MEMORANDUM OPINION AND ORDER

Stephani W. Humrickhouse, United States Bankruptcy Judge.

The issue before the court is whether a chapter 13 debtor may "cram down" the claim of a creditor secured only by a seller-financed purchase-money deed of trust on the debtor's residence to the value of the real property. The matter turns on the interplay between sections 502(b), 506(a), 1322(b)(2), and 1322(c)(2) of the Bankruptcy Code and the North Carolina anti-deficiency statute, North Carolina General Statutes § 45-21.38, and has implications beyond the facts of this case to chapter 13 cases filed after a debtor receives a discharge under chapter 7, colloquially known as "chapter 20" cases.

FACTS AND PROCEDURAL HISTORY

Larry Albert Hurlburt filed a petition for relief under chapter 13 of the Bankruptcy Code on April 13, 2016. Mr. Hurlburt owns and resides at real property located at 130 South Navassa Road, Leland, North Carolina 28451 (the "Property"). Mr. Hurlburt purchased the Property from Juliet J. Black in May 2004. Ms. Black financed a portion of the purchase price in the amount of $131,000 and is the beneficiary of a purchase money deed of trust. See Claim No. 3-2, Exs. 1-3. The loan matured on May 26, 2014, prior to the filing of Mr. Hurlburt's petition. Id. at Ex. 1. Ms. Black's proof of claim asserts a balance due as of the petition date of $180,971.72. Claim No. 3-2. Mr. Hurlburt scheduled the value of the Property as $40,000. BR Dkt. 1 at 22.1

On the same day he filed his petition, Mr. Hurlburt filed the complaint in this adversary proceeding, seeking to quiet title to the Property, to avoid the deed of trust, and objecting to Ms. Black's claim. The causes of action in the adversary proceeding arose from Mr. Hurlburt's contentions that the deed of trust was invalid due to an error in the originally filed document. In an order granting partial summary judgment dated December 5, 2016, this court determined that the deed of trust was valid. AP Dkt. 35. The remaining issue raised in the complaint, although with a slightly different legal analysis now that the validity of the deed of trust has been established, is the nature of Ms. Black's claim in the chapter 13 case given the seller-financed nature of the purchase-money deed of trust.

After the court entered its order finding that Ms. Black held a valid lien on the Property, Mr. Hurlburt filed an amended chapter 13 plan proposing to treat Ms. Black's claim as secured in the amount of $34,132.19, representing the $40,000 asserted value of the Property minus a tax lien held by Brunswick County in the amount of $5,867.81. The plan proposed to pay Ms. Black's secured claim in full at the rate of 4.5% per annum, with no treatment for the balance due under the note. BR Dkt. 28. A Second Amended Plan was filed on February 23, 2017, BR Dkt. 30, revising the proposed treatment of Ms. Black's claim to reflect a higher appraised value of the Property of $47,000, resulting in a secured claim of $41,132.19, and adjusting the plan treatment to accommodate adequate protection payments that had been required by an August 15, 2016 order.

Also on February 23, 2017, Ms. Black filed an "Objection to Debtor's Amended Plan and Motion to Convert or Dismiss Chapter 13 Case," BR Dkt. 29 (the "Objection"). In her Objection, Ms. Black contends, pursuant to 11 U.S.C. § 1322(b)(2) (known as the "anti-modification provision"), that Mr. Hurlburt cannot modify her rights because she is a creditor secured only by a lien on real property that is the debtor's principal residence. She acknowledges that because the debt matured prepetition, § 1322(c)(2) allows some modification of how the claim is paid, but maintains that under controlling case law Mr. Hurlburt must pay her claim in full with interest during the term of the chapter 13 plan. The Objection further alleges that if Mr. Hurlburt is required to pay Ms. Black's claim in full through the plan, he does not have sufficient disposable income to fund the plan, and thus he cannot propose a feasible, confirmable plan.

On March 9, 2017, Ms. Black filed a motion for summary judgment with respect to the legal issues raised in her Objection, and further requested that the legal issues be considered separately from confirmation of Mr. Hurlburt's plan. BR Dkt. 31. Meanwhile, the parties also briefed the remaining issues contained in Ms. Black's motion for summary judgment in the adversary proceeding; in his response brief, Mr. Hurlburt requested that summary judgment be entered in his favor. See AP Dkts. 37, 39. In addition, the National Association of Consumer Bankruptcy Attorneys submitted an amicus curiae brief on behalf of Mr. Hurlburt. AP Dkt. 36.

A hearing on the Objection, Ms. Black's motion for summary judgment on the legal issue raised in the Objection, and the cross-motions for summary judgment in the adversary proceeding was held in Wilmington, North Carolina on April 13, 2017. The common thread among the matters is the proper treatment of Ms. Black's claim, given that it is secured only by real property that is the debtor's principal residence, but also that the value of the Property is less than the amount of the claim and Ms. Black's interest is subject to North Carolina's anti-deficiency statute, North Carolina General Statutes § 45-21.38.

DISCUSSION

I. SUMMARY JUDGMENT STANDARD

"[S]ummary judgment is proper `if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In making this determination, conflicts are resolved by viewing all facts and inferences to be drawn from the facts in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962) (per curiam). Summary judgment is not a "disfavored procedural shortcut," but an important mechanism for filtering out "claims and defenses [that] have no factual basis." Celotex, 477 U.S. at 327, 106 S.Ct. 2548. "[A] complete failure of proof concerning an essential element of the non-moving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. 2548. Summary judgment should not be granted "unless the moving party has established his right to a judgment with such clarity as to leave no room for controversy." Portis v. Folk Constr. Co., 694 F.2d 520, 522 (8th Cir. 1982) (internal quotations omitted).

Here, there are no disputed issues of material fact,2 and the matter may be determined as a matter of law.

II. APPLICABLE LAW

A. Sections 502(b) and 506(a) of the Bankruptcy Code

Section 502 of the Bankruptcy Code governs the allowance and calculation of claims. Pursuant to § 502(a), a claim for which a proof of claim is filed is deemed allowed, unless a party in interest objects. If an objection is filed, the amount of the claim is determined under § 502(b), except the claim shall not be allowed to the extent that "such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured."3 11 U.S.C. § 502(b)(1).

Whether the claim is secured, and in what amount, is determined through application of § 506(a)(1), which provides, in relevant part:

11 U.S.C. § 506(a)(1). In other words, strictly for purposes of determining the amount and classification of a creditor's claim, a claim is secured to the value of the collateral, and unsecured for the balance.

B. Section 1322(b)(2) of the Bankruptcy Code

Section 1322(a) sets forth what must be included in a chapter 13 plan of reorganization, while § 1322(b) provides what may be included in a chapter 13 plan. Specifically, § 1322(b)(2) allows a debtor to "modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence...." 11 U.S.C. § 1322(b)(2). Thus, when applied in conjunction with § 506(a), a chapter 13 debtor may modify the rights of a secured creditor by bifurcating its claim into secured and unsecured components as dictated by the value of the collateral, unless that creditor holds a claim secured only by real property that is the debtor's principal residence. In that situation, the creditor's rights cannot be modified at all, except that a debtor may cure a default over the life of the plan as set forth in § 1322(b)(5). Nobelman v. American Savings Bank, 508 U.S. 324, 113 S.Ct. 2106, 124 L.Ed.2d 228 (1993) (creditor's "rights" as reflected in mortgage instrument, including right to repayment of the principal in monthly installments over a fixed term at specified adjustable interest rates, are protected from modification by § 1322(b)(2); debtors cannot modify the payment and interest terms for the unsecured component without also [necessarily] modifying the terms of the secured component).

Reading §§ 506(a) and 1322(b)(2) together, however, courts have determined that where there is no value in the debtor's residence to secure any portion of a creditor's claim, then the creditor does not hold a secured claim under § 506(a), and thus the anti-modification provisions of § 1322(b)(2) do not apply. In that situation, the claim may be treated as fully unsecured in the chapter 13 plan. In re Kidd, 161 B.R. 769 (Bankr. E.D.N.C. 1993). Contrast Bank of America, N.A. v. Caulkett, 575 U.S. ___, 135 S.Ct. 1995, 192 L.Ed.2d 52 (2015) (in chapter 7 cases, a consensual lien survives the bankruptcy intact even where there is no value in the collateral to secure the claim).

C. Section 1322(c)(2) of the Bankruptcy Code

In the Bankruptcy Reform Act of 1994, Congress added § 1322(c)(2), which applies in cases, like this one, where the loan matured prior to filing or where the loan is set to mature prior to the end of the chapter 13 plan payments. It provides,

11 U.S.C. § 1322(c)(2). Section 1325(a)(5), in turn, allows a debtor to pay to a secured creditor the value of the allowed secured claim over the life of the plan.

The Fourth Circuit considered whether this provision allowed debtors to bifurcate the undersecured claims of residential mortgage holders into secured and unsecured claims in Witt v. United Cos. Lending Corp. (In re Witt), 113 F.3d 508 (1997). In Witt, the chapter 13 debtors contended that § 1322(c)(2) was enacted to overrule Nobelman in cases where the note matured prepetition or would mature prior to the completion of the plan. The Fourth Circuit rejected the argument, holding that § 1322(c)(2) allowed only the modification of the "payment" of the claim, rather than modification of the "claim," meaning that the remaining payments could be stretched out over time, but the debtors were still required to pay the full amount of the allowed claim. 113 F.3d at 512. The court specifically held that "[section] 1322(c)(2) does not permit the bifurcation of an undersecured loan into secured and unsecured claims if the only security for the loan is a lien on the debtor's principal residence." Id. at 513-14.

Witt has been largely criticized, and other circuits have instead held that the plain language of § 1322(c)(2) permits the modification of home mortgages through the bifurcation of the claim into secured and unsecured components, with the unsecured component crammed down pursuant to § 1325(a)(5). For example, in American General Finance, Inc. v. Paschen (In re Paschen), 296 F.3d 1203, 1208 (11th Cir. 2002), the court found "the Witt court's view that the phrase `as modified' modifies `payment,' rather than `claim'" to be "a grammatically strained reading of the statute." Instead, the Paschen court interpreted the prefatory phrase "notwithstanding subsection (b)(2)" to be "a plain statement that" the anti-modification provision "does not have any application to the class of claims that fall under § 1322(c)(2)," id. at 1207, and that the reference to § 1325(a) is an "explicit statement" that claims falling within § 1322(c)(2) are subject to bifurcation into secured and unsecured parts, "with the unsecured portion subject to `cramdown' pursuant to § 1325(a)(5)." Id. at 1208. The Paschen court further noted that the great weight of authority supported its interpretation, and that Witt "appear[ed] to be the only case interpreting the statute differently." Id. at 1209.

While this court is bound by the holding in Witt, this court has interpreted its holding narrowly, finding it permissible to modify the interest rate on a note that matured prepetition as a modification of only a payment term. In re Hubbell, 496 B.R. 784 (Bankr. E.D.N.C. 2013). But see In re Varner, 530 B.R. 621 (Bankr. M.D.N.C. 2015) (disagreeing with Hubbell, finding that Witt allows "stretching payments out over the life of the plan," but not modification of the contractual interest rate).

D. The Anti-Deficiency Statute, North Carolina General Statutes § 45-21.38

Layered atop these Bankruptcy Code provisions in this case is the North Carolina anti-deficiency statute, which applies to seller-financed mortgages and provides, in relevant part:

N.C. Gen. Stat. § 45-21.38.

In Adams v. Cooper, 340 N.C. 242, 460 S.E.2d 120 (1995), the North Carolina Supreme Court noted that, "Our cases interpreting and applying the anti-deficiency statute have consistently held that the 1933 General Assembly intended it to prevent any suit on such a purchase money obligation other than one to foreclose upon the real property securing the obligation." 340 N.C. at 244, 460 S.E.2d at 121. Citing to Realty Co. v. Trust Co., 296 N.C. 366, 371, 250 S.E.2d 271, 274 (1979), the court specified that "[t]he anti-deficiency statute prevents an action for personal judgment on the note and limits the creditor to the property conveyed in the deed of trust." Id. The Cooper court held that the limitation on remedy extended beyond the borrower to third-party guarantors, and reiterated that the statute "bars any suit on the note, whether before or after foreclosure." Id. (citing Barnaby v. Boardman, 313 N.C. 565, 330 S.E.2d 600 (1985)).

E. "Chapter 20"

Although not directly at issue in this case, the matter before the court is analogous to cases in which a debtor has obtained a chapter 7 discharge of his or her personal liability on a mortgage, and later files a chapter 13 case (a so-called "chapter 20" case). In both situations, the mortgage creditor's rights on default are limited to foreclosure of the property, with no recourse against the borrower. Indeed, the Supreme Court of the United States has said as much, noting that "[i]nsofar as the mortgage interest that passes through a Chapter 7 liquidation is enforceable only against the debtor's property, this interest has the same properties as a nonrecourse loan." Johnson v. Home State Bank, 501 U.S. 78, 86, 111 S.Ct. 2150, 115 L.Ed.2d 66 (1991).

In Johnson, the question before the Court was whether a debtor could include a mortgage lien in a chapter 13 plan "once the personal obligation secured by the mortgaged property has been discharged in a Chapter 7 proceeding." 501 U.S. at 80, 111 S.Ct. 2150. After reviewing the statutory definition of "claim," the Court determined that because "the mortgage holder still retains a `right to payment' in the form of its right to the proceeds from the sale of the debtor's property," and alternatively because the creditor has the equitable remedy of the right to foreclose after the debtor's default on the underlying obligation, "the surviving mortgage interest corresponds to an `enforceable obligation' of the debtor." Id. at 84, 111 S.Ct. 2150. As a result, the mortgage lien remained a "claim" against the debtor that could be "rescheduled" under chapter 13. Id. at 80, 111 S.Ct. 2150. Because the property in Johnson was a farm and apparently not the debtor's principal residence, the Court did not provide any guidance on how an in rem residential mortgage claim may be treated in a chapter 13 plan, but it did determine that nothing in the Code prohibited the filing of a chapter 13 case after a debtor obtains a chapter 7 discharge. Id. at 87, 111 S.Ct. 2150.

More recently, courts have considered the question of the permissible treatment of a creditor whose in personam rights were extinguished in a chapter 7, and in rem rights were stripped due to a complete absence of value to support its lien. In In re Sweitzer, 476 B.R. 468 (Bankr. D. Md. 2012), the court held that in a chapter 20 case, the creditor who no longer had in personam rights against the debtor due to the chapter 7 discharge and whose lien was stripped in the chapter 13 case held no claim that was entitled to treatment in the chapter 13 plan.

476 B.R. at 473. Otherwise, the court noted, a nonrecourse debt would be converted into a recourse debt. Id. at 472. The court distinguished Johnson, 501 U.S. 78, 111 S.Ct. 2150, 115 L.Ed.2d 66, which held that a creditor with only in rem rights still had a claim in a debtor's chapter 13 case, because the creditor's in rem rights could not have been stripped in Johnson due to some value in the property to support the secured claim.

The Fourth Circuit later considered similar facts in Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. 2013), in which the court reasoned that a completely valueless lien is classified as an unsecured claim under § 506(a) that may be modified under § 1322(b)(2), and that nothing in the 2005 amendments to the Bankruptcy Code "precludes the stripping off of valueless liens by Chapter 20 debtors." 716 F.3d at 336. In so holding, the court rejected the chapter 13 trustee's argument that any lien secured by real property, even if worthless, is a secured claim and thus subject to § 1325, noting that if that were the case, the analysis in Nobelman that first valued the claim under § 506(a) would be superfluous. "Rather, the Court could have simply held that, because the lien was secured by a primary residence, it falls within the anti-modification provision of section 1322(b), regardless of the value of the collateral." Id. at 338. While Davis held that the court could strip the in rem component of the valueless lien, the appellate court did not elaborate as to what that means for purposes of chapter 13 plan treatment, unlike the Maryland bankruptcy court in Sweitzer.4

Davis and Sweitzer are not directly applicable here, because in those cases there was no value to support a secured claim. There appears to be an absence of cases addressing the required treatment of a claim under these facts, where a claim is secured by the debtor's principal residence with some value to support the claim, but no in personam liability. Perhaps the reason there is no case law is that the answer is simple: application of § 1322(b)(2) precludes any modification of the claim where there is value to secure it, regardless of whether the creditor could take action against the debtor upon default.

III. ANALYSIS

Having reviewed the relevant statutory provisions and applicable case law, the court can distill the relative positions of the parties to a few bullet points. Mr. Hurlburt, as supported by amicus, contends that:

Ms. Black, on the other hand, maintains that:

As noted, Mr. Hurlburt maintains that he is not seeking to bifurcate the claim into secured and unsecured portions to be separately classified, which would be prohibited by Nobelman, but instead seeks simply to determine the amount of the secured claim. In truth, however, the debtor seeks to bifurcate the claim into a secured claim (that portion of the debt for which Ms. Black would have in rem rights) and a non-claim (that portion of the debt for which Ms. Black has neither in rem nor in personam rights). The debtor's effort to distinguish his proposal from impermissible bifurcation under Nobelman focuses too much on the use of the terms "secured claim" versus "unsecured claim" and separate classification of those portions of the claim, and not enough on the underlying principle of Nobelman and the clear language of the statute: the rights of a holder of a claim secured only by the debtor's principal residence cannot be modified under § 1322(b)(2) where there is some value to support the secured claim, no matter what one calls the modification. Johnson supports this view in its holding that a creditor holds a § 502 claim subject to chapter 13 treatment even where the personal liability of the debtor has been discharged. 501 U.S. at 80, 111 S.Ct. 2150.

The debtor has not directed the court to any binding authority that suggests that § 1322(b)(2) does not apply. That section does not prohibit modification of "a claim secured by real estate on which the debtor has personal liability," it prohibits modification of a claim for which there is no security other than real estate that is the debtor's principal residence. The Supreme Court has held that Ms. Black has a "claim." There is no dispute that there is no security other than the Property, and there is no dispute that the Property is worth at least one dollar. The cited cases allowing modification of liens on the debtor's residence apply only where there is not even one dollar of value to support the security interest, a situation that does not apply here.

The court finds that § 1322(b)(2) does apply,5 and it must determine whether the proposed treatment complies with that provision's mandate. The Nobelman Court observed that one cannot modify the payment and interest terms of the unsecured portion of a claim without modifying the creditor's rights with respect to the secured portion. 508 U.S. at 331, 113 S.Ct. 2106. Here, Mr. Hurlburt is asking not to pay at all that portion of the claim that is not supported by value in the Property. It is difficult to see how a debtor could create a "non-claim" for the portion of the debt not supported by the property value (which, despite Mr. Hurlburt's contention to the contrary, is by definition "undersecured") without also modifying the creditor's rights with respect to the secured claim. To decide, however, the court must consider what treatment would be a "modification" of Ms. Black's rights with respect to the secured claim.

According to Nobelman, the creditor's "rights" that are protected from modification by § 1322(b)(2) are those reflected in the mortgage instrument, 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. 508 U.S. at 329-30, 113 S.Ct. 2106. Here, Ms. Black's rights as set forth in the note and deed of trust include the right to receive repayment of the principal amount of $131,000 at a fixed rate of interest, and to foreclose upon default. The loan is in default, and Ms. Black began foreclosure proceedings. The automatic stay of this bankruptcy case interrupted that foreclosure. Now, the debtor seeks to modify what constitutes a default under the note: whereas the note itself requires repayment of $131,000 at 6 percent, the proposed plan would require only repayment of $41,132.19 at 4.5 percent.6 Only if Mr. Hurlburt defaults on those payments would Ms. Black be able to obtain relief from the automatic stay and exercise her contractual and state law rights to foreclose. The fact that Mr. Hurlburt asserts that the amount of money Ms. Black will receive under the plan will equate to the proceeds she could obtain should she foreclose does not change that her rights would be modified under the plan. Certainly she could consent to the proposed treatment, but otherwise, she is entitled to her option to foreclose, or not, if she is not receiving payments as provided in the note. That is the bargain that she and Mr. Hurlburt struck, and § 1322(b)(2) does not allow the debtor to modify that bargain. Those are the "rights" as defined by Nobelman.

Further, Witt mandates the same result.7 Witt provides that 1322(c)(2) allows modification only of the payment of the claim secured by the debtor's principal residence. While Mr. Hurlburt contends that he seeks only to modify the payment of the secured claim, in fact he seeks to modify the claim entirely, by reducing the principal and interest and by curtailing Ms. Black's right to foreclose unless he defaults on the payments on the modified claim.

The policy behind the anti-modification provision expressed in Justice Stevens' concurrence in Nobelman, that "favorable treatment of residential mortgagees was intended to encourage the flow of capital into the home lending market," 508 U.S. at 332, 113 S.Ct. 2106, supports the court's conclusion here that the debtor cannot "cram down" Ms. Black's claim into a secured claim for the value of the Property and no claim for the balance. Where there is some value to support the secured claim, if a debtor wishes to retain his or her residence, he or she must pay the entire debt. Lenders assume the risk that borrowers may file chapter 13 and have the opportunity to cure a default, but lenders also have bargained for the right to foreclose on the real property collateral if the debtor stops paying.8

The benefit of chapter 13 for Mr. Hurlburt is that he can stretch out the balance due over an additional five years, and he has the added benefit from the North Carolina Anti-Deficiency Statute of no personal liability on the note should he later default on the allowed cure. But under these facts — as distinct from those in Davis and Sweitzer — he cannot use chapter 13 to force Ms. Black to have no remedy while he continues to reside in the Property at a substantially reduced price. If Mr. Hurlburt wants to retain the Property, he must pay what he agreed to pay for it.

CONCLUSION

Based on the foregoing, the court finds that (1) Ms. Black holds a claim pursuant to § 502, (2) her claim is secured only by a security interest in real property that is Mr. Hurlburt's primary residence, (3) her rights cannot be modified pursuant to § 1322(b)(2), (4) the proposed treatment is an impermissible modification under § 1322(b)(2), and (5) § 1322(c)(2) as interpreted by Witt does not permit the proposed treatment of Ms. Black's claim. Accordingly, Ms. Black's motion for summary judgment is ALLOWED, and Mr. Hurlburt's cross-motion for summary judgment is DENIED. A separate judgment will be entered to that effect. Further, Ms. Black's objection to confirmation of the Second Amended Chapter 13 Plan is ALLOWED; however, her motion to dismiss is DENIED without prejudice. Mr. Hurlburt may, if he chooses, file an amended chapter 13 plan consistent with the terms of this order, within 30 days of the date of this order, which will then be considered for confirmation in the ordinary course.

SO ORDERED.