Keywords: secured debt . lien stripping . .
Secured Debts: Stripping Liens in Chapter 7 using Section 506 not allowed (except in 11th Circuit)11 Cases , IssueID 68 |
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Topic Description:Generally this practice is not allowed in Chapter 7 -- only in Chapter 13. The Supreme Court in Dewsnup v. Timm in 1992 prohibited the practice of using 506(d) to strip a partially secured lein. But a few rare cases, most notably the 11th Circuit, have recently held that Dewsnup does not apply to cases of wholly unsecured liens, and has held that prior precedent allowing elimination of such liens is still controlling precedent in the 11th circuit. . Lines of Cases:
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Section 506(d) cannot be used by Chapter 7 debtors to eliminate liens on undersecured property.
Unsecured junior mortgage liens on debtors' homes may not be stripped off using section 506 in a Chapter 7 case.
Recent 2012 unpublished 11th CIR BAP case, In re McNeal, Case No. 11-11352 (unpublished), 11th Cir, 5/2/2012, ruled that Folendore is still controlling precedent in regards to wholly unsecured liens in Chapter 7.
Cannot use 506(d) to strip liens in Chaper 13, unless you're in the 11th circuit. Use 1325 instead.
Lien stripping in a Chapter 20. Can a debtor strip a lien if they're not eligible for a discharge in a Chapetr 13. Discharge has to do with in personam liablitiy, not in rem liability. Court says YES.
Unsecured junior mortgage liens on debtors' homes may not be stripped off using section 506 in a Chapter 7 case.
Section 506(d) cannot be used by Chapter 7 debtors to eliminate liens on undersecured property.
Recent 2012 unpublished 11th CIR BAP case, In re McNeal, Case No. 11-11352 (unpublished), 11th Cir, 5/2/2012, ruled that Folendore is still controlling precedent in regards to wholly unsecured liens in Chapter 7.
Cannot use 506(d) to strip liens in Chaper 13, unless you're in the 11th circuit. Use 1325 instead.
Lien stripping in a Chapter 20. Can a debtor strip a lien if they're not eligible for a discharge in a Chapetr 13. Discharge has to do with in personam liablitiy, not in rem liability. Court says YES.
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