Marcia Campbell

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
__________________________________________
:
In re: 	: 	Chapter 13
:
MARCIA CAMPBELL 	: 	Case No. 13-40003 (ALG)
:
Debtor. 	:
__________________________________________:
DECISION
Marcia Campbell (the “Debtor”) has objected to the proofs of claim filed by WPR 3939
Funding LLC (“WPR”) and Ninel Baker (“Baker”), both of whom assert they are secured
creditors. 	There have been myriad filings by these parties, including objections to the Debtor’s
proposed chapter 13 plan, an objection to the Debtor’s discharge, as well as a motion by the Debtor
seeking to avoid the lien of the junior secured creditor. 	The Debtor and the creditors rely on
wildly disparate appraisal reports as to the value of the collateral the creditors claim. 	A central
issue in all of the motions and objections concerns the creditors’ entitlement to default interest.
While certain of the matters at issue require further evidentiary support for resolution, at a hearing
on June 17, 2014, the Court determined that providing the parties with guidance on the question of
default interest would aid in resolution of this matter. 	This Decision and Order will therefore deal
with the issue of entitlement to default interest. 	Proceedings to determine all other issues will be
deferred until after an adjourned chapter 13 hearing on August 7, 2014 at 2:00 p.m.
Facts
On December 8, 2013, the Debtor filed a petition under chapter 13 of the Bankruptcy Code,
and a plan (as subsequently amended, the “Plan”), pursuant to which she seeks to retain a
commercial, mixed-use property that she owns located in the Bronx, New York (the “Property”).
She does not reside in the Property but rents out part of the Property and has a business that
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occupies rental space in the Property.
Opposition to the Plan was filed by WPR and Baker. 	WPR claims to be the holder of a
first priority lien on the Property as assignee of a mortgage and note executed by the Debtor on
April 13, 2005 to secure a $400,000 loan. 1 On February 5, 2014, WPR filed a proof of claim, as
amended (Claim #7),2 in the Debtor’s bankruptcy case in the amount of $479,428.08, representing
$351,888.42 for principal due on the note “plus non-default and default interest, escrow advances,
legal fees and other charges allowable under the Note and Mortgage.” 	WPR’s predecessor in
interest had filed a foreclosure action on the note and mortgage in the Supreme Court, Bronx
County (the “NY Court”) on February 6, 2013, alleging that on October 1, 2012, the Debtor ceased
making monthly payments required under the terms of her note and mortgage; the foreclosure
action was stayed by the Debtor’s bankruptcy filing in December 2013.
Baker purports to hold a secured lien on the Property, junior to the WPR lien, based upon a
mortgage and note executed by the Debtor on August 15, 2009 as security for a $45,000 loan to the
Debtor.3 On January 11, 2013, Baker commenced a mortgage foreclosure action in the NY Court,
alleging that the Debtor had failed to make a single monthly mortgage payment under the terms of
the agreement. 	On February 7, 2014, Baker filed a proof of claim, which she amended on April
28, 2014 (as amended, Claim #8), in the amount of $88,314.53. 4
1 According to WPR’s filings, the original holder of the note and mortgage assigned the documents on April 19, 2013
to another entity which, in turn, assigned these documents on October 9, 2013 to WPR.
2 The amendment to the proof of claim was filed on April 22, 2014 to reflect a correction to the amount of arrearage
allegedly owed.
3 The interest rate on the loan was 8% per year and required monthly payments of $376.65 for twenty years. 	The note
provided that the default interest rate would be “18% or the highest legal rate, whichever is lower.”
4 The April 28, 2014 filing was originally labeled as claim #12 but later corrected to reflect it as an amendment to
claim #8. 	Baker maintains that the amendment increased the claim amount from $79,619.18 to $88,314.53 to reflect
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The Debtor objected to certain parts of both secured claims, including the imposition of
pre- and post-petition default interest. 	Originally, the Debtor also opposed WPR’s request for a
pre-payment premium and late payment charges, but WPR has since waived any pre-payment
charges and concedes that any late charges would be duplicative if default interest is granted. 	See
In re 785 Partners LLC, 470 B.R. 126, 137 (Bankr. S.D.N.Y. 2012). 	Relying on an appraisal that
attributes a market value of $380,000 to the Property, the Debtor also argues that WPR’s secured
claim should be capped at the appraised value of the Property and that Baker’s junior lien should
be avoided entirely. 	Baker commissioned a separate appraisal that valued the Property at
$700,000, which she argues is sufficient to secure her claim even if both the first and second lien
claims are awarded default interest; WPR also relies on this higher value. 	The value of the
Property is an issue for later determination.
Cure Defaults and Reinstate Mortgage
In the Plan, it appears that the Debtor proposes to reinstate the WPR mortgage and cure
defaults.5 Section 1322(b) of the Bankruptcy Code provides that a chapter 13 plan may –
. . .
(2) modify the rights of holders of secured claims other than a claim secured only
by a security interest in real property that is the debtor’s principal residence, or of
holders of unsecured claims;
(3) provide for the curing or waiving of any default;
. . .
(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any
default within a reasonable time and maintenance of payments while the case is
pending on any unsecured claim or secured claim on which the last payment is due
after the date on which the final payment under the plan is due. . . .
$8,695.35 in pre-petition attorney fees, for which she maintains she has a secured claim pursuant to the terms of the
loan documents.
5 As noted, the Debtor seeks to avoid Baker’s junior lien based on the lower appraisal, while Baker contends that the
higher appraisal is sufficient to warrant payment of her claim in full.
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Section 1322(b) allows “the curing . . . of any default” under a chapter 13 plan. 	Even if there is a
contractual acceleration clause,6 the power to cure a default allows chapter 13 debtors to “first
cure their default under (b)(3) and then maintain payments under (b)(5).” 	In re Taddeo, 685 F.2d
24, 28 (2d Cir. 1982). 	See also 11 U.S.C. § 1325(a)(5) (setting forth the confirmation
requirements with respect to each “allowed secured claim provided for by the plan”).
Interest Rate
Pre-petition
While the Second Circuit in Taddeo recognized a debtor’s right to cure a default, it did not
indicate how to determine the proper amount required for cure. 	The issue has been settled by the
addition of § 1322(e) to the Bankruptcy Code, adopted to overrule the Supreme Court’s decision in
Rake v. Wade, 508 U. S. 464 (1993). 	In re Adejobi, 404 B.R. 78, 80 (Bankr. E.D.N.Y. 2009).
Section 1322(e) of the Bankruptcy Code provides as follows:
Notwithstanding subsection (b)(2) of this section and sections 506(b) and
1325(a)(5) of this title, if it is proposed in a plan to cure a default, the amount
necessary to cure the default, shall be determined in accordance with the underlying
agreement and applicable nonbankruptcy law.7
Thus, “the amount necessary to cure a default is the same as would be required to cure if the debtor
were not in bankruptcy.” 	Adejobi, 404 B. R. at 81, quoting 8 COLLIER ON BANKRUPTCY ,
§ 1322.18 at 1322.67 (15th ed. rev. 2006). 	To qualify as a cure amount, the interest and charges
proposed must be both (1) required under the original agreement, and (2) not prohibited by state
law. 	Id. 	As stated by the Adejobi court,
6 “[O]nce a mortgage is accelerated, the entire amount is due.” 	Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d 980,
982, 943 N.Y.S.2d 540, 542 (2d Dept. 2012).
7 Section 1322(e), which applies in a chapter 13 case is almost identical to §§ 1123(d) and 1222(d), which apply in the
chapter 11 and chapter 12 context, respectively.
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The general rule in bankruptcy is that contractual interest on a debtor’s obligation
accrues up to the date of the bankruptcy filing. 	If unpaid, all contractually accrued
interest, including default interest, becomes an integral component of a creditors’
claim in bankruptcy. 	404 B.R. at 83.
Thus, if the parties’ agreement provides for a default rate of interest, if such rate has become due
and payable and if such rate is permitted by state law, the amount necessary to cure the Debtor’s
pre-petition arrears is the default rate. 404 B.R. at 79, 83.
There is no reason to believe the default interest rate provided in either the WPR or Baker
instruments would be void under New York Law. 	Although the 24% default rate in the WPR
mortgage is exceedingly high, and 18.625% higher than the non-default rate of 5.37%, similar
rates have been enforced by New York courts. 	See Emigrant Funding Corp. v. 7021 LLC, 25
Misc.3d 1220(A), 901 N.Y.S.2d 906, (Sup.Ct. Queens Co. Oct. 26, 2009) (enforcing 24% default
interest rate where original rate was 7.25%). 	See also several chapter 11 cases in which this Court
has held that where the parties to the agreement are sophisticated and there are no issues of
overreaching, such higher rate is not considered a “penalty.” 	See 785 Partners, 470 B.R. at
131-32; In re 243d Street Bronx R& R LLC, 2013 WL 1187859 (Bankr. S.D.N.Y. 2013). 	In the
case at bar, there is no assertion that the Debtor, who runs a business from the Property, is the
victim of overreaching. 	In 785 Partners, the bankruptcy court noted that “[e]ven where the
default rate strikes the judge as high, a court cannot rewrite the parties’ bargain based on its own
notions of fairness and equity.” 	Id. 	Thus, the secured creditors in this case appear entitled to
prepetition default interest if it was due and payable prepetition, and the underlying agreements
provided therefor.
There is no dispute that the WPR and Baker notes and mortgages provided for default
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interest, and no dispute that the Baker debt was accelerated.8 There is, however, no notice of
acceleration of the WPR debt in the record, and the parties dispute whether default interest became
payable prepetition. 	We turn to that issue next.
The WPR Note and Mortgage
The WPR Note provides that “after any stated or accelerated maturity hereof, the Loan
shall bear interest, payable on demand, at the default rate . . . set forth in the [M]ortgage. . . .” 	The
Note is therefore very clear that default interest is only payable on demand. 	There is nothing in
the record to reflect that WPR conveyed to the Debtor, after the alleged October 2012 default, and
prior to filing its foreclosure action in the NY Court, its election to treat the default in the payment
of a mortgage installment as a default under the Mortgage. 	Nor is there any indication in the
record that WPR’s predecessors started charging the Debtor default interest in 2012. 	WPR in fact
has never placed in the record a notice of default or notice of acceleration.
Instead, WPR argues that the debt automatically accelerated, relying on ¶ 32(a) of the
Mortgage under the heading “Defaults, ” which provides that “after default in the payment of any
installment of principal or interest as provided in the Note,” the debt shall become due. 	WPR
argues that the failure to pay the October 1, 2012 installment was a default and that the default rate
applied from that date. 	However, WPR ignores the lead-in clause to all of the defaults in ¶ 32,
including failure to make payment, material misrepresentations and the like. 	The introductory
sentence for ¶ 32, which contains the referenced provision, starts as follows:
The Debt shall become due, at the option of the Mortgagee, upon the occurrence of
any of the following events. (emphasis added).
It then lists nine events that the Mortgagee could opt to treat as a default. 	Clearly action by the
8 The record contains a notice of acceleration of the Baker debt, dated June 18, 2012.
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Mortgagee was required in order to accelerate the debt, and there was no automatic acceleration as
a consequence of a payment default.
This construction is compelled by the fact that a contract must be read as a whole,
Postlewaite v. McGraw-Hill, Inc., 411 F.3d 63, 67 (2d Cir. 2005), and a reading of the entire
“Default” section leads to the conclusion that acceleration is required for a payment default. 	The
section relating to “Defaults” is comprised of three paragraphs (¶¶ 32-34). 	Although each
paragraph lists a number of events that would constitute a default, the introductory sentences for
the paragraphs are not identical. 	Paragraph 33 has a similar introductory sentence to ¶ 32 and lists
three potential events that cause the debt to become due “at the option” of the mortgagee.
Paragraph 34, however, contains a different introductory sentence, as follows:
The Debt shall, forthwith, become due upon the occurrence of any of the following
events; the Mortgagor or any guarantor of the payment of the Note and/or of this
Mortgage shall: (emphasis added).
The paragraph then lists 12 events, including the filing of a bankruptcy petition, that result
in automatic acceleration of the debt. 	The fact that, under ¶¶ 32-33, the mortgagee had the
option to accelerate, or not, means that there had to be some mechanism for the mortgagee
to convey its election to the mortgagor. 	See Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d
at 982-83, 943 N.Y.S.2d at 5420) (noting that if acceleration of a debt is “optional,”
affirmative action is required to evidence the election to accelerate).
WPR has totally failed to establish the fact or date of acceleration, and it appears
that WPR and its predecessors have not been forthright concerning the issue. 	When
WPR’s predecessor brought the foreclosure action, it stated in ¶ 10 of the complaint that
once the appropriate length of time elapsed after the default it “has elected by letter dated to
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declare immediately due and payable the entire unpaid principal balance.” 	However,
although the complaint references a “letter dated,” it left out the date of any such letter and
indeed did not even have a space for such date, making it easy for a reader to overlook the
omission. 	As noted above, WPR has not submitted any such acceleration letter in the
record in this case. 	Further, although ¶ 10 of the foreclosure complaint goes on to state:
Pursuant to the terms of the Mortgage, the plaintiff has elected and does hereby
reiterate by the filing of this complaint its intention to declare the entire principal
balance to be due and owing,
WPR has never relied on this assertion. 	Instead, WPR argues that the date of acceleration has no
bearing on the calculation of default interest because the obligation to pay the entire Debt became
due and payable automatically upon the failure to pay the October 1, 2012 installment.9
It is recognized that ¶ 35 of the Mortgage also provided that “[u]pon the occurrence of any
default hereunder, the Note and all other sums secured hereby shall bear interest at the Default
Rate.” 	As the Second Circuit recently stated, however, this type of a general paragraph has been
interpreted by the New York cases as “‘not self-operative,’ intended to simply give the creditor
‘the right to treat the entire debt as matured.’” 	U.S. Bank Trust Nat’l Corp. v. AMR Corp. (In re
AMR Corp.), 730 F.3d 88, 100 (2d Cir. 2013), citing, Wurzler v. Clifford, 36 N.Y.S.2d 516, 517
(N.Y. Sup. Ct. 1942); see also Tymon v. Wolitzer, 39 Misc.2d 504, 240 N.Y.S.2d 888 (N.Y. Sup.
9 The filing of a foreclosure action is generally viewed by New York courts as an appropriate way in which to elect to
accelerate a loan. 	Albertina Realty Co. v. Rosbro Realty Co., 258 N.Y. 472, 476, 180 N.E. 176, 177 (1932); Logue v.
Young, 94 A.D.2d 827, 463 N.Y.S.2d 120, 121 (3d Dept. 1983). 	Nevertheless, notice of an election to accelerate
must be clear and unequivocal. 	Wells Fargo Bank, N.A. v. Burke, 94 A.D.3d at 983, 943 N.Y.S.2d at 542. 	The
language employed in the foreclosure complaint in this case is equivocal as it reiterates whatever “intention” had been
expressed in an acceleration letter that had purportedly been sent. 	The content of any such letter, however, is not in
the record. 	Thus, there is no any way to determine whether the Debtor was afforded an opportunity to cure the
default, or what the mortgagee’s precise plan or “intention” was with respect to declaring the acceleration. 	Therefore,
on this roiled record, the Court cannot make a finding that the loan was accelerated.
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Ct. 1963). 10 This construction of the Mortgage is particularly appropriate here where the
paragraphs on default distinguish clearly between defaults that automatically accelerate the debt
and defaults where the debt can be accelerated at the option of the Mortgagee. Since the record is
insufficient to establish that WPR or any of its predecessors accelerated the Mortgage, it does not
appear that WPR is entitled to prepetition default interest.11
Post-petition / Pre-confirmation
A separate issue is the interest rate applicable in the period after the chapter 13 petition
filing but prior to confirmation of a plan (often referred to as pendency interest). 	As noted earlier,
¶ 34 of the Mortgage provided that the default rate of interest would apply immediately upon the
filing of a bankruptcy petition, so there was acceleration of the debt.12 Nevertheless, a claim for
pendency interest is not governed by § 1322(e) of the Bankruptcy Code or the parties’ agreement,
and, in fact, is entirely disallowed by § 502(b)(2) of the Bankruptcy Code. 	It is available only if
the debt is oversecured because, “pursuant to § 506(b), an oversecured creditor is entitled to
post-petition interest on its claim up to the value of its collateral.” 	243rd Street Bronx R&R LLC,
2013 WL 1187859 at * 2 (Bankr. S.D.N.Y. 2013), citing 785 Partners, 470 B.R. at 133-34
(determing post-petition interest in the context of a chapter 11 case); see also In re Stringer, 508
B.R. 668, 671 (Bankr. N.D. Miss. 2014).
In Keybank Nat’l Ass’n v. Milham (In re Milham), 141 F.3d 420, 423 (2d Cir. 1998), the
10 Moreover, although the Wurzler and Tymon courts deemed that the acceleration clauses at issue required an election
by the creditor, notwithstanding seemingly automatic language, Wurzler, 36 N.Y.S.2d at 517 (“due and payable
forthwith”); Tymon, 240 N.Y.S.2d 893-894, (“immediately become due and payable”), in the instant case, the
language of ¶ 32 of the Mortgage specifically provided that the debt would become due at the option of the mortgagee.
11 There is an outstanding dispute as to the value of the Property and whether Baker’s claim is secured; however, there
does not appear to be any question that she accelerated the debt by letter, dated June 18, 2012.
12 The automatic acceleration of a debt on a bankruptcy filing is not a void ipso facto clause. 	U.S. Bank Trust Nat’l
Corp. v. AMR Corp. (In re AMR Corp.), 730 F.3d 88, 106-107 (2d Cir. 2013).
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Second Circuit considered the issue of pendency interest in a chapter 13 case. 	It determined that
an oversecured creditor is “entitled to receive § 506(b) interest only until the confirmation date of
the chapter 13 reorganization plan. At that time, the accumulated pendency interest becomes a part
of the allowed secured claim, and the plan must provide for payment of the present value of such
allowed claim as of the effective date of the plan.” 	Milham, 141 F.3d at 425. 	The Milham court,
however, did not decide the issue of the interest rate that applied, noting that it is “often, although
not necessarily, at the contract rate.” Id. 	In the context of a chapter 11 case, in In re General
Growth Properties, Inc., 451 B.R. 323, 326 (Bankr. S.D.N.Y. 2011), this Court found that there is
a presumption that the contract rate applies in the absence of a specified rate of interest under
§ 506(b) but added that this presumption is subject to equitable considerations.
Equitable factors considered in determining post-petition interest include whether
(i) the debtor is solvent; (ii) the increased interest rate can be categorized as a
penalty; (iii) the creditor engaged in misconduct; (iv) payment of such rate would
cause harm to other unsecured creditors; or (v) payment of such rate would
materially impair the debtor’s fresh start. 	Id. 	When these factors are absent,
courts are reluctant to modify private contractual agreements concerning
post-petition default interest rates. 	Id. at 328.
In this case, chapter 11 analysis appears useful in the context of a chapter 13 reorganization
case, and several of the factors identified in General Growth Properties are present. 	Payment of
default interest would cause harm to unsecured creditors and materially impair the Debtor’s fresh
start. 	Indeed, the Debtor might be unable to confirm a plan at all. 	Section 506 affords the
Bankruptcy Court “limited discretion to modify the amount of post-petition interest that an
oversecured creditor may collect as part of its claim,” 785 Partners, 470 B.R. at 133 (emphasis in
original), and as the Court said there “the focus should be on the spread between the pre-default
and post-default rates.” 785 Partners, 470 B. R. at 136 n.7. 	The 785 Partners Court found the 5%
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spread at issue there to be reasonable under New York law. 	Id. 	See also In re Vest Associates,
217 B.R. 696, 702 (Bankr. S.D.N.Y. 1998) (noting in a chapter 11 case that the presumption in
favor of the contract rate “may be rebutted if the rate is significantly higher without any
justification offered for the spread or where the default rate appears inordinately high in relation to
the non-default rate”). 	In this case, the default rate of interest for the WPR mortgage is 24%,
18.635% in excess of the 5.375% WPR mortgage interest rate. 	Therefore, assuming that WPR is
oversecured, a fact that the parties currently dispute, WPR’s request for a post-petition default rate
of interest at the contract rate cannot be accepted on the present record. 	A further hearing is
required to set an appropriate, equitable post-petition, pre-confirmation rate.13
Post-Effective Date Interest
In a chapter 13 plan § 1325(a)(5) requires that with respect to each “allowed secured claim
provided for by the plan” that is not secured by the debtor’s principal residence, either (i) the
holder of such claim must accept the plan (§ 1325(a)(5)(A)); (ii) the debtor must surrender the
property securing such claim to the holder (§ 1325(a)(5)(C)); or (iii) the holder of the claim must
retain its lien and receive distribution in equal monthly amounts of property with a value, as of the
effective date of the plan, not less than the allowed amount of such claim. (§ 1325(a)(5)(B)).14 In
13 The issues relating to the default rate of interest on the Baker loan for the “post-petition / pre-confirmation” period
are different, as the Baker default rate is 18%, or 10% higher than the 8% Baker mortgage interest rate. 	A hearing
may nevertheless be required to consider the pendency default rate on this obligation, depending on the value of the
collateral.
14 Section 1325(a)(5) of the Bankruptcy Code provides that with respect to each allowed secured claim provided for
by the plan—
(A) the holder of such claim has accepted the plan;
(B) (i) the plan provides that—
(I) the holder of such claim retain the lien securing such claim until the
earlier of—
(aa) the payment of the underlying debt determined under nonbankruptcy law; or
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the instant case, the Debtor is seeking to retain the Property, and WPR, which holds the secured
arrearage claim provided for in the Plan, has not accepted the Plan. 	Therefore, the Plan must
provide that WPR retain its lien and that the value, as of the plan’s effective date, of the property to
be distributed under the Plan on account of the pre-petition claim cannot be less than the amount of
that claim.
In calculating the amount of interest to be paid under a plan for the foregoing purposes,
where the property, as here, is not the Debtor’s principal residence, the Supreme Court has ruled
that a “formula approach” should apply. 	Till v. SCS Credit Corp., 541 U.S. 465, 478-79 (2004);
see also In re Wimmer, 2014 WL 2925101, at *7-8 (Bankr. S.D.N.Y. June 30, 2014) (applying the
Till formula to real property collateral that was not the debtor’s principal residence). 	The Till
formula starts with the prime rate, “which reflects the financial market’s estimate of the amount a
commercial bank should charge a creditworthy commercial borrower,” and then adjusts that
amount for the risk of nonpayment posed by a bankrupt debtor. 	541 U.S. at 479. 	This
adjustment for risk may require an evidentiary hearing on factors that impact it, including “the
circumstances of the estate, the nature of the security, and the duration and feasibility of the
(bb) discharge under section 1328; and
(II) if the case under this chapter is dismissed or converted without
completion of the plan, such lien shall also be retained by such holder to
the extent recognized by applicable nonbankruptcy law;
(ii) the value, as of the effective date of the plan, of property to be distributed under the plan
on account of such claim is not less than the allowed amount of such claim; and
(iii) if—
(I) 	property to be distributed pursuant to this subsection is in the form of 	periodic
payments, such payments shall be in equal monthly amounts; and
(II) 	the holder of the claim is secured by personal property, the amount of such
payments shall not be less than an amount sufficient to provide to the holder of
such claim adequate protection during the period of the plan; or
(B) the debtor surrenders the property securing such claim to such holder.
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reorganization plan.” 	Id. 	The Till court noted that by starting with the low prime rate and
adjusting upward, the evidentiary burden is placed “squarely on the creditors” who would have
easier access “to any information absent from the debtor’s filing (such as evidence about the
‘liquidity of the collateral market.’)” 	Id. 	The Till Court further stated that an evidentiary hearing
likely would not be protracted or costly because
the resulting “prime-plus” rate of interest depends only on the state of financial
markets, the circumstances of the bankruptcy estate, and the characteristics of the
loan, not on the creditor’s circumstances or its prior interactions with the debtor.
Id.
The interest rate provided by the formula approach applies to the pre-petition arrearage cure claim
as of the effective date of the plan to ensure that “the value, as of the effective date of the plan, of
property to be distributed under the plan on account of such claim is not less than the allowed
amount of such claim.” 15
Thus, as of the effective date, presumably the confirmation date, the appropriate interest
rate is a rate that will afford the creditor the present value of its secured claim as of that date.16 A
hearing must be scheduled to determine that rate if the parties cannot agree.
15 Depending on the value of the collateral, and the content of the Debtor’s Plan, a similar analysis will be required to
set an interest rate for the Baker loan.
16 To the extent that the Debtor proposes to bifurcate the claim into a secured and unsecured portion based upon an
appraisal valuing the Property at less than the total amount of the claim, such treatment is a modification of the rights
of the holder of the claim under § 1322(b)(2), which § 1322(d) requires be paid within five years. 	See In re Koper,
284 B.R. 747, 752-53 (D. Conn. 2002). 	As the Property is not the Debtor’s primary residence, she has two available
options: (1) to continue to pay the mortgage under its terms, including the non-default rate of interest for the remaining
term of the mortgage, while paying the arrearage under the plan at the Till rate of interest; or (2) to modify the
mortgage by bifurcating the mortgage into a secured and unsecured claim portion subject to completing full payment
in five years. 	A hybrid plan, combining the attributes of curing and maintaining the mortgage under §§ 1322(b)(3)
and (b)(5) with a modification of the mortgage terms under § 1322(b)(2) is not permissible. 	Koper, 284 B.R. at
753-54; see also Wimmer, 2014 WL 292510, at *5-7; In re Bullard, 475 B.R. 304, 314 (Bankr. D. Mass. 2012). At
present, the Debtor continues to pay the WPR mortgage under its terms at the non-default rate, and the only WPR
secured claim provided for in the Plan is the pre-petition arrearage claim.
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Conclusion
Based on the record, WPR’s claim for prepetition default interest is denied. 	Baker’s claim
to prepetition interest, default or otherwise, depends on the value of the collateral, an issue that
must still be determined. 	If there is sufficient collateral value, a hearing on the issue of
post-petition interest is required, as is a hearing on the Till rate for the post-effective date period.
This case shall be placed on the chapter 13 calendar of August 7, 2014 at 2:00 p.m., to
discuss further proceedings.
Dated: New York, New York
July 29, 2014
s/Allan L. Gropper
UNITED STATES BANKRUPTCY JUDGE
13-40003-cgm Doc 51 Filed 07/29/14 Entered 07/29/14 11:45:28 Main Document
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