By Louis Robin
Law Office of Louis Robin
Longmeadow, MA
In In re Sagendorph, II, No. 14-4675, 2015 Bankr. LEXIS 2055 (Bankr. D. Mass. 6/22/15), Bankruptcy Judge Hoffman, in a well reasoned and
workmanlike opinion, has mechanically and, in my opinion and that of most
debtor practitioners, properly applied the provisions of Chapter 13 to allow "vesting" of property to a secured creditor; the opinion may
even provide secured creditors an opportunity to save significant foreclosure
costs. In this decision, Judge Hoffman permitted a debtor to surrender a property, and take the additional step of vesting the property to the secured creditor. Section 1325(a)(5)(C) permits “surrendering”
of assets as one of the alternatives for treatment of a secured claim as a precondition
to confirmation. “Vesting” is permitted
as an element of plan under Section 1322(b)(9).
Despite Wells Fargo's objection that “vesting” was “subservient”, Judge
Hoffman found no such direction in the Code – Section 1325 only set forth the
confirmation requirements, while Section 1322 set forth terms that are
permissible.
The Massachusetts state law prohibition of involuntary
transfers of real estate did not restrict the Bankruptcy Code provisions
because bankruptcy law, as a federal law, preempts state law.