In re Paschen
United States Court of Appeals for the Eleventh Circuit
296 F.3d 1203 (2002)
- Written by Jody Stuart, JD
Facts
Richard and Doreen Paschen (defendants) obtained a loan from American General Finance, Inc. (American) (plaintiff) that was secured by a second mortgage on their home. Subsequently, the Paschens filed for Chapter 13 bankruptcy. At the time of filing, the balance owed to American was $11,392. Due to the value of the Paschens’ home, American’s claim was undersecured by $8,640. The Paschens’ Chapter 13 plan proposed the modification of American’s claim by splitting the claim into its secured and unsecured components. Under the plan, the unsecured portion of the claim would be stripped down, and, thus, only the secured portion of the claim, $2,752, would be paid back to American. The final payment under the original payment schedule of the American loan was due before the final payment under the plan would be due. American filed a motion to deny confirmation of the plan. The bankruptcy court found that § 1322(c)(2) of the United States Bankruptcy Code permitted the modification of American’s claim. The federal district court affirmed the bankruptcy court’s decision, and American appealed.
Rule of Law
Issue
Holding and Reasoning (Wilson, J.)
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