Leonard Nobelman, et Ux. v. American Savings Bank et al. (508 U.S. 324)
U.S. Supreme Court · decided June 1, 1993 · Supreme Court Database (Spaeth)
- Citation
- 508 U.S. 324 · 113 S. Ct. 2106
- Decided
- June 1, 1993
- Term
- October Term 1992
- Vote
- 9–0
- Majority author
- Justice Thomas
- Issue area
- Economic Activity
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Conservative
Opinion excerpt
Justice Thomas delivered the opinion of the Court. This case focuses on the interplay between two provisions of the Bankruptcy Code. The question is whether § 1322(b)(2) prohibits a Chapter 13 debtor from relying on § 506(a) to reduce an undersecured homestead mortgage to the fair market value of the mortgaged residence. We conclude that it does and therefore affirm the judgment of the Court of Appeals. I In 1984, respondent American Savings Bank loaned petitioners Leonard and Harriet Nobelman $68,250 for the purchase of their principal residence, a condominium in Dallas, Texas. In exchange, petitioners executed an adjustable rate note payable to the bank and secured by a deed of trust on the residence. In 1990, after falling behind in their mortgage payments, petitioners sought relief -under Chapter 13 of the Bankruptcy Code. The bank filed a proof of claim with the Bankruptcy Court for $71,335 in principal, interest, and fees owed on the note. Petitioners’ modified Chapter 13 plan valued the residence at a mere $23,500 — an uncontroverted valuation — and proposed to make payments pursuant to the mortgage contract only up to that amount (plus prepetition arrearages). Relying on § 506(a) of the Bankruptcy Code, petitioners proposed to treat the remainder of the bank’s claim as unsecured. Under the plan, unsecured creditors would receive nothing. The bank and the Chapter 13…
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