Title Memorandum Opinion in re Ford
Michelle M. Harner
Case Number

Chapter 13 of the U.S. Bankruptcy Code provides a financially-distressed individual with an opportunity to catch her financial breath, assess her financial obligations, and structure a repayment plan to satisfy, at least in part, her obligations to creditors. This scheme benefits both the debtor and her creditors; it dedicates funds to pay creditors’ claims over a period of time and then provides the debtor with a discharge of any remaining obligations upon completion of the plan payments. A debtor may use the chapter 13 process to address most kinds of defaulted debt obligations, including prepetition arrears on her home mortgage or real property taxes. In the context of these longer-term or ongoing obligations, the chapter 13 plan typically does not satisfy all of the debtor’s present and future obligations. Rather, the focus of the plan is to cure arrearages and reset the debtor’s relationship with that creditor.
This memorandum opinion involves a debtor’s obligations under state and local law to redeem her home from a purchaser at a tax sale and how those obligations fit into the chapter 13 plan process. Specifically, the Court had to determine which obligations the debtor owed to Baltimore City and which she owed to the tax sale purchaser and the amounts (or potential amounts) of those respective obligations. The debtor’s chapter 13 plan can only address the debtor’s obligations under state law and not those of the city or tax sale purchaser. Accordingly, the Court (i) sustained the objection to the extent of the statutory fees and costs due the tax sale purchaser and the applicable interest rate on unpaid taxes and (ii) overruled the objection to the extent it suggests that any high bid premium or postpetition taxes must be included in the plan. The Court also provided the debtor an opportunity to file a motion to determine the appropriate rate of interest on any unpaid taxes to the extent that the debtor deems it necessary or appropriate under applicable state law.