional law has held that a foreclosure sale is not complete, in fact not a sale, until it is confirmed by a Court.” Distinguishing McCarn v. WyHy Federal Credit Union, 218 B.R. 154 (B.A.P. 10th Cir. 1998), “[w]hile such may be the law in Wyoming, a state which does not require the confirmation of a foreclosure sale, the BAP’s ruling in McCarn is not applicable to cases arising in Oklahoma where confirmation is required to complete the sale.”); In re Kane, 236 B.R. 131 (Bankr. D. Conn. 1999) (Foreclosure sale confirmed by Connecticut state court before the Chapter 13 petition is beyond rehabilitation notwithstanding that debtor’s right to appeal has not expired.); In re Scheldt, 220 B.R. 362, 364–65 (Bankr. C.D. Ill. 1998) (Adopting rationale in Crawford v. First Nationwide Mortgage Corp. (In re Crawford), 217 B.R. 558 (N.D. Ill. 1998), debtor could not cure default and maintain payments under § 1322(b)(5) where sheriff’s sale and court order confirming sale occurred before the petition and all that remained in the debtor was a special statutory right of redemption. “Under current Illinois law, a debtor’s residence is deemed ‘sold at a foreclosure sale’, thus terminating the debtor’s right to cure defaults under the cure provisions of Chapter 13, when the foreclosure has been confirmed. . . . Debtor’s rights to cure the default under the mortgage terminated pre-petition . . . when Judge Mills entered his Decree Confirming U.S. Marshal’s Report of Sale. . . . Debtor’s special right of redemption . . . was admittedly still in effect at the time she filed her petition herein, and was extended for 60 days pursuant to Section 108(b) of the Bankruptcy Code. However, the law in the Seventh Circuit, as expressed in Goldberg v. Tynan (In re Tynan), 773 F.2d 177 (7th Cir. 1985), clearly states that when a petition in bankruptcy is filed before the expiration of a redemption period, only the statutory right to redemption and not the real property sold at the sheriff’s sale, becomes property of the estate. Accordingly, a debtor’s ownership in real property, if already terminated is not reinstated by the statutory right of redemption. Only if a debtor exercises the right of redemption does the debtor reacquire an interest in real property. . . . Debtor’s statutory right of redemption expired, pursuant to Section 108(b), sixty days after [the petition]. . . . Debtor no longer has any claim in or to the subject property.”); In re Jones, 219 B.R. 1013, 1015 (Bankr. N.D. Ill. 1998) (“[T]hree separate district judges have reversed their bankruptcy counterparts, holding the Illinois foreclosure sale complete only after confirmation” Chapter 13 debtor can cure defaults under § 1322(c)(1) until entry of a state court order confirming foreclosure sale.), probably overruled by Colon v. Option One Mortgage, 319 F.3d 912 (7th Cir. 2003); In re Crawford, 215 B.R. 990, 992–95 (Bankr. N.D. Ill. 1997) (“In this district, bankruptcy courts have held that if the chapter 13 petition is filed after a foreclosure sale, the debtor may not reinstate the mortgage. Two district court judges have disagreed. They held that the power to cure and reinstate is not cut off until the foreclosure sale is confirmed by the foreclosure court, because, they believed, that is when the sale is ‘complete.’ Contrary to those two district court opinions, this Court again holds that a chapter 13 debtor has no power to cure defaults and reinstate a mortgage if the mortgaged property has been sold under a foreclosure judgement before the commencement of the chapter 13 case, even if that sale has not been confirmed.” Disagreeing forcefully with Christian v. Citibank, 214 B.R. 352 (N.D. Ill. 1997) and McEwen v. Federal National Mortgage Ass’n, 194 B.R. 594 (N.D. Ill. 1996), “the plain language and legislative history of § 1322(c)(1) require the extinction of a debtor’s right to cure his or her mortgage default at the time an Illinois foreclosure sale is held, not at the time of sale confirmation. Section 1322(c)(1) . . . defines the critical point as the time when the ‘residence is sold at a foreclosure sale that is conducted in accordance with nonbankruptcy law.’ . . . Congress could ‘have used the words “final”, or “approved”, or “completed”, or the phrase court approved.’ . . . Instead, it used the word ‘conducted.’”), rev’d, 217 B.R. 558 (N.D. Ill. 1998) (Agreeing with McEwen v. Federal National Mortgage Ass’n, 194 B.R. 594 (N.D. Ill. 1996), and Christian v. Citibank, 214 B.R. 352 (N.D. Ill. 1997), Illinois law provides that a foreclosure sale is complete for § 1322(c)(1) purposes when the foreclosure court confirms sale and not at earlier time when sale is “knocked down” to a bidder.), probably overruled by Colon v. Option One Mortgage, 319 F.3d 912 (7th Cir. 2003); In re Rambo, 199 B.R. 747, 750–51 (Bankr. W.D. Okla. 1996) (Oklahoma Chapter 13 debtor can cure defaults until entry of an order confirming the foreclosure sale. “This court does not doubt that the intention of Congress . . . was not to reduce cure rights previously possessed by debtors, but to extend those rights for those debtors in whose jurisdictions they were unduly restrictive. In this court’s view, however, . . . the language which the Congress adopted to achieve its stated intention may well have fallen short of its mark. While it is quite clear that cure is possible ‘until the residence is sold at a foreclosure sale that is conducted in accordance with applicable non-bankruptcy law,’ it is extremely difficult to read into the statutory language any intention to permit the extension of the cure period beyond sale in the event ‘applicable non-bankruptcy law’ would permit a later cure. Thus, it appears that Congress, contrary to its stated intention, may have restricted the cure period in some jurisdictions. . . . [A] foreclosure sale can not be found to have been ‘conducted in accordance with applicable non-bankruptcy law’ until it is established that all steps required by that law in order to complete and validate the sale have been taken. In Oklahoma, prior to the enactment of § 1322(c)(1), . . . it was clear that a Chapter 13 debtor could cure a default under a foreclosed mortgage at any time prior to the entry of an order confirming the foreclosure sale. In this court’s opinion, the enactment of § 1322(c) has not changed that result.”); In re Christian, 199 B.R. 382, 387–88 (Bankr. N.D. Ill. 1996) (Residence is sold in accordance with applicable Illinois mortgage foreclosure law when the judicial sale occurs, not at court order confirming the sale. Judicial sale of debtor’s residence occurred after dismissal of confirmed Chapter 13 case. After order of dismissal was vacated, Citibank moved state court to confirm the judicial sale. Debtor moved for sanctions for violating the automatic stay; Citicorp moved for relief from the stay. Declining to follow McEwen v. Federal National Mortgage Ass’n, 194 B.R. 594 (N.D. Ill. 1996), “the ‘foreclosure sale’ in the present case took place prior to the time of the Dorsey Christian’s bankruptcy filing, [sic] Section 1322(c)(1) does not allow his plan to cure the arrearage in his mortgage to Citibank. . . . [T]he question of when a foreclosure sale is ‘final’ under state law does not determine when a debtor’s residence has been ‘sold at a foreclosure sale’ under Section 1322(c)(1) of the Bankruptcy Code.” Citibank violated stay by seeking confirmation of the sale in state court after reinstatement of Chapter 13 case. However, because the debtor could not cure defaults on the mortgage after the sale, equity favored annulment of the stay to validate Citicorp’s actions.), rev’d, 214 B.R. 352, 356 (N.D. Ill. 1997) (“Section 1322(c)(1) did, in fact, change the cutoff point for curing a mortgage default. Prior to the enactment of this section, the cutoff period was determined according to Section 1322(b)(5). . . . That ‘provision bases the right to cure upon the terms of the claim,’ and courts that analyzed this section focused on the rights of the parties with respect to the mortgage . . . . Section 1322(c) changes that focus because it directs that the time period for curing default is to be determined ‘notwithstanding . . . applicable nonbankruptcy law.’ . . . The legal relationship between parties to a mortgage is not of any concern under Section 1322(c) because it involves considerations of nonbankruptcy law. . . . The section is concerned only with the time when the foreclosure sale is complete, and in Illinois, that time does not occur until the sale has been confirmed by a court. . . . Because I have held that Section 1322(c)(1) permits a debtor to cure a mortgage default until the foreclosure sale is confirmed, the [bankruptcy] court’s decision to annul must be reversed.”), after remand, 231 B.R. 288 (N.D. Ill. 1999) (Bankruptcy court again retroactively annulled stay; on further review, district court affirmed retroactive annulment based on findings that after reinstatement of the Chapter 13 plan, the debtor failed to act and Citibank detrimentally relied by completing the foreclosure sale, making improvements to the property and reselling the property to a third party.), probably overruled by Colon v. Option One Mortgage, 319 F.3d 912 (7th Cir. 2003); In re Blair, 196 B.R. 477, 479–80 (Bankr. E.D. Ark. 1996) (Arkansas Chapter 13 debtor can cure defaults notwithstanding prepetition foreclosure sale where petition is filed before confirmation of sale by state chancery court. “The term ‘last payment,’ like the term ‘rights’ refers to the last payment due under the terms of the original note, not the terms of any subsequent foreclosure decree or the date the debt is due under terms of acceleration. . . . Under new subsection 1322(c)(1), the debtor may only cure the default until such time as the residence is sold at a foreclosure sale. . . . [I]n Arkansas, a debtor’s right to cure a default of a mortgage until the time of ‘sale’ remained the same before and after passage of the Bankruptcy Reform Act of 1994. . . . [T]he debtor had the right to cure until the time of sale. . . . The term ‘default’ as used in both subsections 1322(b) and 1322(c) necessarily encompasses the time past entry of a judgment of foreclosure because the statute provides for cure until the residence is actually sold at a foreclosure sale. To argue that a mortgage cannot be cured beyond entry of the judgment has the effect of nullifying section 1322(c)(1). . . . [T]he fact that the debt merged into the judgment under state law, does not obviate the debtor’s right to cure the default of the mortgage obligations. . . . Determination of whether the sale is final is made under state law. . . . [U]nder Arkansas law, a sale of property is not complete until confirmation of the sale by the Chancery Court. . . . [T]he sale was not confirmed, and, thus, was not final under state law.”); In re Rambo, 196 B.R. 181, 187 (Bankr. W.D. Okla. 1996) (“Oklahoma law does not terminate a debtor’s redemption rights until after confirmation of the foreclosure sale. . . . [T]he right to cure defaults while maintaining regular payments under § 1322(b)(5) . . . extends to the time when the redemption period has been irrevocably terminated.”).

 

37  See Montgomery v. Dennis Joslin Co., II, LLC (In re Montgomery), 262 B.R. 772, 776 (B.A.P. 8th Cir. 2001) (The cure and reinstatement provisions of § 1322(b)(3) and (5) are not available when trustee under deed of trust accepted successful bid at foreclosure sale and executed a deed to the purchaser at 2:00 p.m. and Chapter 13 case was filed at 3:42 p.m.; bankruptcy court appropriately granted purchaser relief from the stay. “The Bankruptcy Code expressly prohibited the Debtor from using the cure-and-reinstatement provisions of Chapter 13 to unseat Joslin from its status after the trustee’s sale. 11 U.S.C. § 1322(c)(1).”); McLouth v. Advanta Mortgage Corp. (In re McLouth), 268 B.R. 244 (D. Mont. 2001) (Applying Montana law, foreclosure sale was complete at 11:00 a.m. when successful bidder tendered purchase price and received trustee’s deed; debtor had no interest in the property when the Chapter 13 petition was filed at 4:59 p.m.); Randall v. Equicredit Fin. Serv. Corp. (In re Randall), 263 B.R. 200, 202–03 (D.N.J. 2001) (Applying New Jersey law, foreclosure sale is not complete until delivery of the deed; Chapter 13 debtor can cure and reinstate the mortgage under § 1322(c)(1) when the petition is filed after the public foreclosure sale but before delivery of the deed. “Section 1322(c)(1) must be read in conjunction with New Jersey state law to determine when the property is considered to be ‘sold.’ . . . Under New Jersey law, a mortgagor is permitted to redeem within a ten-day period after the foreclosure auction . . . or until an order confirming the sale is entered if objections are filed. . . . [T]his right of redemption is not extinguished until the delivery of the deed by the sheriff, typically at the end of the ten-day period. . . . Given that the sale is not complete until the delivery of the deed, the debtors retain their right to cure the default until then.”); In re Grassie, 293 B.R. 829 (Bankr. D. Mass. 2003) (Stay prevents completion of foreclosure sale when at the moment of the petition, purchaser had signed memorandum of sale but creditor had not; under Massachusetts law, statute of frauds was not satisfied, and debtor retained equity of redemption.); In re Kent, No. 3:03-BK-11277, 2003 WL 21540996 (Bankr. E.D. Ark. July 1, 2003) (unpublished) (Applying Arkansas law, foreclosure sale was completed before the Chapter 13 petition when highest bid was accepted and trustee’s deed was executed; debtor had no further rights in the real property and could not include mortgage in plan.); Tucker v. Ameriquest Mortgage Co. (In re Tucker), 290 B.R. 134 (Bankr. E.D. Mo. 2003) (Applying Missouri law, foreclosure sale and delivery of deed the day before the petition cuts off the debtor’s power to cure default notwithstanding that deed was not recorded.); In re Bland, 252 B.R. 133 (Bankr. W.D. Tenn. 2000) (For purposes of § 1322(c)(1), under Tennessee law, foreclosure sale is complete when consideration has passed and the statute of frauds is satisfied. Tendering check for the purchase price and signing trustee’s deed before entry of an order reinstating the debtor’s Chapter 13 case completed the foreclosure sale and precludes treatment of the mortgage under § 1322(c)(1).); In re Dow, 250 B.R. 6, 8 (Bankr. D. Mass. 2000) (“[U]nder Massachusetts law redemption rights still exist until the execution of a memorandum of sale following the bidding process. . . . Those redemption rights, indeed the entire property interest, passed to the bankruptcy estate, triggering the automatic stay.” Auctioneer’s hammer came down at 10:25 a.m.; Chapter 13 petition was filed at 10:28 a.m. A few minutes after the bankruptcy filing, mortgage holder signed the memorandum of sale. Debtor can cure default and reinstate the mortgage because the execution of the memorandum of sale was void.); In re Williams, 247 B.R. 449, 452 (Bankr. E.D. Tenn. 2000) (On the purchaser’s motion for relief from the stay, residence did not become property of the estate because foreclosure sale occurred two days before the petition and a successor trustee deed was executed an hour or two before petition. Residence is not property of the estate and is not protected by the automatic stay. Citing In re Johnson, 213 B.R. 134 (Bankr. W.D. Tenn.), modified after reh’g, 215 B.R. 988 (Bankr. W.D. Tenn. 1997), “[a] foreclosure sale is final in Tennessee when consideration is exchanged and the statute of frauds is satisfied. . . . Execution of a written contract satisfies the statute of frauds . . . . [R]ecording is not necessary.”); In re Beeman, 235 B.R. 519, 524–26 (Bankr. D.N.H. 1999) (The federal question of when a foreclosure sale is completed for purposes of § 1322(c)(1) is answered by state law; under New Hampshire law, the transfer of title that occurs after the auction is the point when the foreclosure sale process ends. “The word ‘sale’ is generally defined as the transferring of ownership and title regarding property to a buyer. . . . Title and ownership generally pass through foreclosure upon the completion of a process, and not upon the occurrence of a single event such as a foreclosure auction. . . . [A] foreclosure auction is a singular event, an event occurring as a part of the foreclosure sale process that does not normally result in a final transfer of ownership and title by itself. By deciding to hinge a debtor’s cure and reinstatement rights on property being sold at a foreclosure sale, rather than the occurrence of a foreclosure auction, Congress has envisioned the cut-off time as occurring at the end of a process rather than at the end of one event within that process. . . . [U]nder New Hampshire law, title does not pass to the purchaser at a foreclosure auction until the foreclosure deed is recorded.”); In re Johnson, 213 B.R. 134, 137 (Bankr. W.D. Tenn.) (Foreclosure sale conducted the day before petition was not complete for purposes of Tennessee law because “no deed was executed or delivered, nor was any consideration paid.” The debtor retained interest in the property that was protected by the automatic stay and debtor has right to cure the mortgage defaults through the Chapter 13 plan.), on reconsideration, 215 B.R. 988 (Bankr. W.D. Tenn. 1997) (Nonjudicial foreclosure sale is final when there is satisfaction of the statute of frauds and an exchange of consideration; credit bid by mortgage holder satisfies the consideration requirement and the preparation and notarization of trustee’s deed, though not recorded, satisfies the statute of frauds. The debtor’s real property passed out of the estate before the filing of the Chapter 13 case. Mortgage holder is entitled to postpetition relief from the stay.); In re Downing, 212 B.R. 459, 463–64 (Bankr. D.N.J. 1997) (“The bankruptcy courts in the district of New Jersey are split in their interpretation of [§ 1322(c)(1)]. Four cases have held that a foreclosure proceeding conducted in accordance with New Jersey law terminates a debtor’s right to cure a mortgage when the hammer goes down at the time of the auction sale. . . . [T]wo other courts have decided that a chapter 13 debtor may cure and reinstate a residential mortgage until the actual delivery of a sheriff’s deed to the successful purchaser. . . . [M]odification of the term ‘foreclosure sale’ by ‘conducted in accordance with applicable nonbankruptcy law’ . . . has created an ambiguity with the meaning of the word ‘sold’ in the preceding paragraph of § 1322(c)(1). . . . [T]he court is required to consider available legislative history . . . . The Simmons [202 B.R. 198 (Bankr. D.N.J. 1996),] line of cases rely on the floor statement of Senator Grassley ‘. . . [t]here may be several months between the court order and the foreclosure sale. [§ 1322(c)(1)] will preempt conflicting State laws; and permit homeowners to present a plan to pay off their mortgage debt until the foreclosure sale actually occurs.’ . . . (citing 140 CONG. REC. § 14462 (daily ed. October 6, 1994)). The legislative history of the House version of the bill relating to the Senator’s statement supports an alternative conclusion. House Report 103-835 states . . . ‘if the State provides the debtor more extensive “cure” rights (through, for example, some later redemption period), the debtor would continue to enjoy such rights in bankruptcy.’ H.R. REP. 103-835, 103rd Cong., 2d Sess. 52 (October 4, 1994); . . . Congress placed the date of termination at the point when the sale is final under ‘applicable state law’, knowing that the applicable date would necessarily vary from state to state. . . . Accordingly, the most consistent interpretation of the legislative history of § 1322(c)(1) is to allow a debtor to cure a mortgage up to the time a sale becomes final. . . . New Jersey law [holds] that a judicial foreclosure sale is final on the date the deed on the property is conveyed by the sheriff.”); In re Mobley, 203 B.R. 784, 785 (Bankr. M.D. Fla. 1996) (Citing In re Jaar, 186 B.R. 148 (Bankr. M.D. Fla. 1995), “the filing of a certificate of sale is the conclusion of the foreclosure sale. . . . In this case, the certificate of sale was issued on March 28, 1996 and the Debtors filed the bankruptcy case on April 4, 1996. . . . Pursuant to 11 U.S.C. § 1322(c)(1), Debtors cannot reinstate or cure default in their mortgage.”); In re Reid, 200 B.R. 265, 267 (Bankr. S.D. Fla. 1996) (Adopting the analysis in In re Jaar, 186 B.R. 148 (Bankr. M.D. Fla. 1995), Florida Chapter 13 debtor cannot cure defaults where foreclosure sale occurred before the petition and certificate of sale was filed by clerk of the state circuit court before the petition. “[E]ven if Debtor retained redemption rights after the sale because of language in the Final Judgment, it was too late for her to cure and reinstate her mortgage in this Chapter 13 case. . . . ‘[I]n Florida, a residence is sold at a foreclosure sale within the meaning of Section 1322(c)(1) at the time the certificate of sale is filed by the clerk of the state court.’”); In re Ross, 191 B.R. 615, 617–20 (Bankr. D.N.J. 1996) (New Jersey Chapter 13 debtor can cure default and reinstate mortgage until the sheriff delivers deed to the successful purchaser. Foreclosure judgment was entered before the petition, and a sheriff’s sale was held. Under New Jersey law, the sheriff had 10 days within which to issue a deed. The sheriff’s deed was issued on the same day as filing of the petition. Plan proposed to cure defaults and reinstate the mortgage. Section 1322(c)(1) establishes “a uniform federally prescribed termination point for curing default on a residential mortgage in a Chapter 13 plan, which would vary from state to state only to reflect differences among the states in the ‘conduct’ of the sale.” “[U]ntil such residence is sold at a foreclosure sale” is ambiguous. “[A] ‘final’ sale, as determined by applicable state law, controls as the termination point of the right to cure default under § 1322(c)(1) . . . . [U]nder New Jersey law, a sale is not ‘final’ at the point of the fall of the gavel at the sheriff’s sale. Rather, the point of finality is reached at the expiration of the ten-day period of objection and the conveyance of the sheriff’s deed.”); In re Jaar, 186 B.R. 148, 153–55 (Bankr. M.D. Fla. 1995) (Interpreting § 1322(c)(1) as amended by the Bankruptcy Reform Act of 1994, Florida mortgage can be cured until the filing of the certificate of sale. A judgment of foreclosure was entered in June of 1993. A public sale was conducted on January 10, 1995. A certificate of sale was issued by the clerk of the state court and filed on January 10, 1995, at 11:17 a.m. The debtor filed Chapter 13 on January 10, 1995, at 3:11 p.m. The phrase “sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law” in § 1322(c)(1) means the filing of the certificate of sale. “[T]he right of redemption terminates with the filing of the certificate of sale . . . . Using the filing of the certificate of sale as the point in Florida where a debtor’s right to cure defaults and reinstate a mortgage terminates is consistent with the provisions of the new § 1322(c)(1), consistent with the reasoning of [Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985)], and consistent with the reasoning of the bankruptcy and district courts in Florida . . . . In Florida, the filing of the certificate of sale, rather than the acceptance of the high bid at the public bidding is the conclusion of the foreclosure sale. . . . In this case, the certificate of sale was filed before the Debtor filed her bankruptcy petition, and the Debtor is not able to cure and reinstate or redeem her mortgage through her Chapter 13 Plan.”).

 

38  See In re Barham, 193 B.R. 229, 232 (Bankr. E.D.N.C. 1996) (North Carolina debtor can cure defaults and reinstate home mortgage until expiration of the 10-day statutory upset bid procedure. Debtor filed five days after foreclosure sale. “[P]ursuant to 11 U.S.C. § 1322(c)(1), a property is ‘sold’ at a foreclosure sale only when the foreclosure sale is ‘completed.’ And in North Carolina, a foreclosure sale is not completed at the auction, but rather only after the expiration of the ten day upset bid period.”).

 

39  In re Benson, 293 B.R. 234, 239 (Bankr. D. Ariz. 2003) (Applying Arizona law, “payment of the bid price is essential to completion of the trustee’s sale . . . unlike the more ministerial acts such as recordation of the deed or judicial confirmation of the sale. . . . Thus the Debtor’s right to cure a default in a principal residence deed of trust will exist at least up until completion of the trustee’s sale, as determined by state law, notwithstanding any state law that might terminate that cure right earlier.”).

 

40  See Taylor v. Vermont Hous. Fin. Agency (In re Taylor), 286 B.R. 275, 279–82 (D. Vt. 2002) (Distinguishing Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002), § 1322(c)(1) provides an independent federal right to cure default with respect to a mortgage in strict foreclosure under Vermont law if the petition is filed before the date of redemption. “Canney focused exclusively on Section 108(b), which applies to remedying defaults generally . . . . In contrast, this case is governed by Section 1322(c)(1), which contains provisions uniquely tailored to protect homeowners’ primary residences. While the facts in Canney are analogous to the facts presented here, the governing law is substantively different. . . . Under the express terms of Section 1322[(c)](1), a homeowner can cure a default on her principal residence until that residence is sold at a foreclosure sale under the applicable nonbankruptcy law. . . . Since Vermont does not require a foreclosure sale to vest ownership in the mortgagee, and Section 1322(c)(1) provides an independent federal right to cure until the date of a foreclosure sale, the issue squarely presented in this case is when the Section 1322(c)(1) right to cure expires in a strict foreclosure regime. . . . In Vermont, under its strict foreclosure law, the mortgagee’s ownership of the subject property following a foreclosure judgment remains encumbered until the date of redemption specified in the foreclosure judgment has passed. . . . Accordingly, the operative date of the ‘foreclosure sale’ specified in Section 1322(c)(1) is the date on which all of the debtor’s rights in the subject property are extinguished, including rights of redemption. In this case, Taylor filed for Chapter 13 relief prior to the expiration of her equity of redemption, making Section 1322(c)(1) available.”); In re Pellegrino, 284 B.R. 326, 330–32 (Bankr. D. Conn. 2002) (Distinguishing Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002), under Connecticut strict foreclosure law Chapter 13 debtor can cure defaults under § 1322(c)(1) until the passage of all law days. “[Section 1322(c)(1)] embodies Congress’ general intention to extend to Chapter 13 debtors an ample, uniform federal window for curing a mortgage default, even if that time extends beyond the period provided by state law and Section 108(b). . . . [A]n analytical hurdle is encountered in attempting to interpret Section 1322(c)(1)’s foreclosure ‘sale’ concepts in the context of a Connecticut strict foreclosure. . . . [T]his Court looks to the essential concept embodied by Section 1322(c)(1)’s ‘sale’ terminology, namely the vesting of title. . . . Section 1322(c)(1) permits the Debtor to cure his payment default under the Mortgage until the foreclosure process vests unified legal and equitable title to the Residence in Nationwide. . . . [U]nder Connecticut state law . . . title does not become absolute in a foreclosing mortgagee until the expiration of all law days—i.e. those of the mortgagor and all junior encumbrancers. . . . [F]or purposes of Section 1322(c)(1), a Connecticut property interest is ‘sold’ in a strict foreclosure only after all the law days have passed. . . . [W]here, as here, a mortgagee has not acquired unified, or absolute, title due to the fact that the law days of all junior encumbrances have not passed, Section 1322(c)(1) affords the debtor-mortgagor an indefinite period of time to confirm a Chapter 13 plan which cures a mortgage default.”); Schinck v. Stephens (In re Stephens), 221 B.R. 290, 294, 297–98 (Bankr. D. Me. 1998) (Section 1322(c)(1) is of no assistance to debtor who suffered “strict foreclosure” under Maine law notwithstanding that procedure did not include a “sale.” Maine has two foreclosure procedures, one called “civil foreclosure,” which contemplates a sale of the property, and one colloquially known as “strict foreclosure,” in which a sheriff’s notice of foreclosure is served on the debtor and, after a one-year redemption period, the lender is entitled to possession. More than a year before the petition, the mortgagee gave the debtor notice of foreclosure through the sheriff consistent with strict foreclosure. The one year redemption period expired. The mortgagee commenced a forcible entry and detainer action under state law, obtained a writ of possession, and served it on the debtors on February 2, 1998. The Chapter 13 petition was filed on February 6, 1998. Although § 1322(c)(1) permits Chapter 13 debtors to cure mortgage defaults until a “foreclosure sale that is conducted in accordance with applicable nonbankruptcy law,” “[b]ecause the rights and interests of mortgagees and mortgagors under Maine’s strict foreclosure procedures are determined without a ‘foreclosure sale,’ the federal law extension of cure rights embodied in § 1322(c)(1) has no application to the dispute before me. Section 1322(c)(1) cannot aid the Stephenses. At the time of their bankruptcy filing they no longer held rights in the previously-mortgaged real estate. . . .  I cannot accept the proposition that § 1322(c)(1) operates to curtail the availability of strict foreclosure under Maine law. . . . I find no ‘“clear” evidence of a congressional intent to preempt state law’ . . . . Section 1322(c)(1)’s limited scope does not operate to reinstate or recreate the Stephenses’ ‘rights in the real estate after they ceased to exist under state law.’”); In re Donahue, 221 B.R. 105, 109 (Bankr. D. Vt. 1998) (Applying Vermont law, “strict foreclosure” is not completed until a certified copy of judgment is recorded in the land records; because petition was filed before recording of certified copy of the judgment though on the last day of the redemption period under state law, debtor can cure defaults under § 1322(c)(1). “We . . . hold that Debtor’s right to cure through a chapter 13 plan, as provided by § 1322(b)(3) and (c)(1), is preserved until the property is sold at foreclosure sale or, in the case of strict foreclosure, until the certified copy of the judgment is filed with the town clerk where the property is located. This filing must occur within 30 days after the expiration of the time of redemption . . . . Debtor filed his chapter 13 petition before the expiration of the time for redemption and is thus well within his right to effectuate a cure.”), rev’d on other grounds, 232 B.R. 610, 614–15 (D. Vt. 1999) (“The Bankruptcy Court found that under Vermont law, Donahue retained title to the property when he filed his bankruptcy petition, because Tatko had not yet recorded his foreclosure judgment. . . . This Court also finds that Donahue retained title to the property when he filed his bankruptcy petition, but because the clerk of the Rutland Superior Court had not yet issued a writ of possession.”). See also Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002) (Applying Vermont strict foreclosure law and without reference to § 1322(c)(1), a prepetition foreclosure judgment left only equity of redemption for Chapter 13 estate and debtor’s failure to redeem within state law. As extended by § 108(b), this leaves debtor without a property interest in the Chapter 13 case.).

 

41  See also § 176.1 [ Land Sales Contracts and Contracts to Make a Deed ] § 102.9  Land Sales Contracts and Contracts to Make a Deed.

 

42  See In re Robinson, No. 03-18339, 2003 WL 22996982 (Bankr. E.D. Pa. Dec. 12, 2003) (unpublished) (Because Secretary of Veterans Affairs treated installment contract for sale of real estate as if it were a mortgage, debtor can cure default under § 1322(c)(1) notwithstanding that Secretary obtained a writ of possession before the petition.); In re Hursey, 292 B.R. 889, 893 (Bankr. C.D. Ill. 2003) (Debtor can cure default with respect to contract to purchase real estate notwithstanding prepetition judgment terminating the contract and ordering the debtor to immediately leave the property when bankruptcy court finds that “the Debtor was never given proper notice of the termination of her rights under the contract. . . . [A]lthough service by certified mail was attempted notifying the Debtor of her default under the Real Estate Contract and the purported termination of her rights, those mailings were not received by the Debtor. As such, the State Court was incorrect when it entered its judgment terminating the Debtor’s rights in the subject Real Estate Contract . . . . This Court notes the fact that the default judgment was obtained on a motion for default of which the Debtor had no notice. . . . [T]he Court concludes that the Debtor is entitled to cure all arrearages under said contract through her Chapter 13 Plan.”); In re Belmonte, 240 B.R. 843, 852–54 (Bankr. E.D. Pa. 1999) (Contract for installment purchase of real property was a security device that debtor could not cure through Chapter 13 plan because prepetition state court judgment declared the debtor without legal or equitable interest. “11 U.S.C. § 1322(c)(1) . . . definitively sets the date of sheriff’s sale as the cutoff point after which a mortgage default can no longer be cured. Section 1322(c) does not, however, specify the treatment to be accorded installment land sale contracts. . . . [S]heriff’s sales are not part of the collection process applicable to installment land contracts. . . . This Court will thus adopt the conclusion reached in [Rowe v. Conners (In re Rowe), 110 B.R. 712 (Bankr. E.D. Pa. 1990)], that the time for a purchaser to cure a breach of an installment land contract expires following entry of a judgment cutting off the purchaser’s equitable interest in the property. . . . [T]hat time has expired for Kevin . . . . This result is mandated in view of the binding determination of the Court of Common Pleas that Kevin has no remaining legal, or equitable right, and indeed not even a colorable possessory right, to the premises.”), aff’d in part and rev’d in part, 279 B.R. 812 (E.D. Pa. 2001) (State court “verdict” that debtor had no interest in real property under an installment land contract between the debtor and his mother was not final for preclusion purposes under Pennsylvania law because the debtor’s motion for posttrial relief was pending at the Chapter 13 petition. However, bankruptcy court’s decision to grant mother relief from the stay was appropriate.); In re Brown, 249 B.R. 193, 198 (Bankr. N.D. Ill. 2000) (Seller under Illinois real estate installment contract is not entitled to relief from the stay, and debtor as the buyer can cure default under § 1322(c)(1) because “a seller under a real estate installment contract does not enjoy a fixed right to forfeiture under Illinois law simply because the contract so provides. Unless the buyer has already obtained a stay within the preceding five years, the seller can only obtain a termination of a real estate installment contract after the passage, without cure, of any stay ordered by the court in [Forcible Entry and Detainer Act] proceedings. Until the end of such a stay, the contract remains binding between the parties, subject to complete reinstatement upon tender by the debtor of the amounts in default.”).

 

43  See § 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance. See, e.g., Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002) (Prepetition foreclosure judgment under Vermont strict foreclosure law left only equity of redemption for Chapter 13 estate; equity of redemption expired because period was not stayed by § 362 but was extended for 60 days by § 108(b).); Tax 58 v. Froehle (In re Froehle), 286 B.R. 94 (B.A.P. 8th Cir. 2002) (Debtor cannot pay redemption amount through Chapter 13 plan when Iowa tax sale occurred before the petition and debtor failed to tender payment in full before expiration of redemption period. Citing Johnson v. First National Bank of Montevideo (In re Johnson), 719 F.2d 270 (8th Cir. 1983), cert. denied, 465 U.S. 1012, 104 S. Ct. 1015, 79 L. Ed. 2d 245 (1984), and Justice v. Valley National Bank, 849 F.2d 1078 (8th Cir. 1988), only the right of redemption became property of the Chapter 13 estate when petition was filed after Iowa tax sale but during redemption period; the redemption period was not tolled by the automatic stay and expired at the end of the 60 additional days granted by § 108(b).); S.I. Sec. v. Dabal, No. 03 C 274, 2003 WL 21785625, at *2 (N.D. Ill. Aug. 1, 2003) (unpublished) (Debtor cannot redeem over the life of the plan from a prepetition tax sale when the debtor did not redeem during the 60-day extension provided by § 108(b). “[T]he automatic stay provision of a bankruptcy suit [sic] does not toll the running of the redemption period. . . . If the property owner does not redeem the taxes within the statutory period (including the extension), his interest in the property is extinguished. . . . Thus, an automatic stay does not prevent the tax purchaser from acquiring equitable or legal title to the property once the redemption period runs, even if bankruptcy proceedings are still in progress.”); Smith v. Phoenix Bond & Indem., 288 B.R. 793, 797 (N.D. Ill. 2002) (Citing Goldberg v. Tynan (In re Tynan), 773 F.3d 177 (7th Cir. 1985), and In re Murray, 276 B.R. 869 (Bankr. N.D. Ill. 2002), “Debtor’s failure to timely redeem the delinquent taxes cannot be cured under §§ 1322(c)(1) or 1322(b)(2) after the time period allowed under § 108(b) ended. . . . Applying § 108(b) to the facts here, debtor had until January 5, 2001, the date marking the end of the redemption period under Illinois law, to redeem his delinquent taxes. . . . [T]he automatic stay . . . does not toll the running of the redemption period.”); In re Murray, 276 B.R. 869, 877 (Bankr. N.D. Ill. 2002) (Declining to follow In re Bates, 270 B.R. 455 (Bankr. N.D. Ill. 2001), when Chapter 13 petition is filed after Illinois tax sale and redemption period expires before confirmation, debtor cannot use § 1322(b)(2) to pay the delinquent taxes over the life of the plan. Reasoning by analogy from Goldberg v. Tynan (In re Tynan), 773 F.2d 177 (7th Cir. 1985), “Congress did not include in § 108(b) any language further extending redemption rights or specifically providing as a further extension the period set forth in a plan filed under § 1322(b)(2). . . . [T]he better analysis limits the debtor to the shorter extension under § 108(b) to redeem the taxes. The failure to timely do so cannot be further cured or extended under a Chapter 13 plan by way of § 1322(b)(2).”).

 

44  See App. I.

 

45  See §§ 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance and 52.1 [ Turnover of Property ] § 50.1  Turnover of Property.

 

46  11 U.S.C. § 1322(c)(1).

 

47  11 U.S.C. § 1322(c)(1).

 

48  281 B.R. 51 (Bankr. S.D. Ala. 2001).

 

49  In re Christian, 214 B.R. 352, 356 (N.D. Ill. 1997).

 

50  See, e.g., Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985) (Eschewing reliance on conflicting state mortgage foreclosure laws, fixes a “federal rule” of sale at foreclosure as the limit on the power in § 1322(b)(5).).

 

51  See § 143.1 [ Demand, Matured and Balloon Loans; “Short-Term” Mortgages after October 22, 1994 ] § 85.2  Demand, Matured and Balloon Loans; “Short-Term” Mortgages after October 22, 1994.

 

52  See discussion of this legislative history in § 144.1 [ Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)? ] § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.

 

53  In re Chang, 185 B.R. 50, 53 (Bankr. N.D. Ill. 1995) (1994 amendments to § 1322(c) permit Chapter 13 debtors to cure defaults and to modify certain short-term mortgages at any time before a foreclosure sale. Mortgage ballooned on November 1, 1994. Chapter 13 petition was filed on March 3, 1995. Plan proposed to pay the outstanding balance of $185,000 with 9% interest over the term of the plan. “In the 1994 amendments to the Bankruptcy Code, Congress provided that, ‘notwithstanding subsection (b)(2) and applicable non-bankruptcy law,’ a Chapter 13 debtor may cure a default with respect to a lien on his or her principal residence until the property is sold at a foreclosure sale. 11 U.S.C. § 1322(c)(1). . . . Since the property in question here has not been sold by foreclosure sale, Debtors continue to have such rights. . . . The changes made by this section . . . also overrule the result in First Nat’l Fidelity Corp. v. Perry, 945 F.2d 61 (3d Cir. 1991). . . . The statute now makes clear that judicial sale is the bright line that cuts off a debtor’s rights, not foreclosure judgment.”).

 

54  See § 144.1 [ Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)? ] § 85.3  Prepetition Foreclosure Judgment: Curing Default, Payment in Full or Modification under § 1322(c)(2)?.