When a homeowner files Chapter 13 bankruptcy to save a primary residence, the “cure and maintain” provision under §1322(b)(5) of the Bankruptcy Code allows them to propose a plan to cure mortgage arrears — even over the creditor’s objection. But what happens when the underlying loan documents have merged into a Florida foreclosure judgment? Which instrument controls?
In this article, originally published in ALFN’s ANGLE magazine (March 2020), ALAW Partner Jeffrey S. Fraser analyzes a Southern District of Florida ruling that answered this question decisively in favor of creditors. The Court held that a debtor improperly relied on the financial terms of a consent foreclosure judgment rather than the underlying mortgage when objecting to a creditor’s proof of claim. The ruling reinforces a critical principle: when a debtor elects to cure under §1322(b)(5), all provisions of the original note and mortgage are reinstated — and the foreclosure judgment does not replace or limit those terms.
Fraser walks through the interplay between statutory and contractual rights, the role of the proof of claim, and the supporting case law that frames this outcome.
Read the full article in ALFN ANGLE, Vol. 7, Issue 2 (March 2020) →