Debtor filed a Chapter 13 petition on January 2, 2015 and included defendant bank on his Bankruptcy schedules.
At the time of the Bankruptcy filing and at all times relevant, Debtor was a member of the U.S. Armed Forces, classified as active duty pending service related disability retirement application.
Debtor separated from his wife, who allegedly allowed the mortgage on his home go into default. He applied to the bank for a mortgage modification. The bank failed to process the mortgage modification or comply with the conditions set forth in the security deed.
The Debtor was eligible for a mortgage modification. Nevertheless, the bank started the nonjudicial foreclosure process on his home.
Because of Debtor’s active duty status, the bank was prohibited from selling his home at a foreclosure sale. On the day of the scheduled sale, Debtor went to the courthouse and did not observe anyone conduct of sale of his home on behalf of the bank.
The Debtor filed a Chapter 13 petition and his plan dealt with the bank’s claim by proposing the continuation of the mortgage modification process. The bank did not object to the plan, which the Court confirmed.
After the plan had been confirmed, the bank contacted the Debtor to tell him that the modification process would continue.
However, the bank changed its tune and claimed that he Court had no jurisdiction over the Debtor’s home. The bank now alleged that the home was not property of the estate when the Debtor filed his petition since a valid foreclosure sale occurred prior to the time of the Chapter 13 filing.
The Debtor responded by averring that (1) the foreclosure sale was not valid; (2) the res judicata effect of the plan confirmation barred the bank’s new claim; and (3) the bank violated the automatic stay.
The bank moved for judgment on the pleadings.
The Court found that the Debtor’s complaint alleged sufficient facts to contest the validity of the foreclosure case. It also found that the Debtor’s claim for a stay violation survived the bank’s motion for judgment on the pleadings. Finally, the Court found that the Debtor’s complaint stated a claim that the bank was bound by the terms of the confirmed plan.