Rake v. Wade Page 2

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Media for Rake v. Wade

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

David W. Carpenter:

It prohibits plan modification, Justice White.

It does not prohibit Code modification of the home mortgage.

And by home mortgage I, of course, refer to a... an allowed secured claim that is secured solely by real property which constitutes the debtors principal residence.

Byron R. White:

Well, by extending the time for payments you certainly are... are modifying the terms of the mortgage, aren't you?

David W. Carpenter:

No, Justice White.

Byron R. White:

The plan... the plan provides for extended payments, doesn't it?

David W. Carpenter:

The plan provides that in order to effect a cure--

Byron R. White:

Uh-hum.

David W. Carpenter:

--Under section 1322, the cure must be effected within a reasonable time.

Byron R. White:

Uh-hum.

David W. Carpenter:

That is not further defined in the Code.

In practice, it is implied to be not longer than the length of the Chapter 13 plan, which could be anywhere from 1 month to 5 years.

William H. Rehnquist:

Well, certainly the acceleration clauses in the... in the mortgage... typical mortgage, then, are... are set aside.

David W. Carpenter:

Your Honor, Mr. Chief Justice, the... the... what is set aside is the right to immediately foreclose and accelerate.

This, however, is not a plan modification as petitioners view it.

It is a modification that is imposed by the Bankruptcy Code itself, section 1322(b)(5).

William H. Rehnquist:

You say that requires that?

David W. Carpenter:

I'm saying that if the debtors choose to avail themselves of the cure provisions of paragraph (b)(5), that it is the Code and not the plan which constitutes the modification.

It does have the... the limiting language,

"notwithstanding the provisions of section 1322(b)(2). "

Antonin Scalia:

But the plan says how... how far deferred it's going to be, doesn't it?

David W. Carpenter:

The plan--

Antonin Scalia:

The Code doesn't... doesn't provide for an automatic answer.

David W. Carpenter:

--No--

Antonin Scalia:

So it's either done by the plan or it's not done.

David W. Carpenter:

--That is correct, Justice Scalia.

However, the treatment is not initiated by the plan per se, it is initiated by the Code.

Antonin Scalia:

Well you can say that about any treatment of anything under the plan.

The Code authorizes a plan to... to adjust any indebtedness, right?

David W. Carpenter:

Uh--