Rake v. Wade Page 16

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Media for Rake v. Wade

Audio Transcription for Oral Argument - March 22, 1993 in Rake v. Wade

David W. Carpenter:

There just may not be any modifications of the home mortgage except to allow a cure.

Therefore, the respondent's argument with respect to what else can be modified in his mortgage, and especially raising the specter of the Fifth Circuit case of Nobelman which is currently pending before this Court, are irrelevant to the issues today.

John Paul Stevens:

Excuse me.

Gee, if you take that position, strictly speaking, to allow a cure is simply to allow you, right now, to pony up all the money that's due.

That's allowing a cure.

David W. Carpenter:

That--

John Paul Stevens:

You--

David W. Carpenter:

--I disagree, Justice Scalia, I'm sorry.

John Paul Stevens:

--What?

David W. Carpenter:

I disagree for this reason.

Section 1322(b)(5) specifically limits the application of 1322(b)(2).

It permits cure within a reasonable time, and that is what I believe Congress intended for the bankruptcy courts on a specific case-by-case basis, fact-specific case, to determine.

In certain cases it would be 36, perhaps even as many as 60 months, a 5-year plan.

In certain cases it might only be 10 months.

In fact, if there's not a very extensive arrearage, the... I believe the bankruptcy rules, as they relate to distributions by a Chapter 13 trustee, prohibit payments of less than $15.

And so if there's a $150 arrearage that is due as of the date of filing of the petition, it could not be stretched out past 6 months, unless there's an exorbitant amount of interest that this Court would ultimately determine is appropriate.

John Paul Stevens:

May I ask you a question on this modification issue?

As I understand the claim here, it's just for the arrearages, it's not for the balance due on the entire note.

And the... if... in your view, if they fail to make... comply with the plan, covering... making the cure in monthly payments over a period of time, would the mortgagee retain the right to accelerate the basic note and foreclose?

David W. Carpenter:

Only upon application to the bankruptcy court, Mr. Justice Stevens, relating to relief from the automatic stay under section 362.

John Paul Stevens:

I see.

And what if--

David W. Carpenter:

And--

John Paul Stevens:

--But after... I'm assuming after confirmation of the plan, and they go... makes payments say... I think under this it's 5 years, wasn't it, to pay this off, or whatever period.

David W. Carpenter:

--I don't--

John Paul Stevens:

But 2 or 3 years later he misses a payment, and then the mortgagee would still have the right to accelerate, wouldn't they, to foreclose.

David W. Carpenter:

--He would have the right, yes, Justice--

John Paul Stevens:

Subject to approval of the bankruptcy court.

David W. Carpenter:

--Yes, Justice Stevens.

He would have to file an application for relief from the automatic stay.