Chapter 20 Lien Stripping 8th Circuit

Posted by NCBRC - December 19, 2011

The issue of whether a debtor may strip a wholly unsecured lien in chapter 13 where discharge is unavailable is before the Eighth Circuit Court of Appeals in the case of Keller v. Fisette (In re Fisette), No. 11-3119, after debtor won before the bankruptcy appellate panel. The debtor argues in his brief, filed on December 8, 2011, that Nobelman v. American Sav. Bank, 508 U.S. 324 (1993), has been consistently and correctly interpreted by all the circuit courts addressing the issue to permit strip-off of wholly unsecured liens in chapter 13. Because BAPCPA permits chapter 13 cases even where discharge is unavailable debtors may avail themselves of all the benefits of a chapter 13 case with the exception of discharge upon completion of the case. One of those benefits is stripping of wholly unsecured liens pursuant to section 1322(b).

Debtor further argues that section 1325(a)(5)(B), which prohibits confirmation of a plan that does not include payment of present value of secured claims, does not apply where the claim is wholly unsecured. Dewsnup v. Timm, 502 U.S. 410 (1992), a chapter 7 case, does not require a different result as the Court in Dewsnup explicitly limited its holding to the facts before it and its reasoning is inapplicable to chapter 13 cases.
NCBRC’s Tara Twomey assisted Craig Andresen in writing the debtor’s brief.


Post a Comment

You must be logged in to post a comment.