Opinion
Case No. 04-10526.
January 5, 2005
Beverly M. Burden, Trustee, Donald B. Smith, Attorney for Trustee, Lexington, KY.
Creditor: Meritage Mortgage Corporation, c/o Select Portfolio Servicing, Inc., f/k/a Fairbanks Capital Corporation, Douglas T. Logsdon, Attorney for Creditor, McBrayer, McGinnis, Leslie Kirkland, PLLC, Lexington, KY.
Debtors: Mark Anthony Roberts and Dawn Renee Roberts James P. Stavros, Attorney for Debtors, Ashland, KY.
AGREED ORDER
Comes Beverly M. Burden, Chapter 13 Trustee, by and through counsel, the Debtor(s), Mark Anthony Roberts and Dawn Renee Roberts, through counsel, and Meritage Mortgage Corporation, c/o Select Portfolio Servicing, Inc., f/k/a Fairbanks Capital Corporation ("Creditor") through counsel, and do hereby AGREE and advise the Court as follows:
The Debtors incurred a debt in favor of the Creditor on or about September 5, 2002 by execution of a Promissory Note in the amount of $24,100.00 and by execution of a first Mortgage on the debtor's real property, as appears of record in the office of the Clerk of Boyd County, Kentucky in Mortgage Book 840, Page 539;
Subsequently, the Debtors filed this Chapter 13 bankruptcy case on July2, 2004;
The first Mortgage in favor of the Creditor is alleged by Debtors and the Chapter 13 Trustee to be defective for the reason that the Notary Acknowledgment allegedly fails to meet the requirements of KRS 423.130, and therefore is claimed to be avoidable by the Trustee pursuant to 11 U.S.C. 544 (a) (3);
The plan as confirmed by Order dated September 13, 2004 provides that the Creditor has a secured claim with a secured value of $0.00, and the Creditor is therefore treated under the plan as a general unsecured creditor.
NOW THEREFORE, IT IS HEREBY AGREED AND ORDERED that:
1. During the pendency of this chapter 13 proceeding, the lien of the Creditor upon the Debtor's real property is hereby deemed AVOIDED pursuant to the Trustee's avoidance powers under 11 U.S.C. Sections 544, 547 and/or other applicable provisions of the Bankruptcy Code and all other applicable law. The real property is further preserved for the benefit of the Debtor's bankruptcy estate pursuant to 11 U.S.C. Section 551.
2. The claim of the Creditor shall be treated as a GENERAL UNSECURED CLAIM pursuant to the provisions of the plan. If this case is converted to one under Chapter 7, the Creditor shall retain the right to raise any defenses it may have to any adversary action brought by the chapter 7 trustee seeking to avoid the Creditor's lien, other than those time limitations set forth in following paragraph.
3. In the event this case is converted (voluntarily or involuntarily) to one under Chapter 7, the Chapter 7 Trustee appointed upon such conversion of this case shall be granted without further order of the Bankruptcy Court an extension of time in which to file an adversary proceeding in the Chapter 7 case to avoid any non-perfected lien(s). Debtor(s) and Creditor further agree that neither will raise any statute of limitations, latches, waiver or similar defenses to an adversary complaint filed by the Chapter 7 Trustee within the later of the below time periods:
a. The maximum statutory time permitted under the Bankruptcy Code as if this case had been originally filed under Chapter 7, plus one hundred and twenty (120) days; or
b. The date of conversion, plus one hundred eighty (180) days.
4. It is FURTHER ORDERED that the Chapter 13 Trustee shall not be required to file any adversary proceeding in order for the Creditors lien that is the subject of this Agreed Order to be deemed avoided.
5. Should this case be dismissed either voluntarily or involuntarily, nothing herein shall be deemed binding on any party unless otherwise provided.
6. During the pendency of this Chapter 13 case, the Creditor shall NOT be required to release its lien on the debtor's property, however, upon completion of all payments due under the confirmed plan or any subsequent properly modified and confirmed plan, the Creditor shall promptly file with the appropriate clerk or clerks, all documents necessary and required to effectuate a full release of the mortgage lien that is the subject of this Agreed Order.
7. In light of the relief granted herein, counsel for the Trustee shall be required to serve a copy of this Agreed Order only on the parties named below.