#2307 signed 3-5-97
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
ROBERTA JANET INGRAHAM,
CASE NO. 96-43016-13
ORDER DENYING STAY RELIEF
This matter is before the Court on a motion for stay relief filed by creditors George G. and Margie
Wiseman. The Wisemans appear by counsel Andrew R. Ramirez. The debtor appears by counsel
John R. Hooge. The Court has reviewed the relevant pleadings and is now ready to rule.
In 1991, the debtor and her ex-husband bought a house from the Wisemans on a contract for deed. The purchase price plus interest were amortized over seven years and a balloon payment for the balance then owed is due in 1998. For various reasons, no payments have been made on the contract since March or April 1996. In August, the Wisemans sued them in state court, seeking to enforce a forfeiture clause in the contract for deed and to quiet title to the property. Relying on Kansas law, the debtor alleged she should be granted an equitable right of redemption despite the forfeiture clause in the contract. On December 18, before the state court decided whether the Wisemans were entitled to the forfeiture, the debtor filed a chapter 13 petition.
In her schedules, the debtor listed the value of the house as $59,000 and the debt to the Wisemans as about $41,500. Beyond merely alleging the debtor has no equity, the Wisemans have made no effort to disprove these assertions. See 11 U.S.C.A. §362(g)(1). As part of her plan of reorganization, the debtor proposes: (1) to lease the house to obtain income that will enable her to resume making the monthly payments to the Wisemans; (2) to pay the arrearages through her plan; and (3) ultimately, to sell the house before the balloon payment is due. As indicated, she contends the house can be sold for enough to pay all the Wisemans are owed, to pay the costs of sale, and to leave her some money as well. She has apparently hired an agent to try to lease and sell the house.
The Wisemans filed a motion for stay relief on December 30. At a hearing on January 17, 1997,
the Court directed the parties to submit briefs, the last of which was filed on February 11. In their
brief, the Wisemans discuss Kansas law and ultimately indicate they want this Court to grant them
relief to have the state court decide whether they are entitled to forfeiture or the debtor is entitled
to an equitable right of redemption. If the state court would grant the debtor that right, they
concede, she "could proceed with her proposed chapter 13 action."
DISCUSSION AND CONCLUSIONS
So long as the debtor still had an interest in the house under the contract for deed when she filed for bankruptcy, she can propose and seek confirmation of a plan that would allow her to cure her defaults and complete her performance obligations under the contract. See §541(a)(1); §1322(b)(3) & (8). As the Wisemans concede, under Kansas law, their attempted forfeiture of the debtor's rights under the contract is not effective unless and until a court determines that forfeiture is appropriate under the circumstances. No such determination was made before the debtor filed for bankruptcy. Consequently, she still had some kind of interest in the house under the contract when she filed, and so can seek confirmation of the plan she has proposed.
The Wisemans' motion must be, and it is hereby, denied.
IT IS SO ORDERED.
Dated at Topeka, Kansas, this _____ day of March, 1997.
JAMES A. PUSATERI
CHIEF BANKRUPTCY JUDGE