The Fourth Circuit is the first circuit court to find that a debtor may strip a wholly unsecured lien in chapter 13 where no discharge is available. In re Davis, No. 12-1184 (May 10, 2013). [Read more…] about Fourth Circuit Allows Chapter 20 Lien Strip
Chapter 20 Lien Stripping Goes to Circuit
The Ninth Circuit is poised to be the first circuit court to address the issue of whether a lien may be stripped in a “Chapter 20” case where discharge is unavailable. The Western District of Washington recently found that lien stripping was not contingent upon the availability of discharge. Litton Loan v. Blendheim, No. 11-2004 (W.D. Wash. March 29, 2013). Litton Loan filed a notice of appeal on April 26, 2013.
In upholding the bankruptcy court’s finding in favor of the debtors, the district court noted “an emerging trend” in the Ninth Circuit permitting such lien stripping. See In re Tran, 321 B.R. 230, 235 (Bankr. N.D. Cal. 2010); In re Hill, 440 B.R. 176, 182 (Bankr. S.D. Cal. 2010); In re Okosisi, 451 B.R. 90, 100 (Bankr. D. Nev.. 2011), and found that those cases were correctly decided. It reasoned that the Supreme Court in Johnson v. Home State Bank, 501 U.S. 78 (1991), explicitly sanctioned chapter 20 cases, and nothing in the later amendments to the Bankruptcy Code imposed a discharge requirement upon the ability to strip a lien that is otherwise amenable to stripping. The court concluded that the lien would be stripped upon completion of plan payments.
The Eighth Circuit recently avoided the issue in the case of In re Fisette, 695 F.3d 803 (8th Cir. 2012), by concluding that the BAP’s order that liens may be stripped in chapter 20 was an interlocutory order not subject to appeal.
Property Associations Lose Battle of the Liens in Two Florida Cases.
In two cases out of the Middle District of Florida, property associations fought for priority over mortgage lenders in order to prevent their liens from being stripped as wholly unsecured. In re Plummer, No. 12-3870 (Bankr. M.D. Fla. Jan. 14, 2013); In re Buckner, No. 12-4962 (Bankr. M.D. Fla. Jan. 17, 2013). The Associations failed to convince the court, however, and, in Plummer, the court permitted the lien stripping under section 1322(b)(1), while in Buckner, the lien was stripped under section 506(d). [Read more…] about Property Associations Lose Battle of the Liens in Two Florida Cases.
Chapter 20 Lien Stripping 8th Circuit
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).
[Read more…] about Chapter 20 Lien Stripping 8th Circuit
Keller v. Fisette (In re Fisette), No. 11-3119 (8th Cir.)
Type: Debtor’s brief
Date: December 8, 2011
Description: Lien stripping of wholly unsecured lien in chapter 20.
Result: Dismissed for lack of jurisdiction. September 12, 2012
Woolsey v. Citibank, No. 11-4014 (10th Cir.)
Type: Amicus
Date: May 18, 2011
Description: Whether wholly unsecured lien may be stripped off in chapter 13 where court allowed modification but refused strip off.
Result: Judgment affirmed, September 4, 2012
In re Jones, No. 07-3256 (10th Cir.)
Type: Amicus
Date: December 3, 2007
Description: Whether 910 car creditor is entitled to interest on its claim under section 1325(a)(5) or whether debtor may bifurcate claim under section 1322.
Result: Vacated and remanded. Debtor lost.
Tanner v. Firstplus Financial, No. 99-11985 (11th Cir.)
Great American Financial v. Paschen, No. 01-16353 (11th Cir.)
In re McNeal, No. 10-1612 (N.D. Ga.)
Type: Amicus
Date: September 27, 2010
Description: Whether wholly unsecured residential lien may be stripped off in chapter 7.
Result: Affirmed. Debtor lost.
McNeal NACBA amicus ND Ga