Bankr. E.D.N.C.: In re Hurlburt- Anti-Deficiency Mortgage Statute does not Circumvent Anti-Modification Provisions


Mr. Hurlburt sought to cram down the claim of a seller-financed purchase money deed to the value of his principal residence. While this would have been impermissible under 11 U.S.C. § 1322(b)(2), because the note was due, Mr. Hurlburt argued that 11 U.S.C. § 1322(c)(2) allowed such treatment even though Witt v. United Companies Lending Corp., 113 F.3d 508 (4th Cir. 1997) interpreted that section to allow only modification of the payment and not cram down. As this was a seller-financed purchase money deed, the anti-deficiency provisions of N.C.G.S. § 45-21.28, limited the lien-holder to only collect against the collateral. Due to the lack of any right to a deficiency claim, Mr. Hurlburt asserted that the lien-holder could never have an “under secured claim” and was limited by 11 U.S.C. § 506(a) to a secured the value of the property. Without both a secured and unsecured claim, the prohibition in Witt on bifurcation did not apply and Mr. Hurlburt only sought to modify the payment on the secured claim.

The bankruptcy court rejected this argument, instead finding that Mr. Hurlburt actually sought “to bifurcate the claim into a secured claim (that portion of the debt for which [the lien-holder] would have in rem rights) and a non-claim (that portion of the debt for which [the lien-holder] has neither in rem nor in personam rights).” (Emphasis added.) As such, pursuant to Nobelman v. American Savings Bank, 508 U.S. 324 (1993) (and with Witt precluding modification under §1322(c)(2)), § 1322(b)(2) prohibited modification of the rights of a secured creditor, “including the right to repayment of the principal in monthly installments over a fixed term at specified adjustable interest rates, the right to retain the lien until the debt is paid off, and the right to proceed against the property by foreclosure and public sale.”


As the bankruptcy court noted, while the anti-deficiency statute of N.C.G.S. § 45-21.28 is of infrequent application, if the lack of personal liability for an unsecured portion of a mortgage debt allowed a debtor to escape from the anti-modification provisions of § 1322(b)(2), this would be far more common in “Chapter 20” cases, where the mortgage note becomes a non-recourse claim if there was no reaffirmation.

For a copy of the opinion, please see:

Hurlburt- Anti-Deficiency Mortgage Statute does not Circumvent Anti-Modification Provisions

For a copy of the amicus brief in support of Mr. Hurlburt, please see:

Hurlbert – Amicus Curiae Brief



1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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