APPENDIX M
WHOLLY UNSECURED MORTGAGE AND MODIFICATION,
ORGANIZED BY CIRCUIT
A. First Circuit
Bullard v. Hyde Park Sav. Bank (In re Bullard), 494 B.R. 92, 99-101 (B.A.P. 1st Cir. May 24, 2013) (Haines, Tester, Godoy), appeal dismissed by No.13-9009, 2014 WL 1910868 (1st Cir. May 14, 2014) (Thompson, Stahl, Kayatta) ("Hybrid" plan that bifurcates mortgage not protected from modification by § 1322(b)(2) and then maintains payments consistent with § 1322(b)(5) is not confirmable. Citing Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), "[U]nder § 1325, unless Hyde Park accepts the plan, or Bullard surrenders his home, the plan must guarantee that the distribution on account of the secured claim must equal the present dollar value of the home as of the confirmation date, and that distribution on account of the claim must occur within five years. . . . [Section] 1322(b) does not expressly prohibit combining subparagraphs (2) and (5) to treat a single secured claim. But . . . [§] 1322 does not exist in a vacuum. . . . Combining §§ 1322(b)(2) and (5) results in a plan that cannot comport with the requirements of § 1325(a)(5)(B)(i)(I), and is, therefore, unconfirmable. . . . Bullard's plan clearly 'provides for' Hyde Park's claim under § 1322(b)(5), . . . and, therefore, the mortgage debt will not be discharged on plan completion. As a consequence, Hyde Park will continue thereafter to retain its lien securing that debt. 11 U.S.C. § 1325(a)(5)(B)(i)(I). In effect, § 1328(a)(1) establishes that as long as a plan employs § 1322(b)(5), it can only be confirmed over the creditor's objection via § 1325(a)(5)(B)(i)(I)(aa). And, since that section states the debt, as determined by nonbankruptcy law, must be paid, a debtor may not use it and bifurcate the applicable claim via § 506(a). To do so would render § 1325(a)(5)(B)(i)(I) ineffective."), aff'g 475 B.R. 304, 314 (Bankr. D. Mass. July 24, 2012) (Hillman) (Although subject to modification, mortgage could not be bifurcated when plan proposed to pay secured portion beyond five-year term. Cure and maintain provision was mutually exclusive of modification provision. "[A] plan that proposes to both modify the rights of the secured claim holder and thereafter cure and maintain payments on the secured portion of the claim for a period that exceeds the term of the plan cannot be confirmed over the creditor's objection.").
First Am. Title Ins. Co. v. Pifalo (In re Pifalo), 379 B.R. 1, 4 (B.A.P. 1st Cir. Dec. 10, 2007) (Lamoutte, Votolato, De Jesus) (Mortgagee's appeal of refinancing order based on its claim that refinancing improperly modified mortgage is rejected because mortgagee failed to appeal determination that mortgage recorded postconfirmation was void. "It is the granting of the motion for leave to refinance upon which the Appellants premise this appeal, and their sole argument is their disagreement with the bankruptcy court's unappealed ruling that First American's mortgage is void.").
Maine
In re Cinq-Mars, No. 16-10654, 2017 WL 3225448 (Bankr. D. Me. July 28, 2017) (Fagone) (Plan cannot strip off junior mortgage when evidence supports $270,000 valuation and senior liens total $250,000.).
Massachusetts
Bell v. Bankowski (In re Bell), No. 10-10870-DJC, 2011 WL 2712755, at *3 (D. Mass. July 12, 2011) (Casper) (Plan can cure mortgage default and maintain payments consistent with original note or can modify unprotected debt and pay secured portion in full during life of plan, but plan cannot split claim and write new note and mortgage to deal with modified debt. Mortgage was not protected from modification by § 1322(b)(2). Plan would create entirely new mortgage and note, with new payment terms and new interest rate. Lender did not accept plan. "That is, 'even after claim splitting, the debtor is stuck having either to pay a large real estate secured claim in full during the plan or to maintain payments consistent with the original loan agreement. . . .' In re Murphy, 175 B.R. 134, 137 (Bankr.D.Mass.1994).").
In re Guerra, No. 16-40121-CJP, 2017 WL 1190604, at *3 (Bankr. D. Mass. Mar. 29, 2017) (Panos) ("This Court joins with the majority of courts that have concluded that . . . [Bank of Am. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015)] has no bearing on the interpretation of § 506(a) and its interplay with § 1322(b)(2). . . . the ability to strip off and discharge a wholly unsecured mortgage lien in a chapter 13 plan under §§ 506(a) and 1322(b)(2) remains available to debtors.").
In re Landry, 462 B.R. 317, 322 (Bankr. D. Mass. Dec. 14, 2011) (Boroff) (Appropriate valuation date for property subject to junior mortgage was confirmation, since purpose of value is to determine how claim would be treated in plan. Language of § 1325 "evidences a congressional intention that valuations relative to plan confirmation be conducted in the context of the present, rather than the past."), rev'd, 479 B.R. 1 (D. Mass. Sept. 17, 2012) (Saylor).).
In re Pires, No. 09-18708-FJB, 2011 WL 5330772, at *5 (Bankr. D. Mass. Nov. 7, 2011) (Bailey) (Rejecting In re McGregor, 172 B.R. 718 (Bankr. D. Mass. Oct. 21, 1994) (Queenan), plan cannot bifurcate unprotected mortgage on rental property and then reamortize secured portion beyond plan life. Proposed plan did not maintain regular mortgage payments for purposes of § 1322(b)(5) and hybrid plan violated § 1322(d) five-year limitation on plan payments. "[N]othing in § 1322(b)(5) actually permits payments on a secured claim to extend beyond the term of the plan. It permits only 'maintenance of payments while the case is pending.'. . . [P]roponents of hybrid plans do not contend, and in most instances could not plausibly contend, that the contractual payments, maintained only over the duration of the plan, would be sufficient to fully amortize the secured claim in accordance with 11 U.S.C. § 1325(a)(5)(A)(ii). 'Maintenance of payment while the case is pending' plainly was not intended as a formula, akin to that in § 1325(a)(5)(A)(ii), for assuring that the holder of a secured claim is paid value equivalent to its claim. In order for § 1322(b)(5) to serve as a mechanism for payment of a modified secured claim, it must be construed as authorizing payment over a term longer than the plan's. This it simply does not do. However, when § 1322(b)(5) is construed as merely permitting continuation during the plan of payments on an unmodified obligation, there is no difficulty. Under that view, § 1322(b)(5) need not specify that payments will continue after the term of the plan because, in that case, the payments would continue not pursuant to the Bankruptcy Code or the plan but pursuant to the unimpaired prepetition agreement between the parties. In short, § 1322(b)(5) does not authorize payments beyond the plan term.").
In re Gusmao, No. 09-18401-FJB, 2010 WL 4918978, at *2 (Bankr. D. Mass. Nov. 29, 2010) (Bailey) (Plan was not confirmed that would modify first mortgage but not maintain contractual monthly payments. "[W]here the modified secured claim would neither be paid within the term of the plan nor according to requirements of the narrow exception sanctioned in [In re McGregor, 172 B.R. 718 (Bankr. D. Mass. Oct. 21, 1994) (Queenan)], the plan may not be confirmed." Because plan did not conform to McGregor, it was not necessary to decide whether court would follow McGregor.).).
In re Mounelaphom, 438 B.R. 759 (Bankr. D. Mass. Oct. 29, 2010) (Hoffman) (Plan that proposed to strip down nonresidential mortgage and to then cure default and maintain payments fails § 1322(b)(5) requirements when it fails to provide for accruing but unpaid postpetition contract payments.).
In re Pires, No. 09-18708-FJB, 2010 WL 3342013, at *1 (Bankr. D. Mass. Aug. 24, 2010) (unpublished) (Bailey) (Without deciding whether "hybrid plan" could both strip down and cure default on mortgage not protected from modification—citing In re McGregor, 172 B.R. 718 (Bankr. D. Mass. Oct. 21, 1994) (Queenan)—proposed plan was too vague and contradictory to be confirmed.).
In re Carman, No. 07-44271-JBR, 2008 WL 2909863, at *1 (Bankr. D. Mass. July 25, 2008) (unpublished) (Rosenthal) (Interest rate on nonresidential mortgage may be modified, but rate must be reasonable and fair.).
In re Pelosi, 382 B.R. 582 (Bankr. D. Mass. Feb. 21, 2008) (Feeney) (Motion to determine status of unsecured mortgage holder is granted, based on proof that second mortgage has no value. Citing Domestic Bank v. Mann (In re Mann), 249 B.R. 831 (B.A.P. 1st Cir. June 30, 2000) (Queenan, Haines, Boroff), court predicts that First Circuit would adopt majority view.).
New Hampshire
In re Robinson, No. 14-11559-BAH, 2015 WL 5309513 (Bankr. D.N.H. Sept. 10, 2015) (unpublished) (Harwood) (Junior lien was not wholly unsecured for purposes of § 1322(b)(2) based on extremely narrow margin—0.17% or $1,964.84—between debtors' appraised value and amount owed on first mortgage. Lienholder's appraised value exceeded debtors' by more than $100,000.).
In re Fournier, No. 13-12452-BAH, 2014 WL 4418553 (Bankr. D.N.H. Sept. 8, 2014) (Harwood) (Junior mortgage was supported by some value and could not be voided. Value determined by average of best comparable sales.).
In re Dolinak, 497 B.R. 15, 19-23 (Bankr. D.N.H. June 28, 2013) (Deasy) (Debtors not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien; junior lienholder is not entitled to any distributions under plan because lien is in rem and personal liability was discharged in prior Chapter 7 case. Plan proposed to strip off wholly unsecured second lien and to pay unsecured claim holders in full except that junior lienholder would receive no payments because the underlying obligation of the debtors was discharged in the prior bankruptcy. "After the discharge in the Prior Bankruptcy, the Second Mortgage Holder retained its in rem rights against the Property, which included its lien and the right to foreclose. . . . However, without any collateral value to support those rights, it is difficult to assign those rights any value at all in the pending chapter 13 case. . . . [T]he Second Mortgage Holder holds an unsecured claim in this case. Because the claim is based solely upon the Second Mortgage Holder's lien rights under a completely unsecured mortgage, and not also under a promissory note, no distribution need or may be made under a chapter 13 plan on account of the claim. However, because the Second Mortgage Holder has an allowed claim, the chapter 13 plan may provide for its treatment in this chapter 13 proceeding. . . . Nothing in the Bankruptcy Code or Rules states that the only way a no-discharge chapter 13 ends is through dismissal. . . . '[N]othing in the Bankruptcy Code conditions a Chapter 13 debtor's ability to modify a wholly unsecured creditor's lien under § 1322(b) on his eligibility for a discharge.'. . . Section 1328(f)(1) only prevents a chapter 20 debtor from receiving a discharge; it does not limit a chapter 20 debtor's rights under § 1322(b). . . . Where the underlying collateral has no value to support a lien-holder's claim, the creditor cannot have an allowed secured claim, and § 1325(a)(5), which would require a discharge to strip certain liens, does not apply. . . . In a chapter 20 case, lien avoidance becomes permanent when the debtor successfully completes all payments under a confirmed plan, and the case is closed.").
In re Plourde, 402 B.R. 488 (Bankr. D.N.H. Mar. 9, 2009) (Vaughn) (When mortgage on nonresidential property is not protected from modification, debtors have two options: either modify the claim under § 1325(a)(5) or cure default within the plan period under § 1322(b)(5). "If the debtor chooses to modify the terms of the claim, he must pay the amount of the secured claim as valued by the court in full within the life of the plan.").
Puerto Rico
Hernández Díaz v. Asociación de Empleados del Estado Libre Asociado de P.R. (In re Hernández Díaz), 544 B.R. 471 (Bankr. D.P.R. Jan. 11, 2016) (Tester) (Bank of America, N.A. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), did not upset Domestic Bank v. Mann (In re Mann), 249 B.R. 831 (B.A.P. 1st Cir. June 30, 2000) (Queenan, Haines, Boroff)—wholly unsecured junior lien is not protected from modification by § 1322(b)(2) and can be stripped off.).
Roman v. Citimortgage, Inc. (In re Roman), No. 14-0255, 2015 WL 7924761 (Bankr. D.P.R. Oct. 9, 2015) (Lamoutte) (Bank of America, N.A. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), did not upset power of Chapter 13 debtor to strip off wholly unsecured mortgage on principal residence.).
In re Lopez, No. 14-09533 (ESL), 2015 WL 5920666 (Bankr. D.P.R. Oct. 8, 2015) (Lamoutte) (Bank of America v. Caulkett, ___ U.S. ___, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), does not apply to Chapter 13 cases.).
Grossman Rivera v. Banco Popular de P.R. (In re Grossman Rivera), No. 14-00100, 2015 WL 3932381 (Bankr. D.P.R. June 25, 2015) (Tester) (Wholly unsecured junior lien may be stripped off under §§ 506(a), (d) and 1322(b)(2).).
Reinoso v. First Bank P.R. (In re Reinoso), 525 B.R. 573 (Bankr. D.P.R. Jan. 27, 2015) (Lamoutte) (Debtor's former spouse was indispensable party in action to strip off wholly unsecured junior mortgage from residence they continued to own jointly.).
Rodriguez v. Firstbank P.R. (In re Rodriguez), 517 B.R. 404, 408-09 (Bankr. D.P.R. Sept. 24, 2014) (Lamoutte) (Wholly unsecured junior mortgage can be stripped consistent with § 1322(b)(2); however, "[t]he stripping of liens pursuant to a confirmed plan is not final unless and until the debtor completes the payments of the plan and obtains a discharge pursuant to Section 1328 . . . . The foregoing also takes into consideration Section 1325(a)(5)(B)(i)(I)(bb), which requires Chapter 13 plans to provide that the claim holder 'retain[s] the lien securing such claim until . . . discharge under section 1328. . . .', Section 1325(a)(5)(B)(i)(II), which provides that 'if the case under this chapter is dismissed or converted without completion of the plan, such lien shall also be retained by such holder to the extent recognized by applicable nonbankruptcy law', Section 349(b)(1)(C), which provides that: 'Unless the court, for cause, orders otherwise, a dismissal of a case other than under section 742 of this title—(1) reinstates—(C) any lien voided under section 506(d) of this title.'").
Rhode Island
In re Veliz, No. 08-13292, 2009 WL 3418638 (Bankr. D.R.I. Oct. 16, 2009) (unpublished) (Votolato) (When mortgage secured by multi-family property was not protected from modification, after bifurcation, debtor can cure default and maintain payments on secured portion of claim in accordance with mortgage note extending beyond life of plan; maintenance of payments under § 1322(b)(5) requires same principle and interest payments within time frame specified in note. Debtor deviating from original contract terms would be required to pay secured claim in full within plan life. Debtor may not deduct from secured claim amount being paid to cure prepetition arrearages because claim is split under § 506(a) into three components: secured claim for value of collateral, unsecured claim for balance of debt, and arrearage claim for unpaid installments.).
B. Second Circuit
Connecticut
Curwen v. Whiton, 557 B.R. 39, 45 (D. Conn. Aug. 26, 2016) (Underhill) (Aligning with Fourth, Ninth and Eleventh Circuits, debtor not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien on principal residence. “BAPCPA did not amend the provisions that have long been used to accomplish lien-stripping in a Chapter 13 bankruptcy. Thus, the analysis remains the same as it was prior to passage of the BAPCPA. . . . If the creditor is a junior lienholder and, as a result of insufficient market value net of other encumbrances, there is no value in the collateral to which the lien may attach, that creditor does not hold an allowed secured claim. . . . [S]ection 1325(a)(5) has no application with respect to that creditor’s claim, and the stripping of the creditor’s lien does not bar plan confirmation. . . . Had Congress wished to prohibit ‘Chapter 20’ debtors from voiding or modifying creditors’ in rem rights, ‘it would not have done so by restricting the availability of a mechanism that by definition only affects in personam liability.’ . . . ”).
Rogers v. Eastern Sav. Bank (In re Rogers), 489 B.R. 327, 333-35 (D. Conn. Mar. 28, 2013) (Hall) (Undersecured mortgage on three-unit residential property cannot be crammed down in a no-discharge Chapter 20 case because Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993), protects the mortgage from modification. Arguably in dicta, In re Sadowski, 473 B.R. 12 (Bankr. D. Conn. Sept. 30, 2011) (Dabrowski), is wrongly decided to the extent it held § 1322(b)(2) is per se not available in a no-discharge Chapter 13 case. "BAPCPA[] does not categorically prohibit the filing of a Chapter 13 petition and plan simply because the debtor has obtained a Chapter 7 discharge within the preceding four years and is discharge-ineligible in the later Chapter 13. . . . [N]or did it presumptively foreclose a debtor in such a case from modifying a claim under section 1322(b)(2). . . . There is also no support for the conclusion that BAPCPA implicitly prohibits application of section 1322(b)(2) in a no-discharge Chapter 13 case as a consequence of preventing successive Chapter 13 debtors from circumventing Dewsnup's supposed lien-stripping prohibition in Chapter 7. . . . Dewsnup . . . simply reaffirmed the long-standing rule of Long v. Bullard, 117 U.S. 617, 6 S.Ct. 917, 29 L.Ed. 1004 (1886), that because an in rem lien is separate from a debtor's in personam liability, and because the Chapter 7 discharge only pertains to the latter, an in rem lien cannot be voided under Chapter 7. . . .[T]he prohibition on lien stripping that Sadowski attempts to evoke from Dewsnup is irrelevant to the issue of whether section 1322(b)(2) may be applied in the case of a no-discharge Chapter 13 petition."), aff'g on other grounds No. 11-32961, 2012 WL 1534028 (Bankr. D. Conn. Apr. 30, 2012) (unpublished) (Weil) (Debtor ineligible for discharge because of § 1328(f) cannot strip junior mortgage.).
In re Sadowski, No. 10-21894, 2011 WL 4572005, at *4-*6 (Bankr. D. Conn. Sept. 30, 2011) (Dabrowski) (Chapter 13 debtors ineligible for discharge because of § 1328(f) cannot strip off wholly unsecured junior lien because of lien retention requirement in § 1325(a)(5)(B)(i). "Congress, in enacting BAPCPA, sought 'to correct perceived abuses of the bankruptcy system.' . . . One such practice was the use of sequential filings to achieve what would not otherwise be permissible in a single filing. . . . [T]he amendments to §§ 1328(f) and 1325(a)(5)(B)(i) supplement the discretionary 'good faith' requirements of § 1325(a)(3) and (7) with an objective test to prevent debtors from using Chapter 13 as a way to circumvent Dewsnup's prohibition against lien stripping in Chapter 7; debtors are not precluded from filing a Chapter 13 plan after receiving a Chapter 7 discharge, but may not avoid an undersecured or 'wholly unsecured' lien by doing so. . . . [I]n accordance with Dewsnup, § 506(d) does not void a lien unless the underlying claim has been disallowed pursuant to § 502(b). . . . [T]he phrase 'allowed secured claim,' as used in § 1325(a)(5), refers to any claim that is allowed under § 502 and for which the creditor holds a lien to secure payment; whether such claim is recourse or nonrecourse, collectible or uncollectible. Because the Debtors are not eligible for a discharge, the Plan cannot be confirmed unless accepted by Wachovia or it provides that Wachovia retain its lien until the full amount of the underlying debt determined under nonbankruptcy law has been paid.").
New York
Eastern District of New York
In re Pod, 560 B.R. 77, 79
In re Hassan, No. 14-73711-reg, 2015 WL 5895481, at *4-*5 (Bankr. E.D.N.Y. Oct. 8, 2015) (Grossman) (Burden of proof is not heightened for debtor to strip junior lien; failure to pay secured debt is not relevant to valuation. "Neither § 506 nor § 1322 contain[s] language imposing or suggesting a heightened burden of proof based on the debtor's conduct prepetition. . . . The initial burden of proof remains on the Debtor . . . . The Debtor has met his initial burden of proof and has established that there is not $1 in value beyond the amount of the first mortgage.").
Peiris v. Ocwen Loan Servicing, LLC (In re Peiris), 539 B.R. 19, 22-23 (Bankr. E.D.N.Y. Sept. 30, 2015) (Lord) (Wholly unsecured junior mortgage on principal residence may be stripped off notwithstanding lienholder's failure to file a proof of claim. Citing Pond v. Farm Specialist Realty (In re Pond ), 252 F.3d 122 (2d Cir. May 31, 2001) (Newman, Cabranes, Thompson), § 506(a) read in conjunction with § 1322(b)(2) establishes that "within the context of a Chapter 13 case, a second mortgage on a debtor's primary residence wholly unsupported by any equity in the property may be voided. . . . [Section] 506(a) values the collateral, not the lien. . . . '[T]o determine whether a lien is "secured" under Section 506(a), a court must examine the value of the collateral underlying a lien, not the value of the lien itself.' . . . '[T]he value of a lien could differ from the value of the collateral underlying that lien for a variety of reasons, such as the state-law rights that attach to the lien but not to the collateral, or the costs associated with collecting on the lien.' . . . A court must therefore look first to the value of the Debtor's principal residence and compare it to the amount of the first lien. . . . If no equity remains after applying the value of the first lien, then the second lien is 'wholly unsecured under Section 506(a).' . . . Nowhere in this process is the court required to value the second lien. . . . If the amount owed on the first mortgage exceeds the value of the collateral, there is no equity in the property beyond the first mortgage. The analysis is complete; the second mortgage is wholly unsecured and may be stripped off by operation of Pond. The fact that no proof of claim was ever filed is irrelevant. No determination is needed as to whether the second mortgage is an allowed claim under § 502, or whether it may be valued under § 506(a). The only valuation to be performed . . . is of the collateral.").
Wong v. Green Tree Servicing, LLC (In re Wong), 488 B.R. 537 (Bankr. E.D.N.Y. Mar. 14, 2013) (Stong) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien; § 1325(a)(5)(B) does not apply to a wholly unsecured junior lien and § 1322(b)(2) permits modification by avoidance of the unsecured lien.).
In re Renz, 476 B.R. 382, 389-92 (Bankr. E.D.N.Y. Aug. 1, 2012) (Trust) (Debtors not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien, but stripped-off junior lienholder is entitled to payment as an unsecured creditor; plan lacks good faith when debtors filed claim on behalf of the junior lienholder, then filed adversary proceeding to strip off the lien, then withdrew the claim and proposed a plan that made no payment to the stripped-off lienholder. The judgment stripping off the junior lien treated the lienholder as a wholly unsecured claim and was law of the case with respect to allowance of that unsecured claim. Stripped-off lienholder's claim was not disallowed based on discharge in prior Chapter 7 case. "'[T]he strip off of [a] wholly unsecured mortgage debt is permissible under a Chapter 13 plan for a debtor who is ineligible to obtain a discharge, and will be effective when payments required pursuant to § 1322(b)(1) and otherwise under the plan are completed.' . . . Debtors filed the Chase Claim and the Adversary on June 21, 2011, purportedly because Debtors wished to reclassify the claim as unsecured and pay the Chase Mortgage through the Plan. Debtors prevailed in the Adversary and obtained a Judgment which explicitly called for treatment of the Chase Claim as unsecured and for voiding of the Chase Mortgage upon plan completion. Thereafter, Debtors executed maneuvers designed to propose a plan which called for no distribution of any kind to Chase. That conduct is antithetical to the exercise of good faith . . . . This Court determined that the Chase Claim, which was an in rem claim when this case was filed, is to be treated as wholly unsecured under § 506(a) and stripped off upon completion of plan payments. . . . Debtors' argument that, by discharging their personal liability in their prior Chapter 7 case and by stripping off Chase's lien in the Adversary, they have somehow disallowed and reduced the Chase Claim from $100,516.80 to $0, is unsupported by any relevant legal authority and is simply unpersuasive.").
In re Miller, 462 B.R. 421, 430-33 (Bankr. E.D.N.Y. Dec. 15, 2011) (Trust) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior mortgage lien; stripping is accomplished by motion and becomes permanent at closing. Disagreeing with most of Orkwis v. MERS (In re Orkwis), 457 B.R. 243 (Bankr. E.D.N.Y. Sept. 19, 2011) (Grossman): "Under [Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2d Cir. May 31, 2001) (Newman, Cabranes, Thompson),] and the decisions of numerous other circuit and appellate courts, . . . a mortgage debt claim for which there is no collateral value is not a secured claim entitled to protection of the anti-modification provisions of § 1322(b)(2); therefore, under the plain language of § 1325(a)(5), such a lien claim is not 'an allowed secured claim' entitled to the plan treatment required by § 1325(a)(5), because the mortgage debt claim is not allowed as a secured claim. . . . If wholly unsecured, the mortgage debt claim would not need to be treated as a secured claim under §§ 1322(b)(2) and 1325(a)(5), but would need to be treated as an unsecured claim in accordance with § 1325(b)(1). As an unsecured claim, the mortgage lien would not remain in place until discharge under § 1325(a)(5)(B)(i)(I), because the unsecured claim is not a secured claim for purposes of confirmation of the debtor's chapter 13 plan, and, therefore, § 1325(a)(5) is not implicated. . . . [T]he holder of the unsecured mortgage claim as to which the debtor has been discharged of in personam liability would nonetheless be entitled to be treated the same as any other nonpriority unsecured claimholders, and allowed the unsecured lien to be stripped off upon completion of the plan payments. . . . This treatment of an unsecured mortgage debt as an unsecured claim, even though the debtor has no personal liability, is consistent with the Supreme Court's decision in Johnson v. Home State Bank, [501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10,] 1991), which held that a mortgage lien for which the debtor no longer has personal liability as the result of a chapter 7 discharge is a claim as defined under the Bankruptcy Code, and is a claim which may be treated in a chapter 13 plan. . . . [N]either § 1325 nor any other provision[ ] of chapter 13 provides that a plan may only be confirmed for a debtor who is eligible to receive a discharge. . . . [A] chapter 13 debtor may strip off a wholly unsecured mortgage lien and treat the claim as unsecured under a plan, whether or not such a debtor is eligible to receive a discharge. . . . [O]nce fully administered, the case is closed pursuant to § 350(a), not dismissed.
Wright v. Chase (In re Wright), 460 B.R. 581 (Bankr. E.D.N.Y. Dec. 2, 2011) (Craig) (Based on appraisals, debtor did not carry burden to establish that junior lien was wholly unsecured.).
Orkwis v. MERS (In re Orkwis), 457 B.R. 243, 249-50 (Bankr. E.D.N.Y. Sept. 19, 2011) (Grossman) (Debtors can strip off wholly unsecured junior mortgage without violating protection from modification in § 1322(b)(2), but § 506 does not void lien; because § 1325(a)(5)(B)(i)(I) applies, lien is not removed until entry of discharge. "Courts considering this issue generally fall within two schools of thought. According to one position, which has been referred to as the majority position, the lien is removed only upon entry of the debtor's discharge. See In re Gerardin, 447 B.R. 342 (Bankr. S.D. Fla. 2011); In re Erdmann, 446 B.R. 861 (Bankr. N.D. Ill. 2011); In re Victorio, 454 B.R. 759 (Bankr. S.D. Cal. 2011); In re Fenn, 428 B.R. 494 (Bankr. N.D. Ill. 2010); In re Lindskog, 451 B.R. 863 (Bankr. E.D. Wis. 2011); In re Mendoza, No. 09-22395 HRT, 2010 WL 736834 (Bankr. D. Col. Jan. 21, 2010); In re Blosser, No. 07-28223-svk, 2009 WL 1064455 (Bankr. E.D. Wis. Apr. 15, 2009)[;] and In re Jarvis, 390 B.R. 600, 604-06 (Bankr. C.D. Ill. 2008). A growing number of courts have taken the opposite position, finding that the lien is removed upon completion of the plan payments in the Chapter 13 case, regardless of whether the debtor is entitled to a discharge. See In re Fisette, 455 B.R. 177 (8th Cir. BAP [Aug. 29,] 2011); In re Davis, No. 09-26768-WIL, 2011 WL 1237638 (Bankr. D. Md. Mar. 30, 2011); In re Jennings, 454 B.R. 252 (Bankr. N.D. Ga. [July 11,] 2011); In re Okosisi, 451 B.R. 90 (Bankr. D. Nev. 2011); In re Fair, 450 B.R. 853 (E.D. Wis. 2011); In re Waterman, 447 B.R. 324 (Bankr. D. Colo. 2011); In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. 2010); and In re Hill, 440 B.R. 176 (Bankr. S.D. Cal. 2010). . . . This Court finds that the Defendant's lien is not removed until entry of the debtor's discharge. . . . [T]he lien against the Property exists as of the date the Debtors' case was filed, and remains a lien against the Property as of the date of confirmation of the Plan. This is true in what is commonly called a Chapter 20 case as well, where the in personam obligation of the debtor has been previously discharged, leaving only the in rem lien as a claim pursuant to [Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991)]. . . . Because § 1325(a)(5) governs lien retention in Chapter 13 cases, a discharge is required pursuant to subsection (B)(i)(I) before the lien is removed. The Gerardin court cited Fenn with approval, finding that a 'discharge under Chapter 13 is a necessary condition for stripping off an unsecured lien' based on the express language of § 1325(a)(5). . . . This Court agrees with the reasoning of the Fenn and Gerardin courts.").
Lepage v. Bank of Am. (In re Lepage), No. 8-10-08287-reg, 2011 WL 1884034 (Bankr. E.D.N.Y. May 18, 2011) (Grossman) (Finding debtor's appraiser more credible than lender's appraiser, property had no value above first lien, permitting avoidance of second mortgage.).
Northern District of New York
In re Mancuso, No. 12-31848, 2013 WL 3356122 (Bankr. N.D.N.Y. July 3, 2013) (Cangilos-Ruiz) (Without determining whether junior lien was avoidable, court determined value from conflicting appraisal evidence.).
In re Snyder, No. 10-62052, 2012 WL 1110119, at *2 (Bankr. N.D.N.Y. Apr. 2, 2012) (Davis) (Plan cannot partially surrender collateral securing commercial mortgage while paying balance of bifurcated mortgage; alternatives in § 1325(a)(5) "for the treatment of secured claims of non-consenting secured creditors . . . are mutually exclusive.").
Karakas v. Bank of N.Y. (In re Karakas), Nos. 06-32961, 06-80245, 2007 WL 1307906 (Bankr. N.D.N.Y. May 3, 2007) (unpublished) (Gerling) (On debtor's complaint to reclassify second mortgage, court found no value in home and claim was reclassified as wholly unsecured.).
American Gen. Fin. Servs., Inc. v. Bryan (In re Bryan), 357 B.R. 12 (Bankr. N.D.N.Y. Dec. 12, 2006) (Gerling) (Following majority view that wholly unsecured mortgage liens can be avoided either through plan process or by motion, and citing In re Yekel, No. 305-47107, 2006 WL 2662849 (Bankr. D. Or. Sept. 14, 2006), avoidance through plan approved, since plan clearly identified wholly unsecured creditor under "lien avoidance" heading.).
Southern District of New York
Green Tree Servicing, LLC v. Wilson (In re Wilson), 532 B.R. 486, 492-93 (S.D.N.Y. June 5, 2015) (Seibel) (Junior lienholder's objection to proof of claim filed by debtors on behalf of first lienholder fails as an attempt by junior lienholder to defeat lien stripping under Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2d Cir. May 31, 2001) (Newman, Cabranes, Thompson); allowance of proof of claim filed on behalf of senior lienholder is irrelevant to whether junior lien lacks value for § 506 purposes. Ironically, Green Tree, holding junior lien, moved to expunge the proof of claim filed by the debtors on behalf of senior lienholder after debtors moved to strip Green Tree's junior lien based on lack of value. Bankruptcy court correctly held that debtors could amend the proof of claim they filed under Bankruptcy Rule 3004 to attach additional documents to meet Green Tree's effort to expunge the proof of claim. "Even if I reversed the Bankruptcy Court's order and expunged [the claim filed on behalf of the senior lienholder] . . . the effect on Green Tree's now-unsecured claim would be nil. Green Tree's attempt to restore its junior mortgage lien by attacking the proof of claim for SPS's senior mortgage lien is based on a fundamental misunderstanding of the purpose that a claim serves in a bankruptcy proceeding. An allowed claim entitles the claimant to receive payments under a confirmed Chapter 13 plan but has no bearing on the validity of a mortgagee's lien. . . . The Bankruptcy Court was correct that 'the lien amount of the first mortgage, the proof of claim of the second mortgage and a valuation of the debtor's principal residence,' was sufficient to void Debtors' junior mortgage. . . . [E]ven if Claim # 18 were to be disallowed, that would have no bearing on whether the Bankruptcy Court's lien stripping was proper.").
In re Ricci-Breen, No. 14-22798 (RDD), 2015 WL 5156617, at *7 (Bankr. S.D.N.Y. Aug. 31, 2015) (Drain) (Wholly unsecured junior lien avoided after contest of equally experienced appraisers. Recognizing narrowness of valuation dispute, with creditor's appraiser 2.9% above target amount and debtors' appraiser 6.9% below, court concluded that appraisals were at least $20,000 too high in light of poor physical condition of property, high cost of repairs and delay necessary repairs would cause. Creditor's appraiser's suggestion that location of the property in a particular school district justified significant valuation adjustment was not supported by evidence. "One may not look past the evidence (or, more aptly, the lack thereof) in the record to apply one's own view of the relative merits of the two school districts, tempting though that may be. Unlike the issue of a market rate broker's fee or market rates for legal services, which the Court hears often, I have never addressed the relative merits or reputations of the . . . school districts. Moreover, that would be only the first step in the analysis; more importantly, one would need to discern how such a difference, if it could be reliably determined, affects the market price of properties in the two districts, an issue requiring further expert testimony or, at a minimum, a factual record that is lacking here. . . . [S]uch an analysis would not be easy in light of other factors affecting value beyond the simple difference in the quality of school districts. . . . What remains, then, is a sense that Mr. Gluckman's appraisal might well be low in light of his choice of comparables in a different school district than the Property without, however, the ability to ascribe any particular market value to that possible deficiency.").
In re Wimmer, 512 B.R. 498 (Bankr. S.D.N.Y. June 30, 2014) (Morris) (Citing Bullard v. Hyde Park Savings Bank (In re Bullard), 494 B.R. 92, 99-101 (B.A.P. 1st Cir. May 24, 2013) (Haines, Tester, Godoy), plan that bifurcates mortgage not protected from modification by § 1322(b)(2) cannot also cure default and maintain payments consistent with § 1322(b)(5).).
In re Forde, 507 B.R. 509 (Bankr. S.D.N.Y. Apr. 9, 2014) (Morris) (Condominium association's liens on rental properties were unsecured and could be stripped off under § 506(d); however, rents in possession of receiver appointed prepetition remained subject to association's lien pursuant to state court judgment.).
In re Shen, 501 B.R. 216, 223 (Bankr. S.D.N.Y. Nov. 15, 2013) (Morris) (Lienholder not entitled to relief from orders avoiding wholly unsecured junior mortgage when relief not requested within reasonable time and lienholder offered no proof that alleged fraud provided defense of its lien. "[E]ven if the Debtor failed to disclose . . . facts to the Court [that refinancing may have been undermined by fraudulent brokers], there still would not be grounds for Rule 60(b)(3) relief since EverBank has not alleged how the Debtor prevented EverBank from presenting those facts to the Court in opposition to the [lien avoidance] Motion.").
In re Wapshare, 492 B.R. 211, 214-17 (Bankr. S.D.N.Y. May 15, 2013) (Morris) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien on residence by completing payments under plan; § 1325(a)(5)(B) is not applicable because wholly unsecured junior lien is not an allowable secured claim. "[T]he Bankruptcy Code, even as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 . . . , does not categorically prohibit the filing of a chapter 13 petition even though the debtor is ineligible for discharge. . . . [T]he Bankruptcy Code does not prohibit the use of § 1322(b)(2) in a chapter 20 case, and the Court is bound to follow the Second Circuit's decision in Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2d Cir.2001). . . . [A]n unsecured junior mortgage lien is permanently avoided in chapter 20 cases once a chapter 13 plan is confirmed and all plan payments have been made.").
In re Aziz, No. 10-16696 (SCC), 2011 WL 5836895 (Bankr. S.D.N.Y. Nov. 18, 2011) (Chapman) (Considering competing appraisals, value of property did not support second mortgage; lien was not protected from modification and could be voided in plan.).
In re Sneijder, 407 B.R. 46 (Bankr. S.D.N.Y. July 2, 2009) (Glenn) (Section 1325(a)(5)(C), in combination with § 506(a), does not permit surrender of real estate in full satisfaction of undersecured liens; notwithstanding that claims bar date may expire before liquidation of collateral, there are several possible procedures for undersecured creditor to assert deficiency claim, including estimation hearing under § 502(c)(1).).
Western District of New York
In re Hurd, 494 B.R. 189 (Bankr. W.D.N.Y. May 22, 2013) (Bucki) (Hybrid plan bifurcating mortgage and then paying secured claim beyond five years was not confirmable absent claimant's acceptance. Debtor must satisfy one of § 1325(a)(5) conditions for secured claims. Debt was secured by single mortgage on two parcels. Debtor proposed to surrender one parcel, paying value of remaining parcel.).
Heubusch v. Novastar Mortgage, Inc. (In re Heubusch), 345 B.R. 49 (Bankr. W.D.N.Y. June 30, 2006) (Bucki) (Applying Pond v. Farm Specialist Realty (In re Pond), 252 F.3d 122 (2d Cir. May 31, 2001) (Newman, Cabranes, Thompson), after determining proper priority among three mortgages, third mortgage cannot be avoided because it is at least partially secured by value.).
Vermont
JPMorgan Chase Bank, Nat'l Ass'n v. Galaske, 476 B.R. 405, 410-11 (D. Vt. June 13, 2012) (Reiss) (Unprotected mortgage can be modified, but plan cannot change monthly payment and interest rate and extend payment term beyond five-year plan. "Where, as here, the debtor opts to modify the terms of a secured claim, § 1322(d) requires that the full amount of the secured claim be paid over the life of the Plan. . . . If a 'cure and maintain' approach is chosen, pursuant to § 1322(b)(5), the plan must provide for the 'maintenance of payments while the case is pending.' Although the Bankruptcy Code does not define 'maintenance of payments,' courts interpret this provision to require 'the same principal and interest payments as provided in the note, within the time frame specified in the note.'").
United States v. Bartlett (In re Bartlett), 353 B.R. 398 (Bankr. D. Vt. Nov. 1, 2006) (Brown) (Relevant to debtors' success over Rural Housing Authority (RHA), which held first mortgage, that debtors had avoided unsecured second mortgage lien of Champion Mortgage.).
C. Third Circuit
In re Stephan, No. 14-1524, 2014 WL 6985748, at *1 (3d Cir. Dec. 11, 2014) (unpublished) (Ambro, Scirica, Roth) (Wholly unsecured junior mortgage is a claim enforceable against the debtor notwithstanding that automatic stay precludes foreclosure sale that would be predicate to collection of deficiency under state law. Automatic stay prevented wholly unsecured junior mortgage holder from filing a foreclosure action. New Jersey law required a foreclosure action before the mortgagee could collect a deficiency. Debtor argued that the deficiency claim was unenforceable and disallowed by § 502(b)(1). "A mortgage interest in a property that has not yet been foreclosed is a classic contingent right to payment. . . . Agreeing with [the debtor] would turn the automatic stay into a device that eliminates all contingent claims, a result that is in tension with the Bankruptcy Code's 'broadest available definition of "claim."'").
Delaware
In re Vidal, No. 12-11758(BLS), 2013 WL 441605 (Bankr. D. Del. Feb. 5, 2013) (Shannon) (Lien stripping cannot be accomplished through plan language that deems junior liens unsecured and stripped. Plan did not comply with standard local plan form. Third Circuit permits stripping of wholly unsecured liens, but proposed plans were evasion of valuation process, since debtors offered no proof of property value. Citing SLW Capital, LLC v. Mansaray-Ruffin (In re Mansaray-Ruffin), 530 F.3d 230 (3d Cir. June 24, 2008) (Rendell, Greenberg, Van Antwerpen), lien stripping requires independent proceeding.).
Gretz v. Inner Spirits, Inc. (In re Gretz), No. 09-52848 (BLS), 2011 WL 1048635 (Bankr. D. Del. Mar. 18, 2011) (Shannon) (After considering conflicting valuation testimony, junior lien of home improvement lender was wholly unsecured and may be stripped off.).
New Jersey
Whispering Woods Condo. Ass'n, Inc. v. Rones (In re Rones), 551 B.R. 162, 168-70 (D.N.J. Feb. 17, 2016) (Wolfson) (Condominium Association lien cannot be stripped off because New Jersey statute gives special priority to six months of assessments which brings the entire lien within the protection from modification in § 1322(b)(2). "[I]f even one dollar of a creditor's claim is secured by a security interest in a debtor's principal residence, then the entire claim—both secured and unsecured portions—cannot be modified under Section 1322. . . . New Jersey's Condominium Act . . . provide[s] a limited super-priority to liens recorded by condominium associations for unpaid assessments. . . . [I]t is the lien itself, not merely the payment of that lien, which is granted a limited priority by the Condominium Act."), rev'g in part 531 B.R. 526, 527-36 (Bankr. D.N.J. June 11, 2015) (Gravelle) (Condominium association lien is wholly unsecured and can be stripped off, notwithstanding state statute that gives priority for payment to six months of accrued fees. Plan can pay six-month priority and then strip off remainder of lien without violating protection from modification in § 1322(b)(2). "The Plan proposes to pay pre-petition condominium fees in an amount equal to the statutory priority allowance of six months accrued fees. The balance of the claim is to be treated as unsecured. . . . [T]he condominium association lien . . . is a security interest . . . its treatment in the Plan is not a bifurcation, and . . . the balance due, after payment of the amount given statutory priority, may be stripped off as it is wholly unsecured. . . . The fact that [state law] provides a statutory priority lien for a portion of the claim does not change the character of the lien as a security interest. . . . The fact that the statute, subsequent to the creation of the Lien, provides a mechanism for partial payment through the grant of a priority of payment, does not elevate the collateral position of the Lien. . . . [T]he Act does not operate to secure the entire amount of the Lien. Because the amount due on the first mortgage exceeds the value of Debtors' principal residence, the Lien is wholly unsecured and may be stripped off in the Plan.").
In re DiClemente, No. 12-1226 (FLW), 2012 WL 5211942 (D.N.J. Oct. 22, 2012) (unpublished) (Wolfson) (Debtor failed to demonstrate likelihood of success on appeal of ineligibility, when bifurcated in rem claim was included in unsecured debt.).
Bank of N.Y. Trust Co. v. Unity Bank (In re Awad), No. 09-3322 (AET), 2009 WL 3489412 (D.N.J. Oct. 22, 2009) (unpublished) (Thompson) (Equitable subordination was not available to change priority of wholly unsecured, third priority lien.).
In re Robinson, No. 11-26981-RTL, 2012 WL 761251, at *3-*5 (Bankr. D.N.J. Mar. 7, 2012) (unpublished) (Lyons) (When state law gives condo association's lien priority over mortgages to extent of six months of assessments, association is at least partially secured and its lien cannot be stripped off or crammed down to zero. "New Jersey . . . grants the association in question a limited priority over prior recorded mortgages. . . . [T]he priority is limited to six months' [sic] of unpaid assessments. . . . The Debtors' proposed treatment of the Association's secured claim is impermissible. The court cannot modify the rights of even partially secured claims which are claims only secured by the Debtors' principal residence.").
In re Scotto-DiClemente, 463 B.R. 308 (Bankr. D.N.J. Jan. 25, 2012) (Kaplan), aff'd, No. 12-1266 (FLW), 2012 WL 3314840 (D.N.J. Aug. 13, 2012) (unpublished) (Wolfson) (Citing Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991), wholly unsecured in rem claim remaining after Chapter 7 discharge must be treated in subsequent Chapter 13 and is counted for eligibility purposes.), denying reconsideration of 459 B.R. 558 (Bankr. D.N.J. Nov. 18, 2011) (Kaplan) (Debtor ineligible for discharge because of § 1328(f)(1) can modify wholly unsecured junior lien; § 1325(a)(5) lien retention language applies only to secured claims, and nothing in Code conditions modification of wholly unsecured lien under § 1322(b)(2) on eligibility for discharge. However, unsecured liens that survived prior discharge are treated as unsecured debt for § 109(e) purposes, rendering debtor ineligible for Chapter 13. Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993), was not construed by McDonald v. Master Financial, Inc. (In re McDonald), 205 F.3d 606 (3d Cir. Mar. 9, 2000) (Sloviter, Roth, Cowen), to prevent strip-off of wholly unsecured junior mortgages. Good faith was factor under § 1325(a)(3), but nothing in record suggested that debtor filed solely to strip off junior liens. At time of filing prior Chapter 7, debtor did not qualify for Chapter 13 relief, because of debt limits. Notwithstanding good faith in filing case and plan, debtor exceeded unsecured debt limits under § 109(e) when in rem lien claims remaining after Chapter 7 discharge were added to unsecured debt.).
In re Gloster, 459 B.R. 200, 205-06 (Bankr. D.N.J. Oct. 13, 2011) (Winfield) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior mortgage. "[BAPCPA] did not make any changes to §§ 506 or 1322, which form the basis for a Chapter 13 debtor to strip-off a wholly unsecured junior lien. Congress must be presumed to have known of the use of §§ 506 and 1322 to strip-off mortgage liens in Chapter 13 cases, given that prior to the enactment of BAPCPA six Circuit Courts of Appeal had determined that the antimodification clause in § 1322(b)(2) does not bar the strip-off of a wholly unsecured junior lien on the debtor's residence. . . . [Section] 1325(a)(5) applies only to allowed secured claims and is not applicable to unsecured claims, which are subject to the confirmation requirements of § 1325(a)(4). . . . [T]he strip-off of a wholly unsecured lien is effective when the debtor completes the payments required under his plan.").
In re Lofton, No. 10-37223, 2011 WL 3678662 (Bankr. D.N.J. Aug. 22, 2011) (Ferguson) (Considering competing appraisals, value was less than first mortgage and second mortgage could be modified.).
In re Kemp, 391 B.R. 262 (Bankr. D.N.J. July 17, 2008) (Wizmur) (Applying elusive distinction between invalidating lien and stripping off wholly unsecured lien found in SLW Capital, LLC v. Mansaray-Ruffin (In re Mansaray-Ruffin), 530 F.3d 230 (3d Cir. June 24, 2008) (Rendell, Greenberg, Van Antwerpen), plan can reclassify claim of wholly unsecured mortgage without the filing of an adversary proceeding. "Here, the debtor is not seeking to invalidate the lien of HSBC. Rather, the debtor seeks to strip the HSBC lien based on the value of the collateral. The Mansaray-Ruffin court . . . confirmed that Rule 7001 does not require a debtor to file an adversary complaint where the debtor seeks to modify the lien amount based on the value of the collateral.").
Pennsylvania
Eastern District of Pennsylvania
Miller v. Citibank, N.A. (In re Miller), 558 B.R. 146 (Bankr. E.D. Pa. Oct. 13, 2016) (Chan) (After consideration of expert testimony, second mortgage was partially secured by value in real property and cannot be stripped off because of protection from modification in § 1322(b)(2).).
Verratti v. PNC Bank (In re Verratti), 517 B.R. 564 (Bankr. E.D. Pa. Sept. 19, 2014) (Raslavich) (Junior lien was wholly unsecured and would be voided based on debtor's appraiser's valuation.).
Hamilton v. Partners for Payment Relief De III, LLC (In re Hamilton), No. 13-002 ELF, 2013 WL 1819546 (Bankr. E.D. Pa. Apr. 22, 2013) (Frank) (Summary judgment for second lienholder is appropriate with respect to valuation and lien stripping when debtor's appraisal was $117,000 and first lien was $113,100.).
Butler v. HSBC Mortgage Servs., Inc. (In re Butler), No. 10-0317, 2010 WL 4736205 (Bankr. E.D. Pa. Nov. 15, 2010) (Fox) (Second mortgage lien was wholly unsecured for purposes of § 506 and was not protected from modification by § 1322(b)(2).).
Mahmud v. JTH Inv. Group, LLC (In re Mahmud), No. 08-0175, 2008 WL 8099115 (Bankr. E.D. Pa. Dec. 4, 2008) (unpublished) (Fox) (Debtors failed to prove that junior liens were wholly unsecured. Debtors relied on proofs of claim filed by senior lienholders, but those proofs of claim lacked prima facie validity under Bankruptcy Rule 3001(c) when creditors didn't attach copies of promissory note and mortgage. Proofs of claim lacking prima facie validity could not be accepted as evidentiary proof of amount of claims of senior lienholders. Debtors offered no other proof of claim amounts.).
Middle District of Pennsylvania
Harris v. Amerifirst Home Improvement Fin. Co. (In re Harris), 494 B.R. 215 (Bankr. M.D. Pa. Apr. 26, 2013) (Thomas) (Applying Miller v. Okmi Sul (In re Miller), 299 F.3d 183 (3d Cir. Aug. 6, 2002) (Scirica, Greenberg, Fullam), junior lien against property jointly owned by debtor and grandson was wholly unsecured. One-half of property value and one-half of first and second liens were applied in calculation to strip lien.).
In re Hinkle, 474 B.R. 460, 465 (Bankr. M.D. Pa. July 2, 2012) (Opel) (Citing Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), plan cannot modify unprotected mortgage for payment beyond length of plan under § 1325(d) except to cure and maintain payments under § 1322(b)(5). Plan proposed to modify mortgage secured by a residence and commercial property to extend loan maturity date, reduce principal balance to reflect surrender of a portion of the collateral and change the interest rate. "Section 1322(b)(2) does allow a Chapter 13 debtor to modify a secured claim, other than a claim secured only by the debtor's principal residence. . . . Where modification is permitted under § 1322(b)(2), it is also subject to the limitations of § 1322(d) . . . . [T]he subject Plan is not a permissible 'cure and maintain' plan under § 1322(b)(5) where regular payments would continue during and after the plan and pre-petition arrearages would be cured through the plan. Neither is it an acceptable modification under § 1322(b)(2) with payment of the allowed secured Claim during the term of the Plan.").
Bubczyk v. Mers, Inc. (In re Bubczyk), No. 1:11-ap-00235MDF, 2012 WL 425332, at *2 (Bankr. M.D. Pa. Feb. 9, 2012) (France) (Debtors were bound by confirmed plan to pay second mortgage in full and could not use postconfirmation adversary proceeding, claim objection and motion to modify plan to treat second mortgage as wholly unsecured. Proposed modification was not due to discovery of new evidence or changed circumstances. "Debtors' failure to accurately value their property when they filed their petition does not provide grounds to set aside the confirmation order.").
In re Erb, No. 1:10-bk-08958MDF, 2011 WL 2600647 (Bankr. M.D. Pa. June 29, 2011) (France) (Wholly unsecured liens may be avoided by either filing motion or providing for avoidance in plan. Debtor bears burden of proof on valuation under § 506(a). After determining value, small equity existed for junior lien on principal residence and it could not be avoided.).
Western District of Pennsylvania
In re Weichey, 405 B.R. 158 (Bankr. W.D. Pa. May 18, 2009) (Agresti) (After weighing competing appraisal testimony, comparable sales approach was appropriate method to determine value of residence, and second mortgage was wholly unsecured.).
Korbe v. Housing & Urban Dev. (In re Korbe), 386 B.R. 585 (Bankr. W.D. Pa. Apr. 22, 2008) (Deller) (HUD's third mortgage is stripped off as wholly unsecured, notwithstanding that court has discretion to refuse modification; HUD's loan is nonrecourse, but "the fact that HUD's claim is in rem in nature actually favors the application of 11 U.S.C. § 506 because this statute ensures that claimants who have a cognizable lien against valuable assets actually receive the benefit of the value of their collateral and no more. Section 506 of the Bankruptcy Code is not intended to be a sword used by wholly unsecured creditors to block Chapter 13 relief to the honest, but unfortunate, debtor.").
D. Fourth Circuit
Burkhart v. Grigsby, 886 F.3d 434, 438–41 (4th Cir. Mar. 29, 2018) (King, Diaz, Shedd) (Chapter 13 plan can strip off wholly unsecured junior mortgage lien using §§ 1322(b)(2) and 506(a) without regard to whether lienholder has filed a proof of claim. “Our past decisions make clear that the power to effectuate a lien strip in a Chapter 13 case stems from §§ 506(a) and 1322(b). . . . Section 506(d), on the other hand, voids liens . . . . The provision therefore implements the bankruptcy court’s broad power over claim allowance
Alvarez v. HSBC Bank USA, Nat'l Ass'n (In re Alvarez), 733 F.3d 136, 138-42 (4th Cir. Oct. 23, 2013) (Gregory, Davis, Keenan) (Wholly unsecured junior lien on property owned as tenancy by the entirety cannot be stripped off in Chapter 13 case filed by only one tenant spouse. "[I]n a typical Chapter 13 proceeding, a bankruptcy court has the authority to strip off a completely valueless lien on a debtor's primary residence, thereby eliminating a lienholder's in rem rights against the collateral property . . . . A lien strip becomes effective and permanently eliminates a lienholder's in rem rights against the collateral property upon completion of a debtor's reorganization plan. . . . [A] debtor's undivided interest in entireties property is part of that debtor's bankruptcy estate. . . . [O]nly Mr. Alvarez's interest in the entireties property, and not the whole of the entireties property owned by the marital unit, became part of his bankruptcy estate. . . . [T]he bankruptcy court is without authority to modify a lienholder's rights with respect to a non-debtor's interest in a property held in a tenancy by the entirety. . . .[T]he Alvarezes were not entitled to obtain the removal of the lien against their entireties property without submitting both parties to the burden of a bankruptcy filing."), aff'g No. MJG-11-2886, 2011 WL 6941670, at *2 (D. Md. Dec. 28, 2011) (unpublished) (Garbis) (Disagreeing with Strausbough v. Co-op Services Credit Union (In re Strausbough), 426 B.R. 243 (Bankr. E.D. Mich. Mar. 25, 2010) (Rhodes), and agreeing with Hunter v. Citifinancial, Inc. (In re Hunter), 284 B.R. 806 (Bankr. E.D. Va. Sept. 30, 2002) (Mayer), debtor may not avoid mortgage lien on tenancy by entirety property as to nondebtor spouse. "[A]s to property owned by tenants by the entireties, the debtor and the nondebtor spouse each have a bundle of rights. Each has, for example, a survivorship interest and ownership rights in the event the tenancy is severed. If [debtor were] correct, in a tenants by the entireties context, not only would the debtor Husband end up with an ownership interest in a property no longer subject to the second lienholder's security interest, but the nondebtor spouse would also.").
Branigan v. Davis (In re Davis), 716 F.3d 331, 335-39 (4th Cir. May 10, 2013) (Niemeyer, Keenan, Diaz) (BAPCPA does not prevent Chapter 20 debtors from stripping off wholly unsecured third mortgage because discharge is not a condition for modification under § 1322(b)(2) and § 1325(a)(5) is not applicable to wholly unsecured in rem claim. "[Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 228 2d (June 1, 1993),] notwithstanding, . . . courts have generally permitted a 'strip off' of completely valueless liens in Chapter 13 cases because, unlike the lienholder in Nobelman, holders of such liens are not 'holders of secured claims' and, therefore, are not entitled to the protection of section 1322(b)(2). . . . [W]e hold that the Bankruptcy Code permits the stripping off of valueless liens in Chapter 13 proceedings. . . . [T]he debtors' junior liens in this case are worthless and, therefore, unsecured claims under section 506(a). While [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),] admittedly requires that section 506 operate in tandem with another statutory provision to effectuate lien-stripping, section 506 has always operated in tandem with section 1322(b) to strip liens in Chapter 13 cases. BAPCPA did not amend sections 506 or 1322(b), so the analysis permitting lien-stripping in Chapter 20 cases is no different than that in any other Chapter 13 case. . . . [T]he law already provides a mechanism for preventing abuse of the bankruptcy process without the creation of a per se rule against lien-stripping, . . . good faith . . . . [C]reditors are also protected by section 349(b)(1)(C), which provides that a lien springs back if the case is dismissed. . . . [T]he unavailability of a discharge in the Chapter 20 context is not determinative."), aff'g No. PJM 11-1270, 2012 WL 439701 (D. Md. Jan. 12, 2012) (unpublished) (Messite), aff'g 447 B.R. 738, 745-51 (Bankr. D. Md. Mar. 30, 2011) (Lipp) (Rejecting In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman), and In re Fenn, 428 B.R. 494 (Bankr. N.D. Ill. May 17, 2010) (Cox), debtors ineligible for discharge because of § 1328(f) can strip off wholly unsecured third lien; new lien retention provisions in § 1325(a)(5) are not applicable to wholly unsecured creditor, and plan was proposed in good faith. "The Court acknowledges but declines to follow the weight of authority that favors TD Bank's argument that lien stripping pursuant to Section 506 is contingent on a debtor's eligibility to receive a Chapter 13 discharge. . . . This Court . . . agrees with the current minority of decisions holding that the Bankruptcy Code does not condition a Chapter 13 debtor's right to strip off a wholly unsecured junior lien on the debtor's eligibility for a discharge. . . . Once it is determined that the claim is not an allowed secured claim pursuant to Section 506(a), by its terms, Section 1325(a)(5)(B) is inapplicable. . . . [T]he Debtors are not 'serial filers' in the abusive sense of the term.").
Maryland
Thomas v. Litton Loan Servicing, LP (In re Thomas), No. AW-10-373, 2010 WL 4788563 (D. Md. Nov. 17, 2010) (Williams) (When debt owed to first mortgage holder exceeded value of property, junior lien should be treated as unsecured and lien avoided.).
Suntrust Bank v. Millard (In re Millard), 414 B.R. 73 (D. Md. Sept. 28, 2009) (Garbis) (Wholly unsecured junior lien is avoidable because § 1322(b)(2) protects only liens that are at least partially secured under § 506(a); 1994 addition of § 1322(c)(2) bolsters view that wholly unsecured liens are avoidable.), aff'd, 404 F. App’x 804 (4th Cir. Dec. 15, 2010) (per curiam) (Duncan, King, Wynn).).
First Mariner Bank v. Johnson, 411 B.R. 221 (D. Md. Sept. 2, 2009) (Titus) (Consistent with six courts of appeals and two bankruptcy appellate panels, when first lien on real property exceeded value in home, junior lien was wholly unsecured and subject to avoidance.).
In re Mulhern, No. 12-20857PM, 2013 WL 3992458, at *1 (Bankr. D. Md. Aug. 2, 2013) (Mannes) (Citing Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. May 10, 2013) (Diaz, Niemeyer, Keenan), when the "sole purpose" of Chapter 20 filing was to avoid junior lien on home, case was filed in bad faith.).
In re Sweitzer, 476 B.R. 468, 473 (Bankr. D. Md. Aug. 22, 2012) (Rice) (Wholly unsecured junior mortgage lien is neither secured nor unsecured claim. Debt is not enforceable personally against debtor who had received prior Chapter 7 discharge. In personam rights "cannot now be resurrected and allowed as an unsecured claim in this case in contravention of that discharge simply because . . . in rem rights were stripped off in this case.").
In re Pollard, No. 10-17396PM, 2011 WL 576599, at *1-*3 (Bankr. D. Md. Feb. 9, 2011) (Mannes) (Not bad faith that debtors filed Chapter 13 case eight months after discharge in Chapter 7 case and will strip off wholly unsecured junior lien—notwithstanding that debtors are not eligible for discharge under § 1328(f). "[T]he court entered a final order and, in so doing, the court found the holding of In re Tran, 431 B.R. 230, 235 [Bankr. N.D. Cal. June 25, 2010) (Jellen)], particularly insightful. . . . There is a substantial division of authority on this point. See In re Fenn, 428 B.R. 494, 503 [(Bankr. N.D. Ill. May 17, 2010) (Cox)]; In re Jarvis, 390 B.R. 600 [Bankr. C.D. Ill. July 9, 2008) (Gorman)]; In re Mendoza, [No. 09-22395 HRT, 2010 WL 736834 (Bankr. D. Colo. Jan. 21, 2010) (unpublished) (Tallman)]. . . . The two filings accomplished a result often permitted in cases under Chapter 20, and the court does not find that this case works an abuse of the Bankruptcy Code or a manipulation of the bankruptcy system. While this case will not result in the issuance of a discharge, that is of no moment as the Debtors' personal liability on the SunTrust obligations has been discharged, leaving only in rem liability . . . . [T]he party affected by the Debtors' Chapter 20 Plan did not come forward to express the slightest interest in opposing Debtors' efforts. . . . Inasmuch as the senior lien retained by SunTrust Bank is massively undersecured, it appears to the court that SunTrust Bank receives a substantial benefit from keeping these Debtors in the house and by Debtors making payments due under the senior lien that, if foreclosed upon, would not realize anything close to the amount due.").
In re Gordy, No. 07-22900PM, 2009 WL 2924683 (Bankr. D. Md. Sept. 9, 2009) (Mannes) (Power to strip off a wholly unsecured second mortgage is not dependent on whether debtor is entitled to a discharge. Debtor who received prior Chapter 7 discharge and was not eligible for Chapter 13 discharge under § 1328(f)(1) can avoid wholly unsecured mortgage lien. Since debtor would not receive discharge, it was unnecessary to await entry of discharge for avoidance to be effective.).
Obeid v. Suntrust Bank (In re Obeid), No. 08-19917PM, 2008 WL 5273671 (Bankr. D. Md. Dec. 15, 2008) (unpublished) (Mannes) (Adopting Johnson v. Asset Management Group, LLC, 226 B.R. 364 (D. Md. Sept. 30, 1998) (Garbis), junior lien that is wholly unsecured may be stripped.).
In re Gordy, No. 07-22900PM, 2008 WL 1990825 (Bankr. D. Md. Apr. 30, 2008) (unpublished) (Mannes) (In rem lien of mortgagee survived prior Chapter 7 discharge, but in subsequent Chapter 13 case, second mortgage without any value is avoidable upon completion of confirmed plan.).
North Carolina
Eastern District of North Carolina
In re Cribb, No. 12-01909-8-JRL, 2012 WL 5897661 (Bankr. E.D.N.C. Nov. 21, 2012) (Leonard) (Junior liens of home equity loan and condominium association were wholly unsecured and would be void on completion of plan and entry of discharge. Georgia law did not prime first mortgage with condominium association's lien.).
In re Haywood, No. 08-06317-8-ATS, 2008 WL 5146637 (Bankr. E.D.N.C. Dec. 5, 2008) (unpublished) (Small) (Claim of homeowners' association can be stripped under § 506 and § 1322(b)(2), rejecting assertion by association that its lien is of higher priority and entitled to different treatment than junior mortgage.), aff'd, No. 10-1810, 2011 WL 4793210 (4th Cir. Oct. 11, 2011) (unpublished) (Gregory, Agee, Wynn).).
Middle District of North Carolina
In re Casey, No. 12-50074, 2014 WL 646755 (Bankr. M.D.N.C. Feb. 19, 2014) (Aron) (Applying Alvarez v. HSBC Bank USA, National Ass'n (In re Alvarez), 733 F.3d 136 (4th Cir. Oct. 23, 2013) (Gregory, Davis, Keenan), lien strip on rental property owned with nonfiling spouse as tenants by the entireties is not allowed.).
In re Martin, 444 B.R. 538, 548 (Bankr. M.D.N.C. Jan. 26, 2011) (Aron) (Although mortgage secured by escrow account was not protected from modification, plan was not confirmable that proposed to extend secured portion of loan beyond plan term, without curing default and maintaining contractual payments and interest rate. "Going forward, the Debtors have two options. First, the Debtors may bifurcate Colonial's claim, provided that the Debtors propose to pay the secured portion of the claim in full over the life of the plan at the [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (May 17, 2004)], rate of interest. Second, the Debtors may propose to treat Colonial's claim as a long-term continuing debt, whereby the Debtors agree to both continue making payments at the contractual rate specified in the mortgage note and to cure any existing arrearage during the life of the plan.").
In re Henderson, No. 09-82159C-13D, 2011 WL 250393, at *2 (Bankr. M.D.N.C. Jan. 24, 2011) (Stocks) (Citing Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165, 1172 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), plan could not be confirmed that reamortized home mortgage for payment beyond five years. "The modifications involve 'reamortizing' the loan by changing the interest rate specified in the note and deed of trust, reducing the amount of the monthly payments . . . and folding the arrearage into the loan balance and spreading the repayment of the arrearage over the remaining term of the loan. It likewise is clear that by providing that the reduced monthly payments are to be made over the remaining term of the thirty-year loan . . . , the plan provides for payments for a period that is longer than the term of the plan. As a result, the proposed plan does not comply with section 1322(d), which means that the plan does not satisfy section 1325(a)(1) and therefore is not confirmable.").
In re Hayes, No. 10-81284A-13D, 2011 WL 249450, at *2 (Bankr. M.D.N.C. Jan. 24, 2011) (Stocks) (Citing Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165, 1172 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), and assuming mortgage with security interest in escrow account could be modified, plan reamortizing debt beyond five-year limitation in § 1322(d) was not confirmable. "Together, sections 1322(b)(2) and 1322(d) mean that a chapter 13 debtor may not modify a secured claim and repay it over a period longer than the term of the plan.").
In re Hines, No. 10-80695C-13D, 2011 WL 212825 (Bankr. M.D.N.C. Jan. 21, 2011) (Stocks) (Plan reamortizing mortgage over period exceeding five years could not be confirmed because § 1322(d) limits modified loan repayment period to length of plan. Court did not decide whether security interest in escrow account subjected mortgage to modification.).
In re Morton, No. 05-53872, 2006 WL 4458706 (Bankr. M.D.N.C. June 27, 2006) (Waldrep) (Upon contested valuation of mobile home affixed to land, when plan proposed no value for second lienholder, court found value to be more than balance due on first lien.).
South Carolina
In re Strever, 468 B.R. 776, 781-82 (Bankr. D.S.C. Mar. 7, 2012) (Waites) (Second lien was not wholly unsecured and could not be voided because, after eliminating distressed property sales, the competing appraisals favored valuation that left some value for second lienholder. First lien was $129,000. Debtors' appraiser valued property at $105,000, including in this analysis two recent foreclosure sales of comparable properties. Second lienholder's appraiser valued property at $136,000 using comparable sales that excluded foreclosures. Court determined that fair market value was "over $129,000" after eliminating foreclosure sales. "[I]f a Chapter 13 debtor intends to retain a principal residence and is attempting to strip off a second mortgage, then that property's fair market value should be determined without relying on foreclosure sales when evaluating a secured party's status under § 506(a)(1). The fair market value best represents what a principal residence is worth to a debtor because it is the price that the residence would likely sell for in an arm's length transaction. . . . [F]oreclosure sales are not the most reliable indication of market value . . . . [Section] 506(a)(1) directs the Court to not rely on foreclosures for valuation when a debtor intends to keep his or her principal residence. Comparing the sales of similar homes sold in arm's length transactions between two individuals, adjusted for the material differences from the property being appraised, is the proper way [to] determine a property's market value for the purposes of § 506(a)(1) and § 1322(b)(2).").
In re Brown, 428 B.R. 672, 677 (Bankr. D.S.C. Mar. 2, 2010) (Waites) (Debtor can pay reverse mortgage over life of plan pursuant to § 1322(c)(2) when mortgage on home inherited from deceased parent accelerated at death. "Separately, even if § 1322(c)(2) did not apply, the substantial equity in the Property could allow Debtor, who is financially able to retire the debt in a short period, to retain the collateral for a substantial period even without a confirmed plan in order to seek to pay or refinance the debt.").
In re Dendy, 396 B.R. 171 (Bankr. D.S.C. May 5, 2008) (Waites) (Confirmed plan providing that second mortgage was wholly unsecured and lien was void is binding on creditor with notice that failed to object; however, creditor is not obligated to release or cancel mortgage of record after discharge of debtors' personal liability. Lien is void as result of confirmation and debt is uncollectible, discharged obligation.).
Virginia
Eastern District of Virginia
Cruickshanks v. Permberton Oaks Townhouse Ass'n, Inc. (In re Cruickshanks), No. 13-03094, 2014 WL 2609928 (Bankr. E.D. Va. June 11, 2014) (Huennekens) (Property owners' association's assessment claim was wholly unsecured because lien was unperfected; under Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. May 10, 2013) (Niemeyer, Keenan, Diaz), lien could be stripped.).
Reconco v. Partners For Payment Relief De III, LLC (In re Reconco), No. 13-1196, 2014 WL 1295721 (Bankr. E.D. Va. Mar. 31, 2014) (Mayer) (Petition date is proper date for valuation and to determine payoff on senior mortgage.).
Mandehzadeh v. Wells Fargo Bank, Nat'l Ass'n (In re Mandehzadeh), Nos. 12-1150, 12-1296, 12-1436, 2014 WL 423609, at *1 (Bankr. E.D. Va. Feb. 4, 2014) (Mayer) (Applying Alvarez v. HSBC Bank USA, Nat'l Ass'n (In re Alvarez), 733 F.3d 136, 138-42 (4th Cir. Oct. 23, 2013) (Gregory, Davis, Keenan), wholly unsecured junior liens on properties owned as tenancies by entireties cannot be stripped off in Chapter 13 filed by only one spouse even when nonfiling spouse is not liable on note. "[T]he presence or absence of in personam liability to the lender by the non-filing spouse neither enhances nor detracts from the lender's in rem right against the property itself. . . . The presence or absence of in personam liability of either the debtor or his spouse does not affect the ability to strip a wholly unsecured lien. Alvarez applies and unless both spouses are debtors before the court, the lien may not be stripped in a chapter 13 case.").
Pierce v. New Generations Fed. Credit Union (In re Pierce), No. APN 11-03288-KRH, 2012 WL 1903263 (Bankr. E.D. Va. May 24, 2012) (Huennekens) (Confirmed plan that treated junior lien as secured precluded adversary proceeding to value and strip lien as wholly unsecured. Lien-stripping process should begin in plan, and if confirmed plan provides for modification, then debtors must pursue adversary proceeding to determine validity, extent and priority of lien.).
Mathews v. US Bank, NA (In re Mathews), No. 10-1243-RGM, 2011 WL 2133325, at *4 (Bankr. E.D. Va. Mar. 31, 2011) (Mayer) (Debtor cannot strip off wholly unsecured tax lien when debtor was not personally obligated and result would be to allow former joint tenant to accomplish lien stripping without exposure to bankruptcy. Debtor and joint tenant had owned property with common law right of survivorship, but nondebtor transferred interest to debtor after incurring taxes for failed restaurant. If former co-tenant had filed bankruptcy, "she would be on the horns of a dilemma. If she strips-off the IRS tax lien in a chapter 13 case, the resulting claim is an unsecured priority claim that must be paid in full in the chapter 13 plan. Bankruptcy Code § 1322(a)(2). If she does not strip-off the IRS lien, the lien (to the extent not paid in the plan) would survive the bankruptcy. Chapter 7 is not helpful. She cannot strip-off the lien in chapter 7. The result of this bankruptcy case is that the debtor and Ms. Fagan working together seek to achieve a result that Ms. Fagan, the obligor of the tax debt, could not achieve directly.").
In re Swanson, No. 10-10643-SSM, 2011 WL 240508 (Bankr. E.D. Va. Jan. 24, 2011) (Mitchell) (Plan that ambiguously valued collateral of wholly unsecured second mortgage creditor at $69,233, while paying creditor $0, did not void lien under § 506. Creditor's failure to file proof of claim does not affect validity of lien under § 506(d)(2). Absent adversary proceeding to avoid deed of trust, confirmation would have no effect on enforcement of deed of trust after plan completion.).
Peterson v. United Bankshares, Inc. (In re Peterson), No. 10-1304, 2011 WL 111154, at *3 (Bankr. E.D. Va. Jan. 13, 2011) (Mitchell) (After contested valuation hearing, junior mortgage cannot be avoided because of $15,605 in equity above first deed of trust. "[E]ven $1.00 of equity is sufficient to bar a strip-off of a security interest in a debtor's primary residence.").
Cook v. Montclair Prop. Owners Ass'n, Inc. (In re Cook), No. 10-1300, 2010 WL 4687953 (Bankr. E.D. Va. Nov. 10, 2010) (Mitchell) (Applying §§ 506(a) and 506(d), lien of homeowners association for unpaid prepetition assessments was wholly unsecured and was void; postpetition assessments were provided for in debtors' plan and would be unaffected by lien avoidance. Court noted that § 523(a)(16) exception to discharge did not apply in Chapter 13 cases.).
Barra v. Onewest Bank (In re Barra), No. 09-1251, 2010 WL 2991028, at *1 (Bankr. E.D. Va. July 26, 2010) (unpublished) (Mitchell) (Property owned solely by one joint debtor had no value to secure junior lien, and lien was not protected from stripoff by § 1322(b)(2). Without deciding whether a debtor co-owning property can always avoid wholly unsecured junior lien in Chapter 13, court indicates "it would likely follow . . . Hunter v. Citifinancial, Inc. (In re Hunter), 284 B.R. 806 (Bankr. E.D. Va. [Sept. 30,] 2002) [(Mayer)]," and disagree with Strausbough v. Co-op Services Credit Union (In re Strausbough), 426 B.R. 243 (Bankr. E.D. Mich. Mar. 25, 2010) (Rhodes).).
In re Russell, No. 10-11720-SSM, 2010 WL 2671496, at *6 (Bankr. E.D. Va. June 30, 2010) (unpublished) (Mitchell) (Following Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), cert. denied, 545 U.S. 1021, 125 S. Ct. 669, 160 L. Ed. 2d 497 (Dec. 6, 2004), and disagreeing with In re Jerrils, No. 09-23346-BKC-PGH, 2010 WL 297941 (Bankr. S.D. Fla. Jan. 13, 2010) (Hyman), plan cannot modify nonresidential mortgage and pay secured portion over 360 months. Section 1322(d) limits payments to five years. Plan cannot use § 1322(b)(5) to modify terms of loan, stripping down unsecured portion and re-amortizing secured portion over original life of loan. "Instead, if a claim is modified, that claim must be paid by the time the plan is completed." " Section 1322(b)(5) allows a debtor to take advantage of a repayment period that exceeds the term of the plan. To do so, however, the debtor must (except for curing defaults) pay the debt according to its original terms. By reducing BAC's secured claim from $400,241 to $232,401 and by reducing the interest rate, the debtor is no longer maintaining payments but instead is modifying the debt. While such modifications are permitted under § 1322(b)(2), the term of the modified loan cannot extend beyond the five-year maximum set by § 1322(d)(1)(C) and (d)(2)(C), . . . since it is only by proceeding under the cure-and-maintain provisions of Section 1322(b)(5) that the debtor can take advantage of a payment term extending beyond the term of the plan. Indeed, to permit a plan to pay a modified debt over a period longer than the plan term would create an anomaly with respect to the debtor's discharge at the completion of plan payments. Long-term debts treated under the cure-and-maintain provisions of § 1322(b)(5) are excluded from the discharge that a debtor receives upon completing plan payments in a chapter 13 case. § 1328(a)(1). . . . But a long-term debt treated other than under § 1322(b)(5) would not be excluded from discharge, thereby effectively converting the BAC/Mellon note into non-recourse debt, so that in the event of a future default, the noteholder would be limited to its in rem remedies against the collateral, contrary to what would appear to be Congress's intent that payment obligations not paid during the plan but extending beyond the end of the plan not be discharged.").
In re Kahn, No. 09-20056-SSM, 2010 WL 2507031 (Bankr. E.D. Va. June 16, 2010) (unpublished) (Mitchell) (Wholly unsecured junior mortgage may not be stripped off in plan but instead stripoff must be accomplished through adversary proceeding; plan providing that debtor would file adversary proceeding to strip off wholly unsecured lien was confirmed, but court expressed doubt whether debtor ineligible for Chapter 13 discharge, because of prior Chapter 7 discharge, could accomplish stripoff. Plan was not filed in bad faith when debtor could accomplish meaningful relief by curing first mortgage arrearage. Ineligibility for discharge is not alone a ground for dismissal of case.).
In re Tran, No. 10-10589-SSM, 2010 WL 2024697 (Bankr. E.D. Va. May 17, 2010) (unpublished) (Mitchell) (Plan was confirmed on condition that debtor file separate adversary proceeding to strip off wholly unsecured mortgage, giving credit union opportunity in adversary proceeding to resist remedy. If adversary proceeding was not filed within 30 days, confirmation would be revoked.).
Gray v. Bank of Am., N.A. (In re Gray), Nos. 09-1224, 09-1325-RGM, 2010 WL 276179, at *4 (Bankr. E.D. Va. Jan. 15, 2010) (unpublished) (Mayer) (Court refuses to enter default judgment on debtor's motion to strip off junior deeds of trust because real estate tax assessments and Internet valuations were not sufficient evidence of value. "Valuation is not, like the color of a car, directly observable. Valuation is derived from other facts. Fed.R.Evid. 701 and 702 are instructive. Valuation is an opinion.").
Dean v. LaPlaya Inv., Inc. (In re Dean), 319 B.R. 474 (Bankr. E.D. Va. Dec. 28, 2004) (Tice) (For purposes of stripping off a third mortgage, the value of real property is determined at the petition in 2001 rather than at trial of an adversary proceeding in 2004. Because third mortgage was wholly unsecured at the petition, the third mortgage holder cannot improve its position based on appreciation and the passage of time.).
Western District of Virginia
Johnston v. Suntrust Bank (In re Johnston), No. 12-05066, 2013 WL 1844751, at *5 (Bankr. W.D. Va. Apr. 12, 2013) (Connelly) (Lien stripping not allowed when debtors failed to carry burden to prove that value of residence was less than first lien. "By considering the underlying economic motivations of the parties, the Court concludes that in an action to strip a lien from a debtor's primary residence, a Chapter 13 debtor bears the burden to prove he is entitled to prevail.").
Didlake v. Wachovia Bank, N.A. (In re Didlake), 454 B.R. 349 (Bankr. W.D. Va. June 29, 2011) (Krumm) (Judgment lien junior to first and second mortgages was wholly unsecured and subject to stripping.).
Didlake v. Wachovia Bank, N.A. (In re Didlake), 454 B.R. 349 (Bankr. W.D. Va. June 29, 2011) (Krumm) (Mortgage creditor's judgment did not invalidate its deed of trust but separate judgment lien was not supported by value.).
West Virginia
Northern District of West Virginia
Fair v. First Choice Am. Cmty. Fed. Credit Union (In re Fair), No. 13-56, 2014 WL 3617875 (Bankr. N.D. W. Va. July 21, 2014) (Flatley) (Petition date is proper valuation date to determine whether junior lien can be stripped under § 1322(b)(2). Postpetition increase in value attributed to improvements not considered.).
E. Fifth Circuit
Louisiana
Eastern District of Louisiana
In re Bourque, No. 06-11266, 2007 WL 274971 (Bankr. E.D. La. Jan. 26, 2007) (unpublished) (Magner) (Citing Bartee v. Tara Colony Homeowner's Ass'n (In re Bartee), 212 F.3d 277 (5th Cir. May 15, 2000) (Higginbotham, Parker, Atlas), wholly underwater second mortgage may be treated as an unsecured claim in Chapter 13 plan.).
Mississippi
Northern District of Mississippi
Putman v. AM Solutions, LLC (In re Putman), 519 B.R. 491 (Bankr. N.D. Miss. Sept. 5, 2014) (Woodard) (Junior mortgage could not be stripped when petition date value of collateral and determination of amount of senior mortgage resulted in $669.07 of value to support junior lien.).
Texas
Northern District of Texas
Beal Bank, S.S.B. v. Fernandez (In re Fernandez), No. 05-03705, 2006 WL 3147385 (Bankr. N.D. Tex. Oct. 27, 2006) (unpublished) (Hale) (Confirmed plan that modified mortgage as unsecured was not properly noticed to mortgagee. Creditor had no notice that dismissed case had been reinstated or opportunity to object to plan. Court granted mortgagee relief from plan and awarded attorney fees.).
Southern District of Texas
In re Ramirez, No. 14-35967-H3-13, 2015 WL 1906109 (Bankr. S.D. Tex. Apr. 24, 2015) (Paul) (Junior mortgage could not be stripped when estimated property value exceeded first mortgage. Substantial cost for repairs would not decrease value dollar for dollar, but rather at an estimated 50% of cost, resulting in value above first mortgage.).
Bernal v. Shinall (In re Bernal), No. 11-3633, 2012 WL 1999266 (Bankr. S.D. Tex. June 4, 2012) (Paul) (Wholly unsecured lien can be stripped off and debt is allowed as unsecured. Court used replacement value—what debtor would be required to pay for like property of same condition and age.).
Frazer v. Property Owners Ass'n of Canyon Vill. at Cypress Springs (In re Frazer), 466 B.R. 107, 118 (Bankr. S.D. Tex. Mar. 5, 2012) (Bohm) (When homeowner association's recorded declaration unconditionally subordinated its lien to home lender and amount owed bank exceeded property value, association's lien was completely unsecured and could be stripped in plan. "[H]ome lending industry does not accept that the lien of a homeowners' association could ever trump a purchase money lien. And, if such is ever to be the case, the home lender must be put on clear, conspicuous, and unequivocal notice. Here, the Association's recorded documentation provides no such notice.").
F. Sixth Circuit
In re Cain, 513 B.R. 316 (B.A.P. 6th Cir. July 14, 2014) (Harrison, Humphrey, Preston) (Citing Wells Fargo Bank, N.A. v. Scantling (In re Scantling), No. 13-10558, 2014 WL 2750349 (11th Cir. June 18, 2014) (Tjoflat, Moore, Schlesinger), Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. May 10, 2013) (Niemeyer, Keenan, Diaz), and Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail), debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien; § 1325(a)(5)(B) is not applicable because lienholder does not have a secured claim.).
In re Calloway, No. 11-8059, 2012 WL 1003559 (B.A.P. 6th Cir. Mar. 27, 2012) (unpublished) (Fulton, Harris, Shea-Stonum) (Debtor not entitled to Rule 60 relief from confirmation order that treated second mortgage as secured when attorney had appraisal in hand before confirmation showing that second mortgage was wholly unsecured. That attorney waited six months after confirmation to seek to modify plan to strip off wholly unsecured second mortgage is not excusable neglect and states no ground for relief from confirmation order.).
Kentucky
Eastern District of Kentucky
In re Travers, No. 15-50844, 2015 WL 7307239, at *2-*3 (Bankr. E.D. Ky. Nov. 18, 2015) (Schaaf) (Bank of America N.A. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), did not upset lien stripping of wholly unsecured junior liens in Chapter 13 cases under Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 7, 2002) (Nelson, Daughtrey, Moore). "Caulkett merely applies the interpretation of 11 U.S.C. § 506(d) in Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 ([Jan. 15,] 1992) to underwater liens. . . . Lane was an interpretation of the Supreme Court's decision in Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 ([June 1,] 1993). . . . Caulkett itself specifically rejected applying the logic of Nobelman in the § 506(d) context . . . . [T]here is no reason to believe that the Supreme Court intended Caulkett to have any effect on Nobelman or the cases that have applied its holding (including Lane) . . . . [A]ll of the courts that have considered this issue in the wake of Caulkett have rejected arguments similar to those advanced by United Bank. They conclude instead that Caulkett is limited to the context of Chapter 7 lien-stripping under § 506(d).").
In re Farthing, No. 04-52243, 2005 WL 3481508, at *2 (Bankr. E.D. Ky. Jan. 5, 2005) (unpublished) (Scott) (Under Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 7, 2002) (Nelson, Daughrey, Moore), Equity One was wholly unsecured, even though between petition and confirmation first mortgage lien was forgiven, which created small equity fir Equity One's mortgage. "Thus, while it may be appropriate to determine the value of collateral—and, therefore, the extent to which a creditor's claim is secured—as of confirmation or the date of the valuation hearing, see 11 U.S.C. § 506(a) (last sentence), it is appropriate to determine if the creditor holds a secured claim at all as of the date the petition was filed.").
Western District of Kentucky
In re Edmunds, 373 B.R. 5 (Bankr. W.D. Ky. Aug. 31, 2007) (Lloyd) (Under Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 7, 2002) (Nelson, Daughrey, Moore), wholly unsecured junior mortgage is subject to modification, but debtors' motion to strip off judgment lien is denied because lien has value above first mortgage.).
Michigan
Eastern District of Michigan
Maplethorpe v. Citimortgage Inc. (In re Maplethorpe), 569 B.R. 157 (Bankr. E.D. Mich. June 16, 2017) (Tucker) (Debtor failed to carry burden of proof in adversary proceeding to strip off wholly unsecured junior mortgage when debtor presented no admissible evidence of the amount of the first mortgage debt. Neither the amount scheduled by the debtors nor the amount stated in the debtors’ complaint was admissible as evidence and debtor presented no other evidence of the amount of the debt other than the original note, which was more than ten years old. In an adversary proceeding to “strip off” a junior mortgage, a debtor must first carry the burden of proof with respect to whether the senior encumbrances exceed the value of the property.).
Werner v. Specialized Loan Servicing, LLC (In re Werner), No. 14-04607, 2015 WL 1577781 (Bankr. E.D. Mich. Apr. 1, 2015) (Randon) (Junior residential lien would not be stripped when valuation battle favored junior lienholder. Opinion of "certified" appraiser given more weight than that of mere "licensed" appraiser with roughly same experience. Debtor's testimony about maintenance and improvements needed on home was self-serving and given little weight.).
McKinney v. JP Morgan Chase Bank (In re McKinney), 501 B.R. 338 (Bankr. E.D. Mich. July 26, 2013) (Tucker) (Petition date controls valuation of residence for purposes of stripping junior mortgage. Valuation of residence in excess of senior mortgage precludes stripping of junior lien.).
Richards v. Community Choice Credit Union (In re Richards), 501 B.R. 326 (Bankr. E.D. Mich. May 25, 2013) (Tucker) (Evidence that value of residence at petition was no more than amount of senior mortgage lien supported stripping of junior lien.).
Clay v. CSB Bank (In re Clay), No. 10-7245, 2011 WL 5922428 (Bankr. E.D. Mich. Nov. 21, 2011) (Shapero) (Considering competing appraisals, court need not determine exact value of residence, only if value exceeded first mortgage. When value was greater than first mortgage, complaint to strip junior lien was denied.).
Thomas v. Citimortgage, Inc. (In re Thomas), 459 B.R. 708 (Bankr. E.D. Mich. Oct. 3, 2011) (Rhodes) (Complaint to avoid wholly unsecured lien of Citimortgage was dismissed when debtor lacked standing to challenge validity of agreement subordinating Bank of America mortgage to Citimortgage. Citimortgage first lien was supported by value.).
Charlick v. Community Choice Credit Union (In re Charlick), 444 B.R. 762 (Bankr. E.D. Mich. Mar. 4, 2011) (Shapero) (Debtors were bound by value and classification of junior lienholder in confirmed plan and could not later relitigate value of property in attempt to strip off lien.).
Strausbough v. Co-op Servs. Credit Union (In re Strausbough), 426 B.R. 243, 246, 248, 249-50 (Bankr. E.D. Mich. Mar. 25, 2010) (Rhodes) (Under § 506(a) and (d), wholly unsecured junior lien on entireties property can be avoided in a Chapter 13 case filed by only one spouse. Court previously denied motion of nondebtor spouse to join in complaint to strip wholly unsecured second mortgage. Court rejects argument that avoidance would allow nondebtor spouses to benefit without filing for Chapter 13 relief, especially when both spouses had previously received Chapter 7 discharges and could not have avoided lien in Chapter 7. Under § 506(a), defendants' claims are secured only to extent of value of creditors' interests in estates' interests in properties. "[A] bankruptcy estate's interest in entireties property is in whatever equity is available in the entireties property that can be liquidated for the benefit of the joint creditors of the debtor and the non-filing spouse. . . . [I]n the present cases, the estate[s] ha[ve] no such interest." Under Liberty State Bank & Trust v. Grosslight (In re Grosslight), 757 F.2d 773 (6th Cir. Mar. 22, 1985) (Engel, Martin, Porter), when joint debts exist, a claim of entireties exemption must be disallowed, permitting the trustee to liquidate entireties property for benefit of joint creditors of an individual debtor and that debtor's nonfiling spouse. "[F]rom both a legal and a practical perspective, a bankruptcy estate's interest in entireties property is in whatever equity is available in the entireties property that can be liquidated for the benefit of the joint creditors of the debtor and the nonfiling spouse. In each case here, the value of the property at issue is less than the amount due on the first mortgage. As a result, there is no equity available to pay joint claims. Therefore, the Court must conclude that these estates have no interest in the entireties properties of the debtors and the non[-]filing spouses." Under § 506(a), "because each of these bankruptcy estates has no interest in the entireties property, the second mortgage holder has no interest in the estate's interest in the property. As held in . . . Lane [v. Western Interstate Bancorp (In re Lane)], 280 F.3d 663, 664 (6th Cir. [Feb. 7,] 2002) [(Nelson, Daughtrey, Moore)], under the plain language of § 506(a) and (d), the second mortgage holder's claim is not an allowed secured claim and is therefore void." Disagreeing with Hunter v. Citifinancial, Inc. (In re Hunter), 284 B.R. 806 (Bankr. E.D. Va. Sept. 30, 2002) (Mayer): "[Hunter] does not analyze the value of the junior lien holder's interest in the estate's interest in the entireties property, as § 506(a) requires when the issue is whether to avoid a lien under § 506(d). . . . This Court appreciates the Hunter court's concern that the non-filing spouse's property is not before the bankruptcy court in these cases, as well as its further concern that the debtor is seeking to use the Bankruptcy Code to benefit the non-filing spouse without the resulting burdens. Ultimately, however, the issue is one of Congressional intent: Did Congress intend to allow the avoidance of a junior lien on entireties property when only one spouse files bankruptcy? While the concerns expressed by the Hunter court certainly should be considered in determining whether Congress so intended, they are not determinative. Of substantially greater weight, however, is the statute itself, which . . . allows a junior lien to be avoided whether both spouses have assumed the burdens of bankruptcy or only one. The reality is that every day, bankruptcy courts construe and apply chapter 13 in ways that benefit non-filing spouses. The most important of these benefits is probably the benefit that the non[-]filing spouse enjoys when his or her spouse files a chapter 13 case for the purpose of maintaining possession of the entireties property while curing the default in the mortgage on the property. Nothing in the Bankruptcy Code requires both parties to join in the filing for both of them to obtain that benefit. Similarly, nothing in the Bankruptcy Code requires a joint filing in a chapter 13 case to obtain the benefits of lien avoidance under § 506(a) and (d).").
Strausbough v. Co-Op Servs. Credit Union (In re Strausbough), 421 B.R. 423 (Bankr. E.D. Mich. Dec. 18, 2009) (Rhodes) (Motion to join nondebtor spouse in complaint to strip wholly unsecured second mortgage lien is denied because nondebtor spouse has no standing to take advantage of §§ 506(a) and 1322(b).).
In re Finley, 408 B.R. 111 (Bankr. E.D. Mich. July 21, 2009) (McIvor) (Plan cannot surrender "in full satisfaction" real property that secures a mortgage that is not protected from modification when property is not worth as much as debt. Section 506(a) applies to an unprotected real estate mortgage, and mortgagee is entitled to deficiency claim notwithstanding that debt can otherwise be modified.).
Western District of Michigan
In re Bulson, 327 B.R. 830 (Bankr. W.D. Mich. May 27, 2005) (Hughes) (When mortgage can be modified under § 1322(b)(2), plan must pay modified secured claim in full, with interest, within life of plan, unless consent to other treatment is obtained; court sua sponte revokes confirmation and dismisses case when debtors' attorney filed plan that misrepresented compliance with § 1325—modified mortgage was not to be paid within life of plan.).
Ohio
Northern District of Ohio
In re Ketchum, No. 11-31991, 2013 WL 3479652, at *5 (Bankr. N.D. Ohio July 10, 2013) (Whipple) (Citing Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 2, 2002) (Nelson, Daughtrey, Moore), under §§ 506(a) and 1322, junior mortgage holder's claim "is unsecured as a result of its interest in Debtors' home having no value at commencement of the case.").
In re DeLong, No. 07-30329, 2007 WL 1121245 (Bankr. N.D. Ohio Apr. 11, 2007) (unpublished) (Whipple) (On facts similar to Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 7, 2002) (Nelson, Daughtrey, Moore), lien of junior lienholder has no value and under § 1322 creditor's rights may be modified to unsecured.).
Southern District of Ohio
Bennett v. Springleaf Fin. Servs. (In re Bennett), 466 B.R. 422 (Bankr. S.D. Ohio Jan. 12, 2012) (Humphrey) (Valuation in confirmed plan left no equity for junior mortgage, which was avoided as wholly unsecured. Creditor was noticed by proposed plan that confirmation hearing would serve as valuation hearing for lien-stripping purposes. Creditor was bound by value of residence in confirmation order. In compliance with local rule, debtor's appraisal was filed with court, noticed on creditor and incorporated in confirmed plan. Form plan contained conspicuous colored box, with bold text advising creditors that plan may modify rights and that confirmation hearing would include valuation under § 506(a) and Bankruptcy Rule 3012.).
Bivens v. M & I Bank FSB (In re Bivens), No. 08-3361, 2009 WL 9121302, at *3 (Bankr. S.D. Ohio Sept. 30, 2009) (Humphrey) (Citing Lane v. Western Interstate Bancorp (In re Lane), 280 F.3d 663 (6th Cir. Feb. 7, 2002) (Nelson, Daughtrey, Moore), "mortgages to which no value can be attributed pursuant to 11 U.S.C. § 506(a) can be stripped off through a Chapter 13 bankruptcy case upon successful completion of the payments under the Chapter 13 plan.").
Pees v. DAN Joint Venture II (In re Claar), 368 B.R. 670 (Bankr. S.D. Ohio Apr. 30, 2007) (Hoffman) (Summary judgment granted on complaint to value home and strip off second mortgage as wholly unsecured; plan could have accomplished same result as adversary proceeding.).
Tennessee
Middle District of Tennessee
In re Bennett, No. 07-05514, 2008 WL 4489139, at *3 (Bankr. M.D. Tenn. Apr. 8, 2008) (unpublished) (Paine) (To determine whether second mortgage was wholly unsecured, debtor's expert was "better supported" by reliable comparables; second mortgage is wholly unsecured and may be modified.).
G. Seventh Circuit
Illinois
Central District of Illinois
In re Stassi, No. 09-71563, 2009 WL 3785570 (Bankr. C.D. Ill. Nov. 12, 2009) (unpublished) (Gorman) (Citing Bankruptcy Rules 9014(b) and 7004(h), confirmation order that stripped junior lien must be vacated because notice of plan was not served in same manner as adversary complaint was served.).
In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman) (When Chapter 13 debtor is not eligible for discharge because § 1328(f) is triggered by recent Chapter 7 discharge, plan cannot strip off and void wholly unsecured second mortgage lien; plan must treat wholly unsecured mortgage lien as an unsecured claim notwithstanding discharge of personal liability in prior Chapter 7 case. Debtor's personal liability was discharged in prior Chapter 7 case. Second mortgage on residence was not secured by any value. Although debtor was not eligible for discharge, court acknowledged that debtor was eligible to maintain Chapter 13 case. Plan provided that wholly unsecured second mortgage would be "stripped off upon confirmation" and "considered void." "A no-discharge Chapter 13 case may not . . . result in a permanent modification of a creditor's rights where such modification has traditionally only been achieved through a discharge and where such modification is not binding if a case is dismissed or converted. . . . [T]he use of Chapter 13 to modify rights not discharged in the prior case requires a second discharge to be fully effective. . . . [B]ecause a portion—the in rem portion—of a creditor's claim against a debtor remains after the Chapter 7 discharge, the permanent modification of that claim can only be effected by completing the terms of the Chapter 13 and receiving a discharge notwithstanding the discharge of personal liability in the prior case.").
Northern District of Illinois
Brendan Mortg., Inc. v. Hall, No. 13 CV 5870, 2014 WL 4414508, at *3 (N.D. Ill. Sept. 5, 2014) (unpublished) (Aspen) ("[T]ime differential between the petition filing date and the appraisal date is a factor that the judge may take into account when assessing the accuracy of the appraisals and testimony."), aff'g 495 B.R. 393 (Bankr. N.D. Ill. July 3, 2013) (Baer) (Value of home determined as of petition date; junior lien wholly unsecured and subject to avoidance upon plan completion and discharge.).
Marsh v. United States Dep't of Hous. & Urban Dev. (In re Marsh), 929 F. Supp. 2d 852 (N.D. Ill. Mar. 13, 2013) (Holderman) (On second remand, value of junior lien for strip-down purposes is determined at date of petition.), after remand of 475 B.R. 892, 897 (N.D. Ill. July 19, 2012) (Holderman) (Appropriate time to value residence for purpose of stripping off junior mortgage was not confirmation because task at hand was to resolve adversary proceeding that was not part of confirmation process. "The bankruptcy court held that . . . [as of] 'the effective date of the plan' [in § 1325(a)(5)(B)(ii)] required the court to value the secured claim (and thus also the collateral securing it) as of that date. That determination raises two problems. First, as mentioned above, the adversary proceeding here is distinct from plan confirmation, so § 1325, which provides requirements for plan confirmation, does not even apply. Secondly, the phrase 'as of the effective date of the plan' in § 1325(a)(5)(B)(ii) modifies the value of the property to be distributed under the plan, not the allowed amount of the secured claim. Thus, § 1325(a)(5)(B)(ii) instructs the bankruptcy court to determine the net present value, as of the effective date of the plan, of all future payments to be made under the plan because of the secured claim, and to compare it to the allowed amount of the secured claim. It does not instruct the bankruptcy court about how to determine the allowed amount of the secured claim. Accordingly, § 1325(a)(5)(B)(ii) does not require valuation of collateral as of the date of plan confirmation even in confirmation hearings, and § 1325(a)(5)(B)(ii) does not require valuation of collateral as of the date of the plan confirmation in an adversary proceeding that occurs prior to plan confirmation." Remand required to determine appropriate valuation date.).
In re Allegretti, No. 17bk17844, 2017 WL 8218842 (Bankr. N.D. Ill. Dec. 15, 2017) (Hunt) (Resolving competing expert witness valuations, second mortgage is wholly unsecured and can be stripped off.).
In re Payan, No. 16 B 22344, 2017 WL 1076695 (Bankr. N.D. Ill. Mar. 20, 2017) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off pursuant to § 506(d) notwithstanding anti-modification protection in § 1322(b)(2).).
Trotter v. Ditech Fin. LLC (In re Trotter), No. 16-35671, 2017 WL 823562 (Bankr. N.D. Ill. Mar. 1, 2017) (Schmetterer) (Ditech’s wholly unsecured second mortgage can be stripped off and lien will be rendered void when debtor completes payments under confirmed Chapter 13 plan.).
De La Torre v. West Town Bank (In re De La Torre), No. 16-17329, 2016 WL 7403716 (Bankr. N.D. Ill. Dec. 16, 2016) (Schmetterer) (Wholly unsecured junior lien on debtor’s residence can be treated as an unsecured claim and the lien will be rendered null and void upon successful completion of the Chapter 13 plan.).
Bijou v. Liberty Bank for Sav. (In re Bijou), No. 16 B 09712, 2016 WL 5874966 (Bankr. N.D. Ill. Oct. 7, 2016) (Schmetterer) (Second lien is wholly unsecured by value and can be stripped off principal residence.).
In re Ball, No. 15-38786, 2016 WL 10749140 (Bankr. N.D. Ill. Aug. 5, 2016) (Schmetterer) (Wholly unsecured junior lien of U.S. Department of Health and Urban Development can be stripped off and treated as an unsecured claim.).
Barnes v. Carrington Mortg. Servs. Inc. (In re Barnes), No. 16 AP 00301, 2016 WL 4052714 (Bankr. N.D. Ill. July 22, 2016) (Schmetterer) (No value supports junior mortgage on debtor’s real property for § 1322(b)(2) purposes; junior mortgage can be stripped off upon completion of plan and entry of discharge.).
Garcia v. Specialized Loan Servicing, LLC (In re Garcia), No. 15-00542, 2015 WL 6153689 (Bankr. N.D. Ill. Oct. 19, 2015) (Schmetterer) (Wholly unsecured junior mortgage lien was void and may be stripped off.).
In re Youngblood-London, No. 14-39555, 2015 WL 5231704 (Bankr. N.D. Ill. Sept. 4, 2015) (Schmetterer) (Wholly unsecured junior lien is not a secured claim within the scope of § 1322(b)(2), may be treated as unsecured in plan and may be stripped off upon completion of plan and entry of discharge.).
Benson v. Household Fin. Corp. III (In re Benson), No. 15-00263, 2015 WL 4637997 (Bankr. N.D. Ill. Aug. 3, 2015) (Schmetterer) (Wholly unsecured junior mortgage is not an allowed secured claim and may be stripped off.).
In re Johnson, No. 15-00224, 2015 WL 5438719 (Bankr. N.D. Ill. July 9, 2015) (Schmetterer) (Wholly unsecured junior lien is not a secured claim within the scope of § 1322(b)(2), may be treated as unsecured in plan and may be stripped off upon completion of plan and entry of discharge.).
Alonso v. State Farm Bank, F.S.B. (In re Alonso), No. 14-00670, 2014 WL 5771162 (Bankr. N.D. Ill. Nov. 5, 2014) (Schmetterer) (Junior lien was wholly unsecured and would be avoided at plan completion and entry of discharge.).
Leal v. JP Morgan Chase Bank NA (In re Leal), No. 14-00350, 2014 WL 4365293, at *2 (Bankr. N.D. Ill. Aug. 28, 2014) (Schmetterer) (Wholly unsecured junior mortgage would be stripped; upon successful completion of plan and entry of discharge lien will be "rendered null and void.").
Gaweda v. RBS Citizens Fin. Grp., Inc. (In re Gaweda), No. 14-00319, 2014 WL 2768668 (Bankr. N.D. Ill. June 18, 2014) (Schmetterer) (Wholly unsecured junior lien was void under § 506(d); dismissal of case would reinstate lien under § 349(b)(1)(C).).
Hayden v. Green Tree Servicing, LLC (In re Hayden), No. 14 AP 00181, 2014 WL 1779270 (Bankr. N.D. Ill. May 5, 2014) (Schmetterer) (Junior mortgage not supported by value is void under §§ 506(a) and 1322 and may be stripped off under § 506(d); dismissal of case will reinstate lien under § 349(b)(1)(C).).
Haley v. Real Time Resolutions (In re Haley), No. 14 AP 00187, 2014 WL 1779274 (Bankr. N.D. Ill. May 2, 2014) (Schmetterer) (Junior mortgage not supported by value is void under §§ 506(a) and 1322 and may be stripped off under § 506(d); dismissal of case will reinstate lien under § 349(b)(1)(C).).
Sidabras v. TCF Nat'l Bank (In re Sidabras), No. 13 A 01201, 2014 WL 1682796 (Bankr. N.D. Ill. Apr. 24, 2014) (Schmetterer) (Problematic selection of comparable sales by appraisers rendered debtor unable to prove that value of property at petition was less than senior mortgage; junior mortgage could not be stripped for lack of value.).
Partee v. Select Portfolio Servicing, Inc., No. 13 AP 01229, 2014 WL 640985 (Bankr. N.D. Ill. Feb. 14, 2014) (Schmetterer) (Wholly unsecured junior lien may be stripped off, conditioned on plan completion and discharge.).
Sanchez v. PNC Bank (In re Sanchez), No. 13-01105, 2014 WL 505125 (Bankr. N.D. Ill. Feb. 6, 2014) (Schmetterer) (Wholly unsecured junior lien is not an allowed secured claim and may be stripped off.).
Scott v. Springleaf Fin. Servs. of Ill., Inc. (In re Scott), No. 13 AP 01343, 2014 WL 293501 (Bankr. N.D. Ill. Jan. 24, 2014) (Schmetterer) (Wholly unsecured junior lien may be stripped off, conditioned on plan completion and discharge.).
Araujo v. Beneficial Fin. I Inc. (In re Araujo), No. 13 AP 01219, 2014 WL 243179 (Bankr. N.D. Ill. Jan. 21, 2014) (Schmetterer) (Wholly unsecured junior lien on principal residence can be stripped off notwithstanding protection from modification in § 1322(b)(2).).
Arenas v. Citibank, N.A. (In re Arenas), No. 13 AP 00887, 2013 WL 4041132 (Bankr. N.D. Ill. Aug. 6, 2013) (Schmetterer) (Wholly unsecured junior mortgage was void and may be stripped off upon completion of plan.).
Ramirez v. Deutsche Bank Nat'l Trust Co. (In re Ramirez), No. 13 AP 00764, 2013 WL 4041129 (Bankr. N.D. Ill. Aug. 6, 2013) (Schmetterer) (Wholly unsecured junior mortgage was void and may be stripped off upon completion of plan.).
Briseno v. Mutual Fed. Sav. & Loan Ass'n (In re Briseno), 496 B.R. 509, 519-20 (Bankr. N.D. Ill. Aug. 2, 2013) (Baer) (Citing Ryan v. United States (In re Ryan), No. 12-3398, 2013 WL 3380131 (7th Cir. July 8, 2013) (Rovner, Ripple, Williams), § 506(d) does not accomplish lien stripping in Chapter 13 cases. Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), applies in Chapter 13 cases. "[Section] 506(d) may be used to void only those liens that are not secured and have not been allowed. . . . [A]s long as a wholly unsecured junior lien has been allowed, it may not be avoided under § 506(d)." Debtors not precluded to strip off wholly unsecured junior mortgage under other theories.).
Allen v. HSBC (In re Allen), No. 13-00238, 2013 WL 3995263 (Bankr. N.D. Ill. Aug. 1, 2013) (Schmetterer) (Wholly unsecured junior mortgage was void and may be stripped off upon completion of plan.).
Bislimi v. JP Morgan Chase Bank (In re Bislimi), No. 13 AP 00812, 2013 WL 3965176 (Bankr. N.D. Ill. July 31, 2013) (Schmetterer) (Wholly unsecured junior mortgage was void and may be stripped off.).
Hardwick v. Bank of Am., N.A. (In re Hardwick), No. 12 AP 00574, 2013 WL 3199808 (Bankr. N.D. Ill. June 21, 2013) (Schmetterer) (Junior lien was wholly unsecured and would be stripped, contingent on confirmation, completion of plan and entry of discharge.).
Kiczka v. Webster Bank (In re Kiczka), No. 12 AP 00380, 2013 WL 3187307 (Bankr. N.D. Ill. June 20, 2013) (Schmetterer) (Wholly unsecured junior liens are not secured claims for purposes of § 1322(b).).
McGruder v. CitiFinancial Serv., LLC (In re McGruder), No. 13-00665, 2013 WL 3155492 (Bankr. N.D. Ill. June 18, 2013) (Schmetterer) (Junior lien was wholly unsecured and would be stripped, contingent on confirmation, completion of plan and entry of discharge.).
Smith v. CitiFinancial Servs., Inc. (In re Smith), No. 13 AP 00295, 2013 WL 2149495, at *2 (Bankr. N.D. Ill. May 15, 2013) (Cassling) (Wholly unsecured junior lien can be stripped off pursuant to § 506(d) notwithstanding the antimodification protection in § 1322(b)(2) and Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993). "Although the Seventh Circuit has not yet considered the issue, the vast majority of circuits hold a wholly unsecured junior mortgage is subject to strip off pursuant to 11 U.S.C. § 506(d), notwithstanding the anti-modification protection afforded holders of home mortgages in 11 U.S.C. § 1322(b)(2) as implied by Nobelman.").
Hernandez v. TCF Banking & Sav. (In re Hernandez), 493 B.R. 46 (Bankr. N.D. Ill. May 10, 2013) (Schmetterer) (Third mortgage lien was wholly unsecured and may be stripped, but partially secured second mortgage was protected from modification.).
Griffin v. Bank of Am., NA (In re Griffin), No. 12 AP 00292, 2013 WL 1953618 (Bankr. N.D. Ill. May 8, 2013) (Cassling) (Junior mortgage was wholly unsecured and could be stripped, but if case were dismissed, lien would be reinstated.).
Caldera v. Citibank, N.A. (In re Caldera), No. 12-01676, 2013 WL 987836 (Bankr. N.D. Ill. Mar. 11, 2013) (Schmetterer) (Junior mortgage was not supported by value and lien could be voided; if case were dismissed, lien would be reinstated.).
Brisco v. United States (In re Brisco), 486 B.R. 422 (Bankr. N.D. Ill. Jan. 30, 2013) (Schmetterer) (Lien was not avoidable simply based on creditor's failure to file proof of claim. SBA did not file proof of claim or have allowed claim for purposes of § 506(a). Modification of lien was not possible since valuation was predicate for use of § 1322(b)(2).).
Lowe v. Ocwen Loan Servicing, LLC (In re Lowe), No. 12 AP 01581, 2012 WL 6589917 (Bankr. N.D. Ill. Dec. 14, 2012) (Schmetterer) (Wholly unsecured junior mortgage would be void, but if case were dismissed prior to plan completion and discharge, lien would be reinstated.).
Nolton v. Springleaf Fin. Servs. of Ill., Inc. (In re Nolton), No. 12-01553, 2012 WL 6589898 (Bankr. N.D. Ill. Dec. 10, 2012) (Schmetterer) (Wholly unsecured junior mortgage can be stripped.).
Bishop v. Specialized Loan Servicing, LLC (In re Bishop), No. 12 AP 01545, 2012 WL 6589876 (Bankr. N.D. Ill. Dec. 7, 2012) (Schmetterer) (Wholly unsecured junior mortgage would be void, but if case were dismissed prior to plan completion and discharge, lien would be reinstated.).
Ryan v. United States (In re Ryan), No. 11 A 1793, 2012 WL 4959632 (Bankr. N.D. Ill. Oct. 17, 2012) (Goldgar) (Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), applies in Chapter 13 cases, and § 506(d) is not available to void IRS lien, even if that lien is wholly or partially unsecured.), aff'd, 725 F.3d 623 (7th Cir. July 8, 2013) (Ripple, Rovner, Williams), cert. denied, No. 13-581, 2014 WL 1124858 (Mar. 24, 2014).).
Hawthorne v. Bank of Am., N.A., No. 12 AP 01267, 2012 WL 4898718 (Bankr. N.D. Ill. Oct. 12, 2012) (Schmetterer) (Wholly unsecured junior mortgage was void, but if case were dismissed, lien would be reinstated.).
Payne v. Ocwen Loan Servicing, LLC, No. 12 AP 01311, 2012 WL 4898810 (Bankr. N.D. Ill. Oct. 12, 2012) (Schmetterer) (Wholly unsecured junior mortgage was void, but if case were dismissed, lien would be reinstated.).
Torres v. Charter One Bank (In re Torres), No. 12-00402, 2012 WL 3309695 (Bankr. N.D. Ill. Aug. 10, 2012) (Schmetterer) (Wholly unsecured junior mortgage will be canceled on successful completion of plan and entry of discharge.).
Velniciuc v. JPMorgan Chase Bank, N.A. (In re Velniciuc), No. 12-00402, 2012 WL 3262795 (Bankr. N.D. Ill. Aug. 7, 2012) (Schmetterer) (Wholly unsecured junior lien was void, but if case were dismissed, lien would be reinstated.).
Crossgrove-Barnes v. Bank of Am., N.A., No. 12 AP 00690, 2012 WL 3042387 (Bankr. N.D. Ill. July 23, 2012) (Schmetterer) (Junior lien was wholly unsecured and subject to being voided under § 506(d). If case were dismissed before plan completion, lien would be reinstated.).
Inorio v. Schaumburg Bank & Trust Co., N.A. (In re Inorio), No. 12 B 00784, 2012 WL 2394689 (Bankr. N.D. Ill. June 22, 2012) (Schmetterer) (Wholly unsecured junior lien can be avoided and canceled upon successful completion of plan.).
Moore v. Bank of Am. NA (In re Moore), No. 11 AP 02547, 2012 WL 1806171 (Bankr. N.D. Ill. May 15, 2012) (Schmetterer) (Unsecured junior mortgage can be stripped off in plan; if case is dismissed, lien would be reinstated.).
Carson v. HSBC Mortg. Corp. (USA), No. 12 AP 00357, 2012 WL 1699112 (Bankr. N.D. Ill. May 11, 2012) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off in plan; if case is dismissed, lien would be reinstated.).
Wilson v. Bank of Am., N.A., No. 12 AP 00363, 2012 WL 1663874 (Bankr. N.D. Ill. May 11, 2012) (Schmetterer) (Junior mortgage with no supporting value can be stripped off in plan; if case is dismissed, lien would be reinstated.).
Brisco v. Chase Home Fin., No. 11 AP 02419, 2012 WL 1309850 (Bankr. N.D. Ill. Apr. 16, 2012) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off; if case is dismissed before plan completion, lien would be reinstated.).
Payne v. Ocwen Loan Servicing, LLC, No. 12 AP 00274, 2012 WL 1309838 (Bankr. N.D. Ill. Apr. 13, 2012) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off; if case is dismissed before plan completion, lien would be reinstated.).
Bautista v. Citizens Cmty. Bank, No. 12 AP 00270, 2012 WL 1309776 (Bankr. N.D. Ill. Apr. 13, 2012) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off; if case is dismissed before plan completion, lien would be reinstated.).
Willis v. Citimortgage, Inc., No. 11 AP 02586, 2012 WL 1110067 (Bankr. N.D. Ill. Mar. 30, 2012) (Schmetterer) (Wholly unsecured junior lien can be stripped off and the lien becomes void notwithstanding the antimodification protection in § 1322(b)(2).).
Gallardo v. JPMorgan Chase Bank, N.A. (In re Gallardo), No. 11-01825, 2012 WL 273294 (Bankr. N.D. Ill. Jan. 30, 2012) (Schmetterer) (Third mortgage lien was wholly unsecured; upon successful completion of plan and entry of discharge, lien would be void.).
Owens v. JP Morgan Chase (In re Owens), 11-AP-02581, 2012 WL 273320 (Bankr. N.D. Ill. Jan. 30, 2012) (Schmetterer) (Second mortgage was wholly unsecured and lien could be modified in plan.).
Heller v. Central Loan Adm. & Reporting (In re Heller), No. 11 AP 02309, 2012 WL 195532 (Bankr. N.D. Ill. Jan. 20, 2012) (Schmetterer) (Wholly unsecured junior lien was void but would be reinstated if case were dismissed.).
Alford v. US Bank (In re Alford), No. 11 AP 02328, 2012 WL 195534 (Bankr. N.D. Ill. Jan. 20, 2012) (Schmetterer) (Wholly unsecured junior lien was void, but lien would be reinstated if case dismissed.).
Alford v. US Bank (In re Alford), No. 11 AP 02328, 2012 WL 195534 (Bankr. N.D. Ill. Jan. 20, 2012) (Schmetterer) (Second mortgage was wholly unsecured and lien was void; if case were dismissed, lien would be reinstated.).
Gimay v. Chase Home Fin., LLC (In re Gimay), No. 11-02028, 2012 WL 113001 (Bankr. N.D. Ill. Jan. 12, 2012) (Schmetterer) (Second mortgage lien was wholly unsecured and would be void on plan completion and entry of discharge.).
Diamond v. Harris Bank, N.A. (In re Diamond), No. 11-02402, 2012 WL 87068 (Bankr. N.D. Ill. Jan. 9, 2012) (Schmetterer) (Wholly unsecured junior lien may be stripped off in plan, contingent on confirmation, plan completion and entry of discharge.).
Miller v. Wells Fargo Bank, No. 11 AP 02035, 2011 WL 6179732 (Bankr. N.D. Ill. Dec. 9, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case is dismissed, lien would be reinstated.).
Hunt v. CitiBank, No. 11 AP 01694, 2011 WL 5975470 (Bankr. N.D. Ill. Nov. 29, 2011) (Schmetterer) (Wholly unsecured junior lien was void, subject to plan completion; if case were dismissed, voided lien would be reinstated.).
Hunt v. Shorebank, No. 11 AP 01692, 2011 WL 5975451 (Bankr. N.D. Ill. Nov. 29, 2011) (Schmetterer) (Junior lien was wholly unsecured and subject to strip off under § 506(d).).
Hensley v. EMC Mortgage LLC, No. 11 AP 01899, 2011 WL 5854907 (Bankr. N.D. Ill. Nov. 18, 2011) (Schmetterer) (Second mortgage was wholly unsecured and lien was void.).
Vazquez v. Bank of Am., N.A., No. 11 AP 01955, 2011 WL 5833981 (Bankr. N.D. Ill. Nov. 17, 2011) (Schmetterer) (Second mortgage was unsupported by value and lien was void.).
Herrera v. Bank of Am., N.A. (In re Herrera), No. 2011 AP 01809, 2011 WL 5443047 (Bankr. N.D. Ill. Nov. 9, 2011) (Schmetterer) (Junior mortgage without supporting value was void; if case were dismissed, voided lien would be reinstated.).
Tinca v. Harris Bank, N.A. (In re Tinca), No. 11-01291, 2011 WL 5358551 (Bankr. N.D. Ill. Nov. 3, 2011) (Schmetterer) (Junior mortgage was unsupported by value and subject to stripping in plan, contingent on confirmation, plan completion and discharge.).
Banks v. EMC Mortg., No. 11 AP 01784, 2011 WL 5240269 (Bankr. N.D. Ill. Oct. 31, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case were dismissed, lien would be reinstated.).
Jeffery v. Specialized Loan Servicing, No. 11 AP 01828, 2011 WL 5240293 (Bankr. N.D. Ill. Oct. 31, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case were dismissed, lien would be reinstated.).
Williams v. JP Morgan Chase Bank, N.A., No. 11 AP 01866, 2011 WL 5240336 (Bankr. N.D. Ill. Oct. 31, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case were dismissed, lien would be reinstated.).
Williams v. JP Morgan Chase Bank, N.A., No. 11 AP 01886, 2011 WL 5240362 (Bankr. N.D. Ill. Oct. 31, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case were dismissed, lien would be reinstated.).
Goree v. US Bank Nat'l Ass'n, No. 11 AP 01245, 2011 WL 5290094 (Bankr. N.D. Ill. Oct. 31, 2011) (Schmetterer) (Wholly unsecured junior mortgage was void; if case were dismissed, lien would be reinstated.).
Thomas v. Franklin Credit Mgmt., No. 11 AP 01783, 2011 WL 5239750 (Bankr. N.D. Ill. Oct. 28, 2011) (Schmetterer) (Wholly unsecured lien was subject to strip off under § 506(d).).
Doudy v. Citifinancial Servs., Inc. (In re Doudy), No. 11-00702, 2011 WL 4924552 (Bankr. N.D. Ill. Oct. 14, 2011) (Schmetterer) (Wholly unsecured second mortgage lien was stripped off in plan, contingent on confirmation, plan completion and discharge.).
Chism v. Bank of Am., No. 11 AP 01691, 2011 WL 4983003 (Bankr. N.D. Ill. Oct. 14, 2011) (Schmetterer) (Wholly unsecured lien was voided under § 506(d), contingent on plan completion and entry of discharge.).
Perez v. Citifinancial Inc. (In re Perez), No. 11-1760, 2011 WL 4708015 (Bankr. N.D. Ill. Oct. 3, 2011) (Schmetterer) (Wholly unsecured junior lien will be canceled on successful completion of plan and entry of discharge; jurisdiction retained to enter orders in aid of judgment after discharge.).
Melgoza v. Washington Fed. Bank for Sav. (In re Melgoza), No. 11 A 00328, 2011 WL 3878361, at *2-*4 (Bankr. N.D. Ill. Aug. 30, 2011) (Schmetterer) (Chapter 13 debtors can strip off wholly unsecured junior lien on principal residence notwithstanding antimodification provision in § 1322(b)(2). "Although the Seventh Circuit has not considered the issue, most courts, including the Second, Third, Fifth, Sixth, Ninth, and Eleventh Circuit Courts of Appeals, have permitted the strip off of wholly unsecured junior liens on a Chapter 13 debtor's principal residence. . . . [A]pplication of § 506(a) precludes the use of § 1322(b)(2) because a creditor found to be wholly unsecured under § 506(a) is not a 'holder of a claim' secured by the debtor's residence. . . . Section 1322(b)(2) does prohibit modification of the rights of a holder of a claim secured by a lien on a debtor's principal residence. . . . However, that provision does not prevent modification of rights held by an unsecured claim holder.").
Baca v. U.S. Bank Nat'l Ass'n (In re Baca), No. 11 AP 00388, 2011 WL 2694551 (Bankr. N.D. Ill. July 7, 2011) (Schmetterer) (Wholly unsecured junior lien may be stripped, contingent on confirmation, plan completion and discharge.).
Joiner v. HSBC Fin. Corp. (In re Joiner), No. 11 B 10633, 2011 WL 2693224 (Bankr. N.D. Ill. July 1, 2011) (Schmetterer) (Second lien was wholly unsecured and may be stripped off, contingent on confirmation, plan completion and discharge.).
Rueda v. CitiMortgage Inc., No. 11 AP 00947, 2011 WL 2633094 (Bankr. N.D. Ill. July 1, 2011) (Schmetterer) (Junior lien without supporting value was subject to stripping, contingent on plan completion and entry of discharge.).
Chen Sein v. Charter One Bank (In re Chen Sein), No. 11 A 00960, 2011 WL 2470634 (Bankr. N.D. Ill. June 21, 2011) (Schmetterer) (Wholly unsecured third mortgage lien may be stripped off, conditioned on confirmation, plan completion and discharge.).
Holmes v. Beneficial Ill., Inc. (In re Holmes), No. 11 A 00781, 2011 WL 2311989 (Bankr. N.D. Ill. June 10, 2011) (Schmetterer) (Wholly unsecured junior lien is avoided, conditioned on plan completion and discharge; creditor must file release of lien within 21 days of discharge. Jurisdiction was reserved to enter supplemental orders quieting title as to junior lien.).
Lee v. IndyMac Bank (In re Lee), No. 11-00785, 2011 WL 1869378 (Bankr. N.D. Ill. May 16, 2011) (Schmetterer) (Second mortgage was unsupported by value and could be avoided, conditioned on confirmation, plan completion and discharge.).
Mustak v. Harris N.A. (In re Mustak), No. 11-00784, 2011 WL 1692165 (Bankr. N.D. Ill. May 3, 2011) (Schmetterer) (Unsecured junior mortgage was subject to avoidance, contingent on confirmation, completion of plan and entry of discharge.).
Leverett v. BAC Home Loan Servicing, L.P. (In re Leverett), No. 11-00040, 2011 WL 902439, at *1 (Bankr. N.D. Ill. Mar. 11, 2011) (Schmetterer) (Junior lien was wholly unsecured and may be "cancelled upon successful completion of the Debtors' Chapter 13 case.").
Erdmann v. Charter One Bank (In re Erdmann), 446 B.R. 861, 868-69 (Bankr. N.D. Ill. Mar. 10, 2011) (Black) (Debtor not eligible for discharge because of § 1328(f) cannot strip wholly unsecured junior mortgage; when one joint debtor is eligible for discharge and one is not and property is owned by entireties, spouse eligible for discharge cannot strip off wholly unsecured junior mortgage. "The majority of courts and commentators taking up this issue require a discharge be entered prior to the lien being removed. In re Fenn, 428 B.R. 494 (Bankr. N.D. Ill. [May 17, 2010) (Cox)] . . . . This is the best reading of section 1325 in conjunction with sections 502 and 506. . . . Debtors' attempt to circumvent the requirements of section 1325(a)(5) . . . must fail. . . . A lien cannot be avoided prior to discharge entered under section 1328. . . . Alexander's ineligibility for discharge . . . makes him ineligible to have the lien stripped as to his interest. Catherine, however, is eligible for discharge and thus would appear to be able to strip the Defendant's lien. . . . Tenancy by the entirety simply does not provide for a lien against the property as to only one spouse. It is all or nothing. . . . Only when the Debtors are able to act as one in the marital unity may they cause the Defendant's lien to be stripped. Alexander's ineligibility precludes them from acting as one.").
Dairo v. Bag Home Loan Servicing (In re Dairo), No. 10-02399, 2011 WL 570190 (Bankr. N.D. Ill. Feb. 15, 2011) (Schmetterer) (Unsecured second mortgage lien can be stripped off contingent on confirmation, plan completion and discharge.).
James v. American Home Mortgage Servicing Inc. (In re James), No. 10 AP 02276, 2011 WL 308097 (Bankr. N.D. Ill. Jan. 28, 2011) (Schmetterer) (Second lien unsupported by value was subject to being stripped, contingent on confirmation, completion of plan and entry of discharge.).
Sims v. Charter One (In re Sims), No. 10 AP 02398, 2011 WL 240658 (Bankr. N.D. Ill. Jan. 24, 2011) (Schmetterer) (Second mortgage lien was not "secured" as term is used in § 1322(b); plan may value collateral under Bankruptcy Rule 3012 and strip off lien, contingent on confirmation, completion of plan and entry of discharge.).
Wilson v. Ocwen Loan Servicing LLC (In re Wilson), No. 10 A 02193, 2010 WL 5374742 (Bankr. N.D. Ill. Dec. 22, 2010) (Schmetterer) (With no value to secure junior mortgage, lien can be stripped off and unsecured claim allowed.).
O'Brien v. PNC Mortgage (In re O'Brien), No. 10 A 01508, 2010 WL 5137658 (Bankr. N.D. Ill. Dec. 13, 2010) (Schmetterer) (Wholly unsecured junior mortgage could be stripped off in plan.).
Bookstein v. Barclay's Capital Real Estate, Inc. (In re Bookstein), No. 10 A 01783, 2010 WL 4876861 (Bankr. N.D. Ill. Nov. 24, 2010) (Schmetterer) (Wholly unsecured junior mortgage lien may be stripped off.).
Rodriguez v. Resurgent Capital Servs. L.P. (In re Rodriguez), No. 10 A 01860, 2010 WL 4876865 (Bankr. N.D. Ill. Nov. 23, 2010) (Schmetterer) (Wholly unsecured junior mortgage may be stripped off.).
Astudillo v. U.S. Bank (In re Astudillo), No. 10 AP 01915, 2010 WL 4688825 (Bankr. N.D. Ill. Nov. 10, 2010) (Schmetterer) (Junior mortgage was wholly unsecured; plan can value collateral under Bankruptcy Rule 3012, stripping off lien, contingent on confirmation, completion of plan and entry of discharge.).
Bady v. Chase (In re Bady), No. 10 AP 01498, 2010 WL 3952007 (Bankr. N.D. Ill. Oct. 8, 2010) (Schmetterer) (With no value to support second mortgage, lien could be stripped—contingent on confirmation, completion of plan and discharge.).
Wolski v. Harris Bank, NA (In re Wolski), No. 10-01433, 2010 WL 3614258 (Bankr. N.D. Ill. Sept. 7, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior mortgage can be stripped off, contingent on confirmation, completion of plan, and entry of discharge.).
Espinosa v. Chase Home Fin. LLC (In re Espinosa), No. 10 AP 01215, 2010 WL 3488969 (Bankr. N.D. Ill. Aug. 27, 2010) (unpublished) (Schmetterer) (Junior mortgage unsupported by value was not secured for § 1322(b)(2) purposes and may be stripped, contingent on completion of plan and discharge.).
Bedford v. Specialized Loan Servicing LLC (In re Bedford), No. 10 AP 01294, 2010 WL 3488973 (Bankr. N.D. Ill. Aug. 27, 2010) (unpublished) (Schmetterer) (Junior mortgage unsupported by value is not a secured claim for § 1322(b)(2) purposes and may be stripped, contingent on debtors' completing plan and obtaining discharge.).
Williams v. Beneficial Ill., Inc. (In re Williams), No. 10-01205, 2010 WL 3364089 (Bankr. N.D. Ill. Aug. 23, 2010) (unpublished) (Schmetterer) (Junior mortgage not supported by value can be stripped off, conditioned on confirmation, completion of plan and discharge.).
Zolicoffer-Wilson v. Chase (In re Zolicoffer-Wilson), No. 10 AP 01329, 2010 WL 3341986 (Bankr. N.D. Ill. Aug. 23, 2010) (unpublished) (Schmetterer) (Junior mortgage not supported by value was subject to modification and stripping off, contingent on confirmation, completion of plan and entry of discharge.).
Melendez v. First Am. Bank (In re Melendez), No. 10 AP 01098, 2010 WL 3156126 (Bankr. N.D. Ill. Aug. 4, 2010) (unpublished) (Schmetterer) (With no value to support second lien on home, claim was not secured and debtor may value collateral under Bankruptcy Rule 3012—contingent on confirmation, completion of plan and entry of discharge.).
Rogus v. US Bank (In re Rogus), No. 10-00196, 2010 WL 3074587 (Bankr. N.D. Ill. July 29, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior mortgage could be stripped off and unsecured lien was void.).
Taylor v. CitiFinancial (In re Taylor), No. 10-00803, 2010 WL 2933699 (Bankr. N.D. Ill. July 23, 2010) (unpublished) (Schmetterer) (With no value to support second lien on home, claim was not secured and debtor may value collateral under Bankruptcy Rule 3012—contingent on confirmation, completion of plan and entry of discharge.).
Gueorguiev v. Chase (In re Gueorguiev), No. 10 AP 01162, 2010 WL 2933659 (Bankr. N.D. Ill. July 23, 2010) (unpublished) (Schmetterer) (With no value to support second lien on home, claim was not secured and debtor may value collateral under Bankruptcy Rule 3012—contingent on confirmation, completion of plan and entry of discharge.).
Cooley v. Specialized Loan Servs., LLC (In re Cooley), Nos. 09-46941, 10-00128, 2010 WL 9499015 (Bankr. N.D. Ill. June 11, 2010) (Schmetterer) (With no value to support junior mortgage, lien was wholly unsecured and would be stripped at completion of plan and discharge.).
In re Fenn, No. 09 B 49343, 2010 WL 2293419 (Bankr. N.D. Ill. June 8, 2010) (unpublished) (Cox) (Plan cannot satisfy in rem claim surviving Chapter 7 discharge without obtaining creditor's acceptance, surrendering property or paying allowed claim pursuant to § 1325(a)(5). Creditor retained in rem lien until earlier of payment under nonbankruptcy law or § 1328 discharge.), upon further hearing of 428 B.R. 494 (Bankr. N.D. Ill. May 17, 2010) (Cox) (Wholly unsecured second mortgage can be stripped off and voided pursuant to § 506(d), but when debtors are not eligible for discharge under § 1328(f), plan cannot be confirmed that fails to retain the wholly unsecured lien until payment of the underlying debt consistent with nonbankruptcy law. Although Seventh Circuit has not addressed the issue, five circuits and two bankruptcy appellate panels have held that a Chapter 13 debtor can strip off a wholly unsecured second mortgage lien. However, after BAPCPA, plan cannot be confirmed that does not retain the lien of even a wholly unsecured mortgage until the earlier of discharge or the payment of the underlying debt determined under nonbankruptcy law. When the debtor is not eligible for discharge because of § 1328(f), plan can't be confirmed unless it retains wholly unsecured second mortgage lien until the underlying debt is paid in full in accordance with nonbankruptcy law.).
Redd v. Bank of Am. (In re Redd), No. 10 AP 00035, 2010 WL 2366583 (Bankr. N.D. Ill. June 7, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior mortgage was avoidable, contingent on confirmation, completion of plan and entry of discharge.).
Zurita v. Green Tree Servicing LLC (In re Zurita), No. 10 A 00093, 2010 WL 1780031 (Bankr. N.D. Ill. Apr. 30, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior lien stripped conditioned on plan confirmation, completion and discharge.).
Fox v. Mortgage Elec. Registration (In re Fox), No. 10 A 00221, 2010 WL 1780293 (Bankr. N.D. Ill. Apr. 28, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior mortgage may be stripped conditioned on plan confirmation, completion and discharge. Court retained jurisdiction to enter supplemental order "quieting title" after discharge.).
Fox v. Mortgage Elec. Registration Sys., Inc. (In re Fox), Nos. 10 B 48, 10 A 221, 2010 WL 1655482 (Bankr. N.D. Ill. Apr. 23, 2010) (unpublished) (Schmetterer) (Wholly unsecured junior mortgage will be canceled upon successful completion of plan; court retains jurisdiction to enter order in aid of judgment after discharge.).
In re Ginther, 427 B.R. 450, 456-57, 454 (Bankr. N.D. Ill. Apr. 22, 2010) (Barbosa) (Section 1322(b)(2) does not protect wholly unsecured junior mortgage from avoidance, but adversary proceeding is required by Bankruptcy Rule 7001(2). Creditor may waive right to adversary proceeding by failure to object. "[A]s the Supreme Court recently held in [United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010),] a creditor can lose its right to an adversary proceeding by failing to object, at least where it received reasonable or actual notice. Espinosa clarified that the Bankruptcy Rules are procedural rules, Id. at 1367, and therefore overruled [In re Hanson, 397 F.3d 482 (7th Cir. Feb. 2, 2005) (Bauer, Manion, Evans),] which had held that constitutional due process required compliance with notice provisions in the Rules." Section 1322(b)(2) provides for modification of rights of holders of secured claims. Under § 506(a), claim is allowed as secured only to extent of value of creditor's interest in estate's interest in property. Section 1327(b) vests property in debtor free and clear of claims or interests of creditors provided for by plan—implementing the stripping off of wholly unsecured liens without resort to § 506(d). Section 1325(a)(5)(B) allows cramdown plans over objection of creditor holding allowed secured claim. Creditors retain enforceable liens only to extent of allowed secured claims. "Therefore, except with respect to the exceptions stated in § 1322(b)(2) . . . , § 1325(a)(5)(B) together with § 1322(b)(2) gives the debtor the power to force a creditor to accept a plan which will treat the undersecured portion as an unsecured claim and which will terminate the creditor's lien upon payment in full of the plan, despite the fact that the creditor has not been paid his entire claim in full.").
Lopez v. Harris NA (In re Lopez), No. 09 A 01173, 2010 WL 1485553 (Bankr. N.D. Ill. Apr. 13, 2010) (unpublished) (Schmetterer) (Second mortgage supported by no value could be stripped, conditioned on confirmation, completion of plan and discharge.).
Burks v. Household Fin. Corp. III (In re Burks), No. 10-00040, 2010 WL 1286179, at *2 (Bankr. N.D. Ill. Mar. 31, 2010) (Schmetterer) (When no value supported second mortgage, it "is not a claim secured at all by a secured interest in the Debtor's principal residence, as the term is used in Section 1322(b)." Lien will be void upon confirmation, completion of plan and entry of discharge.).
Burks v. KeyBank, N.A. (In re Burks), No. 10-00041, 2010 WL 1253717 (Bankr. N.D. Ill. Mar. 29, 2010) (Schmetterer) (Wholly unsecured third mortgage lien was not protected by § 1322(b)(2) and was void—contingent on confirmation, plan completion and discharge.).
Murray v. US Bank NA (In re Murray), No. 09-ap-01151, 2010 WL 898620, at *2 (Bankr. N.D. Ill. Mar. 11, 2010) (Schmetterer) (Wholly unsecured junior mortgage would be stripped off "upon successful completion of the Debtor's Chapter 13 Plan and entry of debtor's discharge.").
Hall v. Countrywide Bank (In re Hall), No. 09 A 671, 2010 WL 786259, at *2 (Bankr. N.D. Ill. Mar. 1, 2010) (Schmetterer) (Junior mortgage lien unsupported by any value may be eliminated "upon successful completion of debtor's Chapter 13 Plan and entry of debtor's discharge. . . . Jurisdiction will be retained to enter orders in aid of this judgment after debtor's discharge.").
In re Meyer, No. 09 B 20268, 2010 WL 370297, at *1, *3 (Bankr. N.D. Ill. Jan. 29, 2010) (Schmetterer) (Stripdown of junior mortgage did not require adversary proceeding because junior mortgage creditor yielded voluntarily to jurisdiction by filing objection to plan; junior mortgage lien was wholly unsecured and avoidable, "contingent on confirmation thereof, completion of the Plan by Debtors and entry of their Discharge.").
In re Forrest, 410 B.R. 816 (Bankr. N.D. Ill. Sept. 16, 2009) (Schmetterer) (Applying Bankruptcy Rule 7001(2), plan cannot strip unsecured junior mortgage; debtor must file adversary proceeding. Court distinguishes valuation of collateral from voiding unsecured lien and cites In re Hanson, 397 F.3d 482 (7th Cir. 2005), as requiring heightened degree of notice and due process when voiding lien.).
Southern District of Illinois
Buford v. U.S. Bank Nat'l Ass'n (In re Buford), No. 13-03091, 2014 WL 555804 (Bankr. S.D. Ill. Feb. 12, 2014) (Grandy) (Distinguishing Ryan v. United States, 725 F.3d 623 (7th Cir. July 8, 2013) (Ripple, Rovner, Williams), cert. denied, No. 13-581, 2014 WL 1124858 (Mar. 24, 2014), lien secured by claim disallowed because satisfied through refinancing is avoided under § 506(d).).
Stephens v. Regions Bank (In re Stephens), No. 11-3302, 2012 WL 4086767 (Bankr. S.D. Ill. Sept. 17, 2012) (Altenberger) (Second mortgage was avoidable because not supported by equity.).
Indiana
Northern District of Indiana
In re Melendy, No. 16-20107, 2017 WL 1169560 (Bankr. N.D. Ind. Mar. 20, 2017) (Klingeberger) (Written in verse, Chapter 13 debtor not eligible for discharge because of § 1328(f)(1) can strip off wholly unsecured mortgage on principal residence.).
Hegeduis v. Harris, N.A. (In re Hegeduis), 525 B.R. 74, 77-86 (Bankr. N.D. Ind. Jan. 23, 2015) (Klingeberger) (In an opinion applying principles of quantum mechanics, valuation of property for purposes of lien stripping is determined as of petition date, notwithstanding that adversary proceeding to strip off junior liens was filed two years after confirmation. "[T]he critical event point winner is the date of the filing of the petition initiating the case. . . . [T]here is case law authority which determines the critical event point to be at different points in the Chapter 13 case process, including the date of the filing of the petition; the date of the filing of a Chapter 13 plan; the date of hearing on confirmation of the Chapter 13 plan; the date upon which a proceeding to determine whether or not a mortgage is strippable is filed; and the date upon which that proceeding is tried and then determined. . . . [I]t is meaningless to state that a valuation is to be determined as of a discrete date of a discrete event in a Chapter 13 case, and it is in fact existentially impossible to do so unless the valuation date dictates the critical event point. . . . It is ridiculous to state that the date of valuation of anything is the date of the confirmation hearing, primarily because no one will have competent evidence of valuation of real or personal property on the date of plan confirmation, but rather will have evidence of valuation derived at some point prior to that date, or to be derived after that date. Moreover, the confirmation hearing date can vary significantly from case to case, which places an observer on the confirmation hearing date platform in one case in an entirely different time continuum from an observer on that platform in another case, even in a theoretically identical valuation continuum. . . . Critical event points for valuation based upon activities in an adversary proceeding are entirely artificial and variable. . . . The petition date is the critical date in the context of determining allowed secured claim valuations for other purposes. . . . In a consumer case, why would the date of valuation of personal property differ from the date of valuation of residential real estate? The answer is, it shouldn't. . . . The court determines that the critical event point in a Chapter 13 case around which the 11 U.S.C. § 1322(b)(2) consequence of valuation of residential real estate relatively revolves is the date of the petition.").
Stewart v. JP Morgan Chase Bank (In re Stewart), 408 B.R. 215, 218 (Bankr. N.D. Ind. July 1, 2009) (Klingeberger) (Citing In re Hanson, 397 F.3d 482 (7th Cir. Feb. 2, 2005) (Bauer, Manion, Evans), adversary proceeding is required by Bankruptcy Rule 7001(2) to determine whether plan can strip lien alleged to be unsupported by value in debtor's home. Debtor has burden to prove that lien has junior priority and no value. Service of process on registered agents under Bankruptcy Rule 7004(b)(3) was proper when mortgage creditors were not "insured depository institution[s].").
In re Grupp, No. 08-40940, 2009 WL 8762884 (Bankr. N.D. Ind. Apr. 6, 2009) (Grant) (Stripping of wholly unsecured liens may not be accomplished by motion to avoid lien.).
Southern District of Indiana
Cathcart v. Wachovia Mortgage, No. 1:04-CV-1236-JDT-TAB, 2005 WL 756208 (S.D. Ind. Feb. 22, 2005) (unpublished) (Tinder) (Proper valuation standard to determine whether second mortgage can be stripped off principal residence is fair market value under Associates Commercial Corp. v. Rash, 520 U.S. 953, 117 S. Ct. 1879, 138 L. Ed. 2d 148 (June 16, 1997), not net liquidation value; because landlocked portion of mortgaged property has some value in excess of first mortgage, second mortgage cannot be stripped off in a Chapter 13 case. Debtor's appraiser valued property at $111,000, subject to a first mortgage of $112,000. Appraiser assigned no value to a portion of the property that was landlocked and not accessible. Bankruptcy court concluded that some value—at least $1,000—should be assigned to the inaccessible portion of the property, bringing the value above $112,000, the amount of the first mortgage, and thus there was value to which Wachovia's second mortgage could attach.).
Profitt v. Mendoza, No. 1:04-CV-742-LJM-WTL, 2004 WL 3223059 (S.D. Ind. Nov. 23, 2004) (unpublished) (McKinney) (Fair market value, not net liquidation value, is proper standard for determining whether a mortgage is wholly unsecured by value; when fair market value is $17,000 and first mortgage is $103,248.73, there is value to partially secure a second mortgage and the second mortgage cannot be stripped off the property because of § 1322(b)(2).).
In re Witte, No. 10-12229-WJM-13, 2011 WL 1134683, at *1 (Bankr. S.D. Ind. Mar. 23, 2011) (Metz) (Value prevented stripping of junior lien. "[Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] considered only whether the senior mortgage on a debtor's residence could be 'stripped down' to its fair market value under 11 U.S.C. § 506(a). It did not address whether a wholly unsecured junior mortgage could be 'stripped off' completely and rendered entirely unsecured.").
In re Duncan, No. 08-8808AJM3, 2008 WL 5333561 (Bankr. S.D. Ind. Dec. 17, 2008) (unpublished) (Metz) (Finding mortgage creditor's evidence of value more persuasive, residence has equity and second mortgage is not subject to stripping.).
Wisconsin
Eastern District of Wisconsin
Lindskog v. M & I Bank, 480 B.R. 916 (E.D. Wis. Oct. 2, 2012) (Clevert) (Debtor ineligible for discharge could not avoid wholly unsecured junior lien. Voiding lien would amount to de facto discharge.).
In re Fair, 450 B.R. 853, 856-58 (E.D. Wis. Apr. 19, 2011) (Randa) (Chapter 13 debtor not eligible for discharge because of § 1328(f)(1) can strip off wholly unsecured junior mortgage. "In light of [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)], Section 506(d) is not the proper authority for lien stripping in chapter 13. . . . '[A] wholly unsecured claim, as defined under Section 506(a), is not protected under the antimodification exception of Section 1322(b)(2).' . . . The Court must presume that Congress understood the distinction between discharging in personam liability and modifying the terms of an in rem lien when it enacted § 1328(f)(1). . . . [D]enying certain chapter 13 debtors the right to a discharge did nothing to change the fact that lien stripping is generally allowed under chapter 13. . . . Congress did not intend to prevent lien stripping through § 1328(f)(1), and it is inaccurate to characterize lien stripping as a de facto discharge under the bankruptcy code. . . . [Section] 1325(a)(5) . . . does not apply to unsecured claims. . . . GMAC's junior mortgage lien is unsecured, and there is nothing in the bankruptcy code which ties the modification of an unsecured lien to obtaining a discharge under chapter 13. . . . This is not to say that debtors enjoy an absolute right to strip off unsecured liens in a no-discharge chapter 13 case. Courts have an independent duty to determine whether chapter 13 proceedings are conducted in good faith. §§ 1325(a)(3), (7).").
In re Moncree, 511 B.R. 922 (Bankr. E.D. Wis. June 27, 2014) (Kelley) (Modification not available to reduce value assigned to property in confirmed plan; debtor bound by res judicata effect of confirmed plan.).
Monroe v. Seaway Bank & Trust Co. (In re Monroe), 509 B.R. 613, 618-29 (Bankr. E.D. Wis. Apr. 25, 2014) (Halfenger) (In one of the best summaries to date of conflicting arguments and case law, debtors ineligible for discharge because of § 1328(f) can confirm plan that permanently strips off wholly unsecured junior lien on residence upon completion of payments. "The Monroes cannot avoid HUD's lien under § 506(d). . . . The Supreme Court held in [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),] that 'allowed secured claim' in § 506(d) 'means a claim that is, first, allowed under § 502 and, second, secured by a lien enforceable under state law, without regard to whether that claim would have been deemed secured or unsecured under § 506(a).' . . . Dewsnup divorced § 506(d)'s use of 'allowed secured claim' from § 506(a)'s description of a claim 'secured by a lien on property' . . . . But the Supreme Court's reasoning in [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] directs that § 506(a) determines whether a creditor's claim is 'secured' for purposes of § 1322(b)(2). . . . The Court held that if the estate has any interest in the residence to which a creditor's lien can attach, the creditor holds a 'secured claim' for purposes of § 1322(b)(2). . . . In so holding, however, the Court deemed 'correct' the debtors' reading of 'secured claim' in § 1322(b)(2) as being determined by § 506(a) . . . . Thus, § 506(a)'s inquiry into whether there is value in property to which a lien can attach determines whether a claim is 'secured' or 'unsecured' for purposes of § 1322(b)(2). . . . [E]very court of appeals to consider the issue has held that a chapter 13 plan can eliminate a wholly underwater lien that encumbers a debtor's principal residence. . . . A chapter 13 plan that proposes to strip a nonrecourse lien can therefore be conceived of as modifying the nonrecourse creditor's right to foreclose by making that right contingent on the debtor's ability to perform the plan fully . . . . No Code provision supports [the holding in In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman),] that a debtor's chapter 13 plan can strip an underwater lien only if the debtor is eligible for a discharge. . . . Section 1325(a)(5) imposes plan confirmation requirements applicable only to 'allowed secured claim[s]. . . '. . . . Because HUD lacks an allowed secured claim, § 1325(a)(5)(B)(i)(I)(bb) does not apply, and the Code's discharge provisions otherwise have no bearing on whether the court can confirm a chapter 13 plan that, if fully performed by the Monroes, will permanently modify the rights of creditors provided for in the plan. The possibility of 'springing liens' under §§ 348 and 349 also does not provide a basis for reserving lien stripping under § 1322(b)(2) to plans proposed by discharge-eligible chapter 13 debtors. . . . [A] chapter 13 plan may modify permanently the rights of holders of unsecured claims. . . . [C]onfirmation of the plan 'vests all of the property of the estate in the debtor[ ] . . . free and clear of any claim or interest of any creditor provided for by the plan.' § 1327(b) & (c). . . . [T]he Seventh Circuit has construed 11 U.S.C. § 1141(c)'s similar 'free and clear' language to mean that if a plan provides for the lienholder's claim without preserving the lien, the plan eliminates the lien . . . . In re Penrod, 50 F.3d 459, 462 (7th Cir. [Mar. 22, 1995) (Posner, Rovner, Moran)]. . . . [T]he Supreme Court has explained that an order confirming a chapter 13 plan is a final judgment binding on creditors whose claims are addressed in the plan . . . . [United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 269-70, 275, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (Mar. 23, 2010)]. . . . [T]he principle that liens pass through bankruptcy unaffected cannot support the conclusion that a no-discharge chapter 13 plan may not extinguish liens. As Penrod cautions, 'like most generalizations about law, the principle that liens pass through bankruptcy unaffected cannot be taken literally.' . . . It is a bridge too far to infer that § 1328(f)'s 4-year discharge prohibition imposes an extra-textual limitation on a chapter 13 plan's ability to modify the rights of holders of claims that § 506(a) treats as unsecured. . . . [T]he ability of chapter 13 plans to modify creditors' rights is a product of §§ 1322 and 1327, and is limited by § 1325 only when the right is possessed by a creditor that holds an 'allowed secured claim' as determined by § 506(a). . . . The Supreme Court recognized long ago that a plan of reorganization can extinguish the security interests of junior lienholders when the value of a debtor's property is less than the amount due to the senior lienholder. See [In re 620 Church St. Bldg. Corp., 299 U.S. 24, 25-27, 57 S. Ct. 88, 81 L. Ed. 16 (Nov. 9, 1936)]. . . . Section 1327 and controlling authority make clear that it is the statutory effect of a confirmed chapter 13 plan providing for the modification of creditors' rights, rather than the discharge of the debtor's personal liabilities, that eliminates liens contingent upon the debtor's complete performance of the plan. And, although § 1325(a)(5) requires no-discharge chapter 13 plans to pay to the holders of 'allowed secured claim[s]' the full amount owed under nonbankruptcy law, that limitation does not apply to a wholly underwater lien . . . . Thus, a chapter 13 debtor's ability to strip an underwater-junior-mortgage lien through his chapter 13 plan is unaffected by the debtor's ineligibility to receive a discharge.").
Blosser v. KLC Fin., Inc. (In re Blosser), No. 08-2353, 2009 WL 1064455, at *1 (Bankr. E.D. Wis. Apr. 15, 2009) (unpublished) (Kelley) (Following In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman), debtor ineligible for Chapter 13 discharge cannot strip wholly unsecured mortgage lien. "The Jarvis reasoning is compelling because allowing a debtor to file Chapter 7, discharge all dischargeable debts and then immediately file Chapter 13 to strip off a second mortgage lien would not be much different than simply avoiding the mortgage lien in the Chapter 7 itself. But Chapter 7 debtors are not allowed to use § 506 to avoid liens. Dewsnup v. Timm, 502 U.S. 410[, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)]. Moreover, lien stripping under these circumstances does not appear to comport with Congressional intent, as evidenced by the 4-year bar between a Chapter 7 discharge and eligibility for a Chapter 13 discharge, and the provisions allowing avoided liens to 'spring back' on conversion or dismissal of the Chapter 13 case. 11 U.S.C. §§ 348(f)(1)(C), 349(b)(1)(C).").
Western District of Wisconsin
Rowe v. Krekeler (In re Rowe), No. 17-17, 2018 WL 539779, at *1–*5 (Bankr. W.D. Wis. Jan. 23, 2018) (Furay) (Plan provision that second mortgage was valued at $0 and that lien was avoided did not preclude defense of lien avoidance by mortgagee because debtor filed adversary proceeding before confirmation to strip mortgage and separate contested matter or adversary proceeding was necessary. After considering competing, imperfect appraisals, second mortgage was secured in the amount of “at least $1,309” and could not be stripped off. “Plaintiff’s Plan provides that the Defendants’ lien is avoided. . . . [T]he valuation issue was not litigated as part of a plan confirmation. Thus, there is no valuation of collateral in the Plan to which Defendants might be bound. . . . Plaintiff filed this adversary proceeding and the Defendants filed an answer three days before the Plan was confirmed. . . . Plaintiff recognized that action in addition to the Plan was required to lien strip and so filed an adversary proceeding. Defendants’ due process rights take priority over a term in the Plan. Rowe’s attempt to avoid the lien in the Plan is not binding absent a specific determination in a separate contested case or adversary proceeding. The confirmed Plan merely means no payments will be made to Defendants through the Plan. . . . Defendants hold a secured claim in the amount of at least $1,309. . . . The anti-modification provision in section 1322 prevents the Plaintiff from changing Defendants’ rights.”).
Larson v. Nationstar Mortg. LLC (In re Larson), 544 B.R. 883, 885-86 (Bankr. W.D. Wis. Jan. 22, 2016) (Furay) (Bank of America, N.A. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), does not change effect of § 506 on wholly unsecured junior mortgage in Chapter 13 case—junior lien can be stripped. "[T]he eight circuit courts that have addressed the question have all concluded that the anti-modification protections provided to secured creditors by 11 U.S.C. § 1322(b)(2) apply only when the creditor's lien actually has some value. . . . [T]here is no reason to believe the Supreme Court intended Caulkett to have any effect on [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] or the cases that have applied its holding.").
H. Eighth Circuit
Minnesota Hous. Fin. Agency v. Schmidt (In re Schmidt), 765 F.3d 877, 881-83 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly) (Joining Second, Third, Fourth, Fifth, Sixth, Ninth and Eleventh Circuits, Chapter 13 debtor eligible for discharge can strip off a valueless junior lien on principal residence. "[I]t is necessary first to consult § 506(a)(1) to determine which type of claim is involved. [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1992),] 'confirm[ed] that § 506(a) is the starting point in the analysis and is not rendered a nullity in the Chapter 13 context.' . . . 'Section 1322(b)(2) protects a creditor's rights in a mortgage lien only where the debtor's residence retains enough value—after accounting for other encumbrances that have priority over the lien—so that the lien is at least partially secured under Section 506(a).' . . . Because the creditor's claim in Nobelman was partially secured, the Court was not concerned with whether § 1322(b)(2)'s antimodification provision applies regardless of a claim's status under § 506(a)(1). . . . If . . . the creditor's claim is wholly unsecured, then the reasoning of Nobelman does not preclude modifying the creditor's rights under § 1322(b)(2). . . . 'Simply pointing out that some arbitrariness occurs is not a compelling objection.'"), aff'g No. CIV. 13-434 ADM, 2013 WL 2470218 (D. Minn. June 7, 2013) (unpublished) (Montgomery) (Property value rendered claim wholly unsecured and lien may be avoided on plan completion. Residential mortgagee must hold secured claim under § 506(a) to qualify for anti-modification protection in § 1322(b)(2).).
Fisette v. Keller (In re Fisette), 695 F.3d 803 (8th Cir. Sept. 12, 2012) (Wollman, Beam, Loken) (Trustee's appeal of BAP decision that debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien is without appellate jurisdiction in court of appeals because BAP remanded for consideration of other confirmation issues.), dismissing appeal of 455 B.R. 177, 182-87 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail) (Chapter 13 debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior liens on residence at completion of payments under plan; § 1325(a)(5)(B)(i)(I)(bb) does not apply because wholly unsecured liens are not allowable secured claims. "[Section] 1322(b)(2) does not bar a Chapter 13 debtor from stripping off a wholly unsecured lien on his principal residence, a position that has been adopted by all Circuit Courts of Appeal to address this issue. . . . In accordance with the language of § 1322(b)(2), only if the creditor is the holder of a secured claim, meaning that its claim is at least partially secured after application of § 506(a), will it be eligible for the protection of § 1322(b)(2)'s antimodification provision. . . . [N]othing in the Bankruptcy Code conditions a Chapter 13 debtor's ability to modify a wholly unsecured creditor's lien under § 1322(b)(2) on his eligibility for a discharge. . . . [Section] 1325(a)(5)(B)(i)(I)(bb)[ ] does not apply in the case of a wholly unsecured lien on a debtor's principal residence. . . . [N]othing in § 1328(f)(1) . . . limits the debtor's rights under § 1322(b)(2).").
Iowa
Northern District of Iowa
In re Lukaszka, No. 17-00242, 2017 WL 3381815, at *2
In re Krapfl, No. 10-01461, 2010 WL 4338475 (Bankr. N.D. Iowa Oct. 27, 2010) (Kilburg) (Acknowledging some disagreement, all circuit courts ruling on issue agreed that § 1322(b)(2) protection from modification did not apply to wholly unsecured second mortgage on Chapter 13 debtor's principal residence; while Eighth Circuit had not considered that issue, court concluded that wholly unsecured junior mortgage was subject to being stripped off under § 1322(b) and § 506(a).).
Minnesota
In re Brown, 536 B.R. 837, 840-47 (Bankr. D. Minn. Sept. 11, 2015) (Kishel) (Wholly unsecured junior lien cannot be stripped when debt was incurred by debtor and former spouse, debt was secured by property held as joint tenants and quitclaim of property to debtor pursuant to divorce decree did not affect former spouse's liability to junior lienholder. "The Debtor took title to her ex-husband's undivided one-half interest in the property once he executed and delivered the quit claim deed to her; but that conveyance carried [junior lienholder's] lien with the ex-husband's interest as it had attached to that interest. It is not necessary to get into the abstract inquiry of whether lien stripping might still lie to divest [junior lienholder's] lien, to the extent that it nominally secured the Debtor's liability on the underlying debt. In the end, lien stripping simply cannot divest the lien to the extent that it continues to secure the ongoing liability of the Debtor's ex-husband. . . . To the extent that the mortgage had attached to secure the liability of the Debtor's ex-husband, that encumbrance survived the divorce process. . . . [T]he court in a divorce proceeding cannot compel a creditor to collect a debt contracted jointly by the spouses in the first instance, from only one spouse after the divorce; and it cannot compel a third-party creditor to release its security on any terms other than those of the original grant. . . . By extension, the allocation of marital property to one spouse does not per se release it from an encumbrance previously granted by a non-recipient spouse to secure the non-recipient spouse's debt to a third-party creditor. . . . When the Debtor filed under Chapter 13, the real estate still secured the debt of the Debtor's ex-husband to [junior lienholder]. . . . [I]n the bankruptcy case of one co-borrower a creditor can not suffer the loss of its recourse to collateral originally granted to it by a co-borrower on the same transaction, on the mere happenstance that the borrower-in-bankruptcy acquired title to that collateral before going into bankruptcy and the same creditor still holds a lien against it to secure both borrowers' original liability on the same loan. . . . [N]onrecourse secured claims subject to modification are limited to those created by the original grant of the debtor in bankruptcy.").
Atkins v. Bank of Am., N.A. (In re Atkins), 497 B.R. 568 (Bankr. D. Minn. Sept. 4, 2013) (Sanberg) (Debtors' request to strip or release junior lien after plan completion granted notwithstanding unavailability of that relief in Minnesota at time petition and plan were originally filed; absent jurisdictional error or violation of due process, under United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 130 S. Ct. 1367, 176 L. Ed. 2d 158 (2010), confirmed plan that treated junior lien as unsecured was enforceable.).
In re Loban, 426 B.R. 805, 806 (Bankr. D. Minn. Apr. 2, 2010) (O'Brien) (Citing In re Hughes, 402 B.R. 325 (Bankr. D. Minn. Mar. 16, 2009) (O'Brien), wholly unsecured second mortgage cannot be stripped; section 506(a) does not apply "to claims secured only by a lien on a debtor's principal residence. See 11 U.S.C. § 1322(b)(2).").
Missouri
Eastern District of Missouri
Brenneke v. Fifth Third Bank (In re Brenneke), 441 B.R. 625 (Bankr. E.D. Mo. Oct. 12, 2010) (Surratt-States) (Accepting creditor's appraisal, property value provided security for second mortgage, which was not subject to modification.).
Lewis v. State St. Bank (In re Lewis), 419 B.R. 804 (Bankr. E.D. Mo. Dec. 14, 2009) (Surratt-States) (Value of property was insufficient to secure third deed of trust, leaving third deed of trust wholly unsecured and subject to modification.).
Western District of Missouri
In re Turner, No. 14-43032-13, 2014 WL 6674778 (Bankr. W.D. Mo. Nov. 24, 2014) (Federman) (By statute enacted in response to In re Coleman, 373 B.R. 907 (Bankr. W.D. Mo. Aug. 2, 2007) (Federman), manufactured home is "deemed" real property for purposes of protection from modification in § 1322(b)(2).).
Roach v. Bank of Missouri (In re Roach), No. 09-2051, 2010 WL 234959, at *3 (Bankr. W.D. Mo. Jan. 15, 2010) (unpublished) (Dow) (Evidentiary hearing necessary to determine whether mortgage is wholly unsecured; appropriate date for valuation is effective date of plan. As between date of confirmation hearing and date of petition, § 1325(a)(5) does not provide specific guidance, but § 506(a)(1) provides that valuation is to be determined in light of purpose of valuation and proposed use of property. "Accordingly, the Court is to determine valuation based upon the context in which the valuation is occurring. Here, the valuation is occurring in the context of determining the allowed amount of the creditor's secured claim for purposes of plan confirmation. That fact, and the fact that the value to be given to the secured creditor is to be determined 'as of the effective date of the plan' suggests [sic] that the appropriate date of valuation is the date of the confirmation hearing. Many courts have adopted this approach, which this Court considers to be the better rule.").
Nebraska
Palmer v. Real Time Sols. (In re Palmer), No. A16-8060, 2017 WL 4773100 (Bankr. D. Neb. Oct. 20, 2017) (Saladino) (Wholly unsecured second lien can be stripped off personal residence.).
Porter v. First Nat’l Bank of Omaha (In re Porter), No. BK15-81391, 2016 WL 7046579 (Bankr. D. Neb. Dec. 2, 2016) (Saladino) (Citing Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail), wholly unsecured second lien may be stripped off.).
Henson v. Bank of Am., N.A. (In re Henson), No. BK13-80182, 2016 WL 6269582 (Bankr. D. Neb. Oct. 26, 2016) (Saladino) (Junior lien of Bank of America is wholly unsecured and can be stripped off, citing Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail).).
Porter v. First Nat’l Bank of Omaha (In re Porter), No. BK15-81391, 2016 WL 5400358, at *1 (Bankr. D. Neb. Sept. 27, 2016) (Saladino) (Failure to properly serve bank is fatal to adversary proceeding seeking to strip off wholly unsecured junior lien. “[T]he plaintiff in this case has named a local bank as a defendant but has failed to follow the appropriate procedures under the federal rules for accomplishing proper service on such an institution[.]”).
Clarke v. Ditech Fin., LLC (In re Clarke), No. BK15-81490, 2016 WL 5400388 (Bankr. D. Neb. Sept. 27, 2016) (Saladino) (Citing Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. 2011), wholly unsecured junior lien will be stripped off at completion of plan.).
Kresl v. Beneficial Neb., Inc. (In re Kresl), No. A15-8016, 2015 WL 5667069 (Bankr. D. Neb. Sept. 24, 2015) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly), wholly unsecured junior lien may be stripped off and avoided upon completion of plan.).
Osbourn v. Wells Fargo Fin. Bank (In re Osbourn), No. A15-8007, 2015 WL 5604442 (Bankr. D. Neb. Sept. 21, 2015) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly), wholly unsecured junior lien on residence may be stripped off and avoided upon debtors' completion of Chapter 13 plan.).
Young v. Green Tree Servicing, LLC (In re Young), No. A15-4016, 2015 WL 4940090 (Bankr. D. Neb. Aug. 18, 2015) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly), wholly unsecured junior lien may be stripped off and avoided upon successful completion of plan. Conversion or dismissal will leave lienholder with a valid unavoided secured claim.).
Turman v. Pinnacle Bank (In re Turman), No. A14-8035, 2015 WL 3745304 (Bankr. D. Neb. June 12, 2015) (Saladino) (Wholly unsecured junior residential lien may be stripped off upon Chapter 13 discharge.).
Smith v. Green Tree Servicing, LLC (In re Smith), No. A14-8041, 2015 WL 921091, at *2 (Bankr. D. Neb. Mar. 2, 2015) (Saladino) (Wholly unsecured junior lien against principal residence may be stripped off in Chapter 13 plan. "[T]he lien shall not be avoided until the plaintiffs complete the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, the lienholder would continue to hold a valid and unavoided lien secured by the plaintiffs' residential real property.").
Kros v. Houshold Fin. Corp. III (In re Kros), No. A14-8044, 2015 WL 764045, at *2 (Bankr. D. Neb. Feb. 23, 2015) (Saladino) (Wholly unsecured junior lien against principal residence may be stripped off. "[T]he lien shall not be avoided until the plaintiffs complete the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, the lienholder would continue to hold a valid and unavoided lien secured by the plaintiffs' residential real property.").
Wells v. Household Fin. Corp. III (In re Wells), No. 14-08042, 2015 WL 756660 (Bankr. D. Neb. Feb. 20, 2015) (Saladino) (Wholly unsecured junior lien on residence would be stripped for purposes of confirmed plan; lien would not be avoided until plan completed.).
Wahrman v. Citibank, Nat'l Ass'n (In re Wahrman), No. 13-8010, 2014 WL 5426730 (Bankr. D. Neb. Oct. 22, 2014) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly), wholly unsecured junior lien may be stripped off and avoided upon completion of plan.).
Sipp v. Citifinancial, Inc. (MD) (In re Sipp), No. 14-8004, 2014 WL 5304744 (Bankr. D. Neb. Oct. 15, 2014) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt), 765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Kelly, Shepherd), wholly unsecured junior lien may be stripped off and avoided upon completion of plan.).
Potmesil v. Great W. Bank (In re Potmesil), No. A-14-8016, 2014 WL 4956665 (Bankr. D. Neb. Oct. 2, 2014) (Saladino) (Citing Minnesota Housing Finance Agency v. Schmidt (In re Schmidt),765 F.3d 877 (8th Cir. Aug. 28, 2014) (Colloton, Shepherd, Kelly), Chapter 13 debtor can strip off and avoid wholly unsecured junior lien on principal residence upon discharge.).
Bixenmann v. Community Home Fin. Servs. (In re Bixenmann), No. 13-4047, 2014 WL 690232, at *2 (Bankr. D. Neb. Feb. 20, 2014) (Saladino) (Wholly unsecured junior lien may be stripped off and avoided subject to plan completion. "In the event the Chapter 13 case is converted or dismissed prior to plan completion, the lienholder would continue to hold a valid and unavoided lien secured by the plaintiffs' residential real property.").
Elske v. UP Connection Fed. Credit Union (In re Elske), No. A12-8082-TLS, 2013 WL 6077817, at *2 (Bankr. D. Neb. Nov. 19, 2013) (Saladino) (Citing Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail), debtor can strip off wholly unsecured junior lien. "[L]ien shall not be avoided until . . . [debtor] completes the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, the lienholder would continue to hold a valid and unavoided lien secured by the plaintiff's residential real property.").
Wichman v. Wells Fargo Fin. Bank (In re Wichman), No. A13-4046-TJM, 2013 WL 6074125, at *2 (Bankr. D. Neb. Nov. 18, 2013) (Mahoney) (Citing Fisette v. Keller (In re Fisette), 455 B.R. 177 (B.A.P. 8th Cir. 2011) (Schermer, Venters, Nail), debtor can strip off wholly unsecured junior lien. "[L]ien shall not be avoided until . . . [debtor] completes the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, the lienholder would continue to hold a valid and unavoided lien secured by the plaintiff's residential real property.").
Lor v. U.S. Bank, N.A. (In re Lor), No. A13-8002-TJM, 2013 WL 3934377 (Bankr. D. Neb. July 30, 2013) (Mahoney) (Citing Fisette v. Keller (In re Fisette), 455 B.R. 177, 182-87 (B.A.P. 8th Cir. Nov. 11, 2011) (Schermer, Venters, Nail), wholly unsecured junior lien may be stripped off and voided upon completion of plan. Conversion or dismissal reinstates lien.).
Hanzek v. Omaha Police Fed. Credit Union (In re Hanzek), No. A12-8080-TLS, 2013 WL 3760143 (Bankr. D. Neb. July 16, 2013) (Saladino) (Plan may strip off wholly unsecured junior lien on residence. Lien will not be avoided until plan payments are completed.).
Churchill v. CitiFinancial, Inc. (In re Churchill), No. A12-4018-TLS, 2013 WL 1499533 (Bankr. D. Neb. Apr. 11, 2013) (Saladino) (Wholly unsecured junior lien may be stripped, conditioned on plan completion; if case dismissed or converted prior to completion, lien would remain valid.).
Aumiller v. GMAC Mortg., LLC (In re Aumiller), No. A12-4090-TLS, 2013 WL 1249579 (Bankr. D. Neb. Mar. 26, 2013) (Saladino) (Wholly unsecured junior lien may be stripped off, subject to plan completion, but if case converted or dismissed prior to completion, lien would remain valid.).
Sealy v. United Guar. Residential Ins. Co. of N.C. (In re Sealy), No. A12-8072-TJM, 2013 WL 960328 (Bankr. D. Neb. Mar. 12, 2013) (Mahoney) (Wholly unsecured junior lien may be stripped off in plan, but not avoided until plan completion; in event of conversion or dismissal prior to completion, lien would remain valid.).
Hogan v. GMAC Mortg., LLC (In re Hogan), No. A12-8071-TJM, 2013 WL 781109 (Bankr. D. Neb. Feb. 28, 2013) (Mahoney) (Junior lien was wholly unsecured and could be stripped off in plan, but lien would not be avoided until plan completion; in event of case conversion or dismissal prior to completion, lien would remain valid.).
Baehr v. Bank of the West (In re Baehr), No. A12-4023-TJM, 2012 WL 2871766 (Bankr. D. Neb. July 12, 2012) (Mahoney) (Wholly unsecured junior lien may be stripped off in plan, but would not be avoided until plan completion. In event of conversion or dismissal prior to completion, lien would remain valid.).
Poe v. Wells Fargo Bank (In re Poe), No. 12-4032-TLS, 2012 WL 2792263 (Bankr. D. Neb. July 9, 2012) (Saladino) (Junior lien was wholly unsecured and may be stripped off; in event case converted or dismissed prior to plan completion, lien would remain valid.).
Weber v. CACH, LLC (In re Weber), No. A12-8009-TLS, 2012 WL 2574623 (Bankr. D. Neb. July 3, 2012) (Saladino) (Debtor can strip off wholly unsecured junior lien; lien is not avoided until debtor completes Chapter 13 plan.).
Jaminet v. City of Lincoln, Neb. (In re Jaminet), No. 12-4022-TLS, 2012 WL 2061187 (Bankr. D. Neb. June 7, 2012) (Saladino) (Wholly unsecured junior lien may be stripped in plan, but lien would not be avoided until completion of payments. If case were converted or dismissed prior to completion, lien would remain valid.).
Arnold v. Beneficial Neb., Inc. (In re Arnold), No. 12-4019-TJM, 2012 WL 1605963 (Bankr. D. Neb. May 8, 2012) (Mahoney) (Wholly unsecured third lien may be stripped, but lien would not be avoided until plan completion. In the event of conversion or dismissal prior to completion, lien would remain valid.).
Weber v. Portfolio Recovery Assocs., Inc. (In re Weber), No. 12-8010-TLS, 2012 WL 1372205 (Bankr. D. Neb. Apr. 19, 2012) (Saladino) (Wholly unsecured junior mortgage may be stripped off in plan, but not avoided until plan completion. In event of conversion or dismissal prior to completion, lien would remain valid.).
Nielsen v. Bank of Am. Corp. (In re Nielsen), No. A11-8062-TLS, 2012 WL 620968 (Bankr. D. Neb. Feb. 24, 2012) (Saladino) (Wholly unsecured junior lien may be stripped off, but would not be avoided until plan completion; in event case was converted or dismissed prior to plan completion, lien would remain valid.).
Smith v. Citimortgage, Inc. (In re Smith), No. A11-4223-TLS, 2012 WL 620786 (Bankr. D. Neb. Feb. 24, 2012) (Saladino) (Wholly unsecured second lien may be stripped off in plan, but lien would not be avoided until plan completion; in event of conversion or dismissal prior to plan completion, lien would be valid.).
Montague v. Green Tree Servicing, LLC (In re Montague), No. A11-4191-TLS, 2012 WL 252800 (Bankr. D. Neb. Jan. 26, 2012) (Saladino) (Second mortgage lien was wholly unsecured, and may be stripped off in plan, but will not be avoided until plan completion; in event of conversion or dismissal, lien would remain valid.).
Magni v. U.S. Bank, N.A. (In re Magni), No. A11-8049-TLS, 2012 WL 112956 (Bankr. D. Neb. Jan. 12, 2012) (Saladino) (Wholly unsecured junior lien may be stripped off, but lien would not be avoided until plan completion; in event of conversion or dismissal, lien would be reinstated.).
Lyons v. GMAC Rescap, LLC (In re Lyons), No. A11-8078-TLS, 2012 WL 33904 (Bankr. D. Neb. Jan. 6, 2012) (Saladino) (Junior lien was wholly unsecured and may be stripped off, but not avoided until plan completion; in event of conversion or dismissal, lien would remain valid.).
Tucker v. Wells Fargo Fin. Bank (In re Tucker), No. 11-4192-TLS, 2011 WL 6130597 (Bankr. D. Neb. Dec. 8, 2011) (Saladino) (Junior lien was wholly unsecured and would be avoided at plan completion; in event case was converted or dismissed prior to completion, lien would remain valid.).
Tucker v. Wells Fargo Fin. Bank (In re Tucker), No. 11-4192-TLS, 2011 WL 6130597 (Bankr. D. Neb. Dec. 8, 2011) (Saladino) (Wholly unsecured junior lien may be stripped off, but not avoided until plan completion; in event of conversion or dismissal, lien would remain valid.).
Churchill v. HSBC Bank Nev., NA (In re Churchill), No. 11-4193-TLS, 2011 WL 5825768 (Bankr. D. Neb. Nov. 17, 2011) (Saladino) (Third mortgage was wholly unsecured and could be stripped off, subject to plan completion. In event of conversion or dismissal, lien would remain valid. No documentation of lien avoidance would be recorded until plan completion.).
Shively v. GMAC Mortgage, LLC (In re Shively), No. A11-8055-TLS, 2011 WL 3812610 (Bankr. D. Neb. Aug. 29, 2011) (Saladino) (Wholly unsecured third lien on principal residence can be stripped off upon completion of Chapter 13 plan; no documentation of lien avoidance will be recorded until completion of plan.).
Carstens v. GMAC Mortgage, LLC (In re Carstens), No. A11-8054-TJM, 2011 WL 3502767 (Bankr. D. Neb. Aug. 9, 2011) (Mahoney) (Wholly unsecured junior lien may be avoided, conditioned on plan completion; no documentation of lien avoidance shall be recorded until successful completion.).
Spry v. Great W. Bank (In re Spry), No. A11-8046-TJM, 2011 WL 2600654 (Bankr. D. Neb. June 29, 2011) (Mahoney) (Two junior liens without supporting value may be stripped but not avoided until plan completion. In event of conversion or dismissal, liens would remain unavoided.).
Billmeier v. Discover Fin. Servs. (In re Billmeier), No. A10-8024-TLS, 2011 WL 1541298 (Bankr. D. Neb. Apr. 21, 2011) (Saladino) (Wholly unsecured third lien could be stripped, conditioned on successful plan completion.).
West v. HSBC (In re West), No. A10-8044-TJM, 2011 WL 1004617 (Bankr. D. Neb. Mar. 17, 2011) (Mahoney) (Wholly unsecured lien can be stripped off, but lien would not be avoided until plan completion. In event of conversion or dismissal prior to completion, lien would remain valid.).
Shearman v. Citizens Bank (In re Shearman), No. A10-8019-TLS, 2011 WL 576589 (Bankr. D. Neb. Feb. 8, 2011) (Saladino) (Wholly unsecured junior mortgage can be stripped off, but lien is not avoided until debtors complete plan; in event of conversion or dismissal prior to plan completion, lien remains valid.).
In re Powers, No. BK10-41051-TLS, 2011 WL 477814 (Bankr. D. Neb. Feb. 4, 2011) (Saladino) (Without addressing that debtors appear to be ineligible for discharge under § 1328(f), wholly unsecured junior mortgage can be stripped off, subject to completion of plan; value scheduled by debtors in 2007 Chapter 11 case was not preclusive under principles of judicial estoppel in Chapter 13 case filed in 2010. Debtors filed Chapter 11 case on December 28, 2007, converted to Chapter 7 and were discharged on July 13, 2009. Current Chapter 13 case was filed on April 8, 2010. Lienholder was aware during Chapter 11 case that value of property was less than what debtors scheduled.).
Mason v. Discover Fin. Servs. (In re Mason), No. 10-8023-TJM, 2011 WL 96736 (Bankr. D. Neb. Jan. 12, 2011) (Mahoney) (Wholly unsecured third mortgage can be stripped off, but lien would not be avoided until completion of plan; if case is converted or dismissed prior to plan completion, lien would remain valid.).
Ellis v. BAC Home Loans Servicing L.P. (In re Ellis), No. A10-8054-TJM, 2010 WL 5067425 (Bankr. D. Neb. Dec. 7, 2010) (Mahoney) (Wholly unsecured second lien can be stripped off, subject to completion of plan and discharge; in event of conversion or dismissal prior to plan completion, creditor would continue to hold valid, unavoided lien.).
Tanner v. Wells Fargo Bank, N.A. (In re Tanner), No. A10-8047-TLS, 2010 WL 4259794 (Bankr. D. Neb. Oct. 22, 2010) (Saladino) (Wholly unsecured junior mortgage can be stripped off, contingent on completion of plan; in event of conversion or dismissal prior to plan completion, lien would remain valid and unavoided.).
Brown v. Citibank, N.A. (In re Brown), No. A10-8022-TJM, 2010 WL 2859346 (Bankr. D. Neb. July 19, 2010) (unpublished) (Mahoney) (When there was no value to secure junior mortgage, lien was subject to avoidance, conditioned on debtor's completing plan.).
Carlson v. HSBC Mortgage Servs. (In re Carlson), No. A10-8018-TJM, 2010 WL 2859779 (Bankr. D. Neb. July 19, 2010) (unpublished) (Mahoney) (When there was no value to secure junior mortgage, lien was subject to avoidance, conditioned on debtor's completing plan.).
Nelsen v. HSBC Mortgage Servs. (In re Nelsen), No. 09-8054-TJM, 2009 WL 6338014 (Bankr. D. Neb. Dec. 22, 2009) (unpublished) (Mahoney) (Wholly unsecured junior mortgage may be stripped, but lien will not be avoided until debtors successfully complete plan. In event of conversion or dismissal, creditor would hold valid and unavoided lien. Lien avoidance should not be recorded until completion of plan.).
Gilkerson v. HSBC Mortgage Servs. (In re Gilkerson), No. A09-8055-TJM, 2009 WL 6338614 (Bankr. D. Neb. Dec. 22, 2009) (unpublished) (Mahoney) (Wholly unsecured second mortgage is stripped, conditioned on completion of plan; in event of conversion or dismissal, avoided lien would be restored.).
Hoesing v. Countrywide Home Lending (In re Hoesing), No. A08-8077-TLS, 2009 WL 3296086, at *2 (Bankr. D. Neb. Oct. 9, 2009) (unpublished) (Saladino) (Debtor may strip off wholly unsecured lien held by mortgage creditor; "[h]owever, the lien shall not be avoided until the debtor completes the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, Countrywide would continue to hold a valid and unavoided lien secured by the plaintiff's residential real property. For this reason no documentation of lien avoidance need or shall be recorded until such time as the plaintiff successfully completes the Chapter 13 plan.").
Swift v. Rotert (In re Swift), No. A08-8071-TJM, 2009 WL 3208352 (Bankr. D. Neb. Oct. 6, 2009) (unpublished) (Mahoney) (Second lien was wholly unsecured and may be stripped off in adversary proceeding.).
Begley v. American Nat'l Bank (In re Begley), No. A09-8027-TLS, 2009 WL 2513410, at *2 (Bankr. D. Neb. July 15, 2009) (unpublished) (Saladino) (Third mortgage was wholly unsecured and may be stripped off but not until completion of plan. "[T]he third lien shall not be avoided until plaintiffs complete the Chapter 13 plan in its entirety. In the event the Chapter 13 case is converted or dismissed prior to plan completion, American National Bank would continue to hold a valid and unavoided lien secured by the plaintiffs' residential real property. For this reason no documentation of lien avoidance need or shall be recorded until such time as the plaintiffs successfully complete the Chapter 13 plan.").
Bostwick v. US Bank (In re Bostwick), No. A08-8046-TJM, 2008 WL 4877283 (Bankr. D. Neb. Nov. 6, 2008) (unpublished) (Mahoney) (Absent evidence of value to secure junior mortgage, second lien is wholly unsecured and may be stripped under § 506.). Accord Alsman v. Home Comings Fin. (In re Alsman), No. A08-8040-TJM, 2008 WL 4877453 (Bankr. D. Neb. Nov. 6, 2008) (Mahoney); In re Cahill, No. BK07-41515-TJM, 2008 WL 4878068 (Bankr. D. Neb. Nov. 6, 2008) (Mahoney).).
South Dakota
In re Reed, No. 10-30068, 2011 WL 1045070 (Bankr. D.S.D. Mar. 16, 2011) (Nail) (Wholly unsecured junior lien can be stripped off in Chapter 13 case. Supreme Court did not address stripping off wholly unsecured mortgages in Chapter 13 in Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993), and appellate courts in eight circuits have determined that § 1322(b)(2) does not protect wholly unsecured mortgages.).
I. Ninth Circuit
HSBC Bank USA, Nat'l Ass'n v. Blendheim (In re Blendheim), 803 F.3d 477, 490-98 (9th Cir. Oct. 1, 2015) (Paez, Bybee, Callahan) (Chapter 20 debtors can void lien of timely filed but disallowed mortgage claim at completion of payments notwithstanding ineligibility for discharge under § 1328(f); disallowance of timely filed first lien mortgage claim triggers lien voidance under § 506(d). HSBC was first lienholder on debtor's residence and timely filed a claim. The debtors objected on the ground that HSBC failed to attach the promissory note. HSBC never responded and the claim was disallowed. The debtors then filed an adversary proceeding to void HSBC's lien under § 506(d). HSBC did nothing until a year and one-half after the order disallowing its claim. Confirmed plan permitted voiding HSBC's lien upon completion of payments. The debtors were not eligible for discharge because of § 1328(f). "Although HSBC filed a proof of claim, the bankruptcy court expressly disallowed the claim after the Blendheims objected and HSBC failed to respond. . . . Although voiding HSBC's lien upon disallowance may seem a harsh consequence, we find that Congress directed such an outcome under § 506(d). . . . The Fourth, Seventh, and Eighth Circuits have concluded that bankruptcy courts may not use § 506(d) to void liens whose claims have been disallowed on the sole basis that their proofs of claim were untimely filed. . . . These courts reason that voiding liens merely because the creditor did not timely file a claim violates the long-standing, pre-Code principle that 'valid liens pass through bankruptcy unaffected.' . . . Congress codified the principle that liens may pass through bankruptcy in § 506(d)(2) . . . . Our sister circuits concluded that a claim filed late is tantamount to not filing a claim at all, and that therefore, under pre-Code principles and the rationale of § 506(d)(2), an untimely claim could not justify voiding the lien securing it. . . . These decisions are distinguishable . . . HSBC timely filed its proof of claim. Because this case does not concern a late-filed or non-filed claim, § 506(d)(2)'s exception does not apply. . . . [W]hile voiding a lien securing an untimely filed claim might be considered a 'disproportionately severe sanction' for untimeliness, . . . voidance is not so severe a sanction in a case like this one, where the bankruptcy court disallowed the claim because . . . HSBC 'just slept on its rights' and refused to defend its claim. . . . HSBC's failure to respond is more akin to a concession of error than a failure to file a timely claim. HSBC simply forfeited its claim. . . . Two other courts of appeals and bankruptcy appellate panels from three circuits, including our own, have . . . all conclud[ed] that Chapter 20 debtors may void liens irrespective of their eligibility for a discharge. . . . With closure, no conversion, dismissal, or discharge is necessary. . . . [A] discharge is neither effective nor necessary to void a lien or otherwise impair a creditor's state-law right of foreclosure. . . . [A] 'discharge' operates as an injunction against a creditor's ability to proceed against a debtor personally. . . . Discharges leave unimpaired a creditor's right to proceed in rem against the debtor's property. . . . [B]ecause bankruptcy discharge, by definition, affects only in personam liability, it has never served as the historical means for ensuring that the Bankruptcy Code's various mechanisms for modifying or voiding a creditor's in rem rights remained in place at the conclusion of a plan. . . . Nothing in the Code conditions Chapter 13's other benefits or remedies on discharge eligibility. . . . [I]f Congress had meant to prohibit Chapter 20 debtors from voiding or modifying creditors' in rem rights, it would not have done so by restricting the availability of a mechanism that by definition only affects in personam liability. . . . Section 1328(f) does not purport to interfere with the important lien-stripping 'tool in the Chapter 13 toolbox.' . . . We join the Fourth and Eleventh Circuits in concluding that Chapter 20 debtors may permanently void liens upon the successful completion of their confirmed Chapter 13 plan irrespective of their eligibility to obtain a discharge. . . . [D]ue process was satisfied when HSBC received notice that the Blendheims filed their objection to its proof of claim.").
Asset Mgmt. Holdings, LLC v. Hernandez (In re Hernandez), No. 8:15-bk-10563-TA, 2017 WL 1395741 (B.A.P. 9th Cir. Apr. 11, 2017) (unpublished) (Lafferty, Kurtz, Faris) (Citing Free v. Malaier (In re Free), 542 B.R. 492 (B.A.P. 9th Cir. Dec. 17, 2015) (Jury, Kirscher, Faris), wholly unsecured second mortgage that was discharged in prior Chapter 7 case is not counted as secured or unsecured debt for eligibility purposes in subsequent Chapter 13 case in which the lien will be stripped.).
Chagolla v. JP Morgan Chase Bank, N.A. (In re Chagolla), 544 B.R. 676, 679-81 (B.A.P. 9th Cir. Feb. 9, 2016) (Jury, Kurtz, Wanslee) (Wholly unsecured junior lien can be voided by motion after discharge and closing of Chapter 13 case when confirmed plan provided for avoidance, avoided lien was treated as an unsecured claim and former lienholder suffered no prejudice. "[B]ankruptcy court retains continuing jurisdiction to interpret and enforce its own orders. . . . [N]either § 506(a) nor Rule 3012 has a time limit for filing a valuation motion. . . . [T]o bring a motion to avoid lien under § 506(a) after a debtor has received a discharge or the case is closed, at a minimum, the following must be satisfied: first, the confirmed plan must call for avoiding the wholly unsecured junior lien and treat any claim as unsecured; second, the chapter 13 trustee must treat the claim as unsecured pursuant to the plan; and third, the creditor must not be sufficiently prejudiced so that it would be inequitable to allow avoidance after entry of discharge or the closing of the case.").
Beck v. Wells Fargo Home Mortg. (In re Beck), No. NC-15-1095-JuKuW, 2016 WL 399455 (B.A.P. 9th Cir. Feb. 1, 2016) (unpublished) (Jury, Kurtz, Wanslee) (Motion to correct mistaken reference to deed of trust in motion to strip off wholly unsecured junior lien should have been granted under Rule 60(a) because Wells Fargo had adequate notice that debtors sought to treat its junior lien as wholly unsecured notwithstanding mistaken reference.).
Boukatch v. MidFirst Bank (In re Boukatch), 533 B.R. 292, 297-301 (B.A.P. 9th Cir. July 9, 2015) (Kirscher, Pappas, Jury) (Debtors ineligible for discharge under § 1328(f) can strip off wholly unsecured junior lien on residence. "[T]he two Circuit Courts and two Bankruptcy Appellate Panels that have addressed this issue have held that a chapter 20 debtor may strip a wholly unsecured junior lien in the absence of a discharge. . . . Courts utilizing the first approach hold that stripping off wholly unsecured liens in chapter 20 cases is not permissible because it amounts to a 'de facto discharge,' which is prohibited by § 1328(f). . . . Courts adopting the second approach allow chapter 20 lien stripping but hold that the parties' prebankruptcy rights are reinstated by operation of law after the plan has been consummated absent discharge or payment in full; therefore, the lien avoidance can never be permanent. . . . Courts adopting the third approach allow chapter 20 lien stripping 'because nothing in the Bankruptcy Code prevents it.' . . . We join the 'growing consensus of courts' that have followed the third approach and hold that nothing in the Code prevents chapter 20 debtors from stripping a wholly unsecured junior lien against the debtor's principal residence, notwithstanding their lack of eligibility for a chapter 13 discharge. . . . [W]e determine § 1325(a)(5) . . . does not apply. . . . [P]lan completion is the appropriate end to Debtors' chapter 20 case. Unlike a typical chapter 13 case, the lien avoidance will become permanent not upon a discharge, but rather upon completion of all payments as required under the plan.").
Carpenter v. Bronitsky (In re Carpenter), No. NC-11-1477-JuKiJo, 2012 WL 1947618 (B.A.P. 9th Cir. May 30, 2012) (unpublished) (Jury, Kirscher, Johnson) (Bankruptcy court can determine whether junior lien is protected from modification without a hearing when unsubstantiated submissions by debtor are overcome by calculations in lienholder's proof of claim. Valuation under Bankruptcy Rule 3012 can proceed without a hearing when issue is amount of debt and amount stated in proof of claim is not rebutted by unsubstantiated allegations by debtor.).
Lantzy v. Rojas (In re Lantzy), No. CC-10-1057-KiLPa, 2010 WL 6259984, at *3-*5 (B.A.P. 9th Cir. Dec. 7, 2010) (unpublished) (Kirscher, Lynch, Pappas) (Citing Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. May 11, 2001) (Nelson, Brunetti, Kozinski), Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), and Smith v. Rojas (In re Smith), 435 B.R. 637 (B.A.P. 9th Cir. July 8, 2010) (Dunn, Markell, Jaroslovsky), wholly unsecured junior lien is counted as unsecured debt and renders debtors ineligible notwithstanding that lien avoidance will not be complete until discharge. "A determination under section 506(a) that a creditor is wholly unsecured effectively excuses debtors from treating the creditor's claim as secured under the chapter 13 plan. . . . [T]he flip side of this strategy is that it changes a creditor's claim status from secured to unsecured, which can adversely affect a chapter 13 debtor's eligibility under section 109(e). . . . 'Section 506(a) allows the court to value the property. Once the court values the property, § 506(d) voids any lien or portions of a lien securing a debt that exceeds the value of the property. This lien is then void for purposes of the bankruptcy. Once the court issues a Chapter 13 discharge . . . , the lien avoidance is complete. . . . [D]ecisions subsequent to Dewsnup [v. Timm, 502 U.S. 410 (1992)] limit its applicability to the Chapter 7 context in which the issue arose.'").
California Fid., Inc. v. Eaton (In re Eaton), No. EC-05-1261-PaNMa, 2006 WL 6810924, at *4-*5 (B.A.P. 9th Cir. Feb. 28, 2006) (unpublished) (Pappas, Naugle, Marlar) (When plan confirmed in 2001 did not strip off wholly unsecured junior liens, motion in 2004 to value junior liens secured by residence at $0 would modify plan, and bankruptcy court erred by using collateral values as of original petition. Using values at time of modification, appreciation of collateral fully secured junior liens, precluding stripoff by way of plan modification. "[Section] 506(a) instructs that a secured creditor's status be determined in a chapter 13 case in conjunction with either the disposition of the property, or the hearing on any plan affecting the creditor's interest. . . . [T]he bankruptcy court in 2001 confirmed[] a plan that did not even mention the secured claims in question . . . . It was not until May 2004 that Appellees finally took further steps to value the claims secured by the liens on the house . . . . [V]aluation of Appellant's claim should have been done as of the effective date of the proposed modified plan. . . . To extinguish a creditor's lien, a chapter 13 plan must 'provide for' the creditor's claim secured by that lien. § 1327(c) . . . . To 'provide for' a claim, the plan must make express provision for, deal with, or refer to a claim. . . . Absent a clear provision in a plan dealing with a secured creditor's claim, the debtor cannot extinguish the creditor's lien and that lien passes through bankruptcy unaffected. . . . If, as here, a plan is silent about the fate of a secured claim and does not provide clear notice to the secured creditor concerning its treatment under the plan, that plan cannot effectively avoid a lien or determine its value.").
Arizona
In re Burboa, No. 2:13-bk-18246-EPB, 2014 WL 4851832 (Bankr. D. Ariz. Sept. 29, 2014) (Ballinger) (Debtor not eligible for discharge because of § 1328(f) cannot strip off wholly unsecured junior lien on residence.).
In re Wegscheid, 361 B.R. 144 (Bankr. D. Ariz. Jan. 29, 2007) (Haines) (Applying Lam v. Investors Thrift (In re Lam), 211 B.R. 36 (B.A.P. 9th Cir. July 3, 1997) (Hagan, Ryan, Ollason), wholly unsecured mortgage could be modified. Plan provided no value, and objection to creditor's claim went unanswered. Debtor's post-discharge motion to avoid lien granted.).
California
Central District of California
Washington Mut. Bank v. Enewally (In re Enewally), No. SA CV 02-459-GLT, 2002 WL 34178495, at *2 (C.D. Cal. Nov. 26, 2002) (unpublished) (Taylor) (With no dispute that WaMu's claim is subject to bifurcation, "[s]ince bifurcation . . . is a § 1322(b)(2) modification under Nobelman, and [debtors] may not also invoke the right to cure and maintain under § 1322(b)(5), the five-year term limitation of § 1322(d) applies." WaMu's appeal of timing of valuation is denied, with WaMu arguing valuation should be done at confirmation, but WaMu offered no proof that value changed in six-month period prior to confirmation.).
In re Brown, No. 6:16-bk-18361 MJ, 2017 WL 2869794 (Bankr. C.D. Cal. June 30, 2017) (Jury) (After considering competing appraisals, and adjusting for repairs, value of home was $255,000 and senior lien of $250,887 did not exhaust value; junior lien cannot be avoided in a Chapter 13 plan.).
In re Quevedo, No. 1:14-BK-15563-MB, 2015 WL 6150602 (Bankr. C.D. Cal. Oct. 19, 2015) (unpublished) (Barash) (Rejecting and then adjusting appraisers' flawed valuations, motion to strip junior mortgage is denied when value of property exceeds first mortgage by $553.48.).
In re Gutierrez, 503 B.R. 458, 460-63 (Bankr. C.D. Cal. Nov. 27, 2013) (Bason) (Petition date determines whether junior lien is unsecured and may be stripped off. "Two sections of the Bankruptcy Code are most relevant. In favor of using the petition date, section 502(b) provides, 'the court, after notice and a hearing, shall determine the amount of [claims to which an objection is made] in lawful currency of the United States as of the date of the filing of the [bankruptcy] petition[.]' . . . On the other hand, a good argument can be made that the dollar amount of a claim is a different issue from whether a claim is treated as a secured claim or an unsecured claim. The same date may or may not apply to both determinations. Section 506 . . . is entitled '[d]etermination of secured status.' It states that value: 'shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor's interest.' . . . It is important not to read too much into the emphasized language. It does not state that valuation must be as of the hearing date (or any other specific date), only that it must be determined 'in conjunction with' the confirmation hearing. Nevertheless, it is true that the statute could be read to imply that valuation as of the hearing date is favored if no other considerations apply. In this case, . . . other considerations do apply. It is also true that Congress specified the petition date as the valuation date in the next paragraph of the statute, which was added in 2005. . . . As other courts have pointed out, however, the specific reference to the petition date in paragraph (2) of the statute does not mean that the petition date is prohibited under paragraph (1)—it simply leaves the appropriate date of valuation under paragraph (1) to the discretion of the bankruptcy courts. . . . Based on the foregoing analysis, section 506(a) provides no clear answer as to the date of valuation. Another section of the Bankruptcy Code is similar, in that it may appear at first glance to suggest a valuation date but in fact is ambiguous. For purposes of confirming a chapter 13 plan, the 'value, as of the effective date of the plan, of property to be distributed under the plan' must be not less than the 'allowed amount of the secured claim.' 11 U.S.C. § 1325(a)(5)(B)(ii) (emphasis added). It has been argued that the statute's reference to 'the effective date of the plan' requires a valuation date around the same time. The reference to the effective date, however, modifies 'property to be distributed under the plan,' not 'the allowed amount of the secured claim.' . . . 'In other words, § 1325(a)(5)(B)(ii) merely provides that the size of a secured claim should be adjusted by a discount factor, but the section presupposes that the value of the claim has already been fixed.' . . . Again, the statute does not specify the date of valuation. . . . The relatively few cases to address the appropriate valuation date under section 1322(b)(2) reach inconsistent conclusions. . . . To add to the confusion, 'value is only one side of the § 1322(b)(2) coin' and to determine 'whether a mortgage claim is out of the money it is necessary to know the amount of the senior debt on the collateral,' which may vary over time. . . . [A]lthough there is no plain meaning to the relevant statutory provisions and there is no clear answer in the case law, the tentative ruling is that the petition date rather than the date of the confirmation hearing is the most appropriate date to use for determining whether a junior lien is subject to the anti modification provisions of section 1322(b)(2). In other words, both property valuation and the determination of the senior lien amount apparently should be determined as of the petition date.").
In re Winitzky, No. 1:08-bk-19337-MT, 2009 WL 9139891, at *3 (Bankr. C.D. Cal. May 7, 2009) (Tighe) (Following In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman), debtor ineligible for discharge because of § 1328(f) cannot strip wholly unsecured mortgage lien. "Dewsnup prohibits stripping this lien in a Chapter 7 case. Where a Chapter 13 does not afford a discharge and its main purpose is to work out a repayment plan for debts not discharged in the Chapter 7, a lien strip would allow a debtor to simply do indirectly what the Supreme Court has ruled he may not do directly. Congress has limited a Chapter 13 discharge to once every four years, and has prohibited the discharge of liens on a primary residence in Chapter 7, even where they are wholly unsecured. . . . If a court could strip a lien, with res judicata effect, without issuing the discharge, it would create a special 'lien discharge' where a debtor would still be liable for a debt but the creditor could not enforce that debt with the bargained for lien. No language in the Code supports such a discharge and finding that it exists would be a major change from pre-Code practices. . . . A separate lien discharge would also contradict sections 348 and 349 of the Code.").
Eastern District of California
Frazier v. Real Time Resolutions, Inc., 469 B.R. 889, 898-901, 899 n.10 (E.D. Cal. Mar. 9, 2012) (England) (Debtor not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien on principal residence. "[Lam v. Investors Thrift (In re Lam), 211 B.R. 36 (B.A.P. 9th Cir. July 3, 1997) (Hagan, Ryan, Ollason),] and [Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer),] instruct that the antimodification provision does not protect a creditor whose junior lien on a debtor's primary residence has been classified as an 'unsecured claim' by § 506(a)(1). . . . [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),] prohibited lien stripping of Chapter 7 allowed claims. In light of Dewsnup, Section 506(d) is not the proper tool for lien stripping of allowed claims in Chapter 13. . . . Regardless of 506(d)'s inapplicability, lien stripping is expressly and broadly permitted in the context of rehabilitative bankruptcy proceedings under Chapters 11, 12 and 13. . . . Congress was deliberate in only prohibiting discharge in a Chapter 20 case. The Bankruptcy Code does not specifically prohibit stripping off unsecured mortgage liens for a debtor who is ineligible to receive a discharge . . . . The lien strip will become permanent not upon a discharge, as would happen in a typical Chapter 13 case, but upon completion of all payments as required by the plan. . . . As the holder of an unsecured claim, the creditor whose lien was stripped 'need only be paid its pro-rata share of Debtors' disposable income calculated under 707(b) and its pro-rata share of any equity in Debtors' assets.'" In a footnote: "[T]he Court agrees with the Bankruptcy Court's decision finding § 1325(a)(5) is inapplicable to Appellant's allowed unsecured claim. Section 1325(a)(5) has no applicability to unsecured allowed claims, which are separately governed by the confirmation requirements of § 1325(a)(4).").
In re Hatch, No. 17-23829-A-13J, 2017 WL 3738241, at *2 (Bankr. E.D. Cal. Aug. 30, 2017) (McManus) (After valuation hearing, U.S. Bank’s junior lien on manufactured home is wholly unsecured and can be stripped. Bank offered a higher written appraisal but it was not admissible because appraiser was not present to testify. “While both debtors appeared and were cross-examined . . . the respondent failed to produce Mr. Proctor. Therefore, the only evidence concerning value that will be entertained by the court is the testimony of the debtors. . . . As the owners of the home . . . the debtors were competent to offer a lay opinion as to its value.”).
In re Kelley, No. 14-14343-B-13, 2015 WL 3952352 (Bankr. E.D. Cal. June 25, 2015) (Lee) (Junior mortgage was wholly unsecured when court rejected appraiser's vague and evasive explanations of valuation.).
In re Dekoning, No. 13-16634-B-13, 2014 WL 4258298 (Bankr. E.D. Cal. Aug. 27, 2014) (Lee) (Junior mortgage not wholly unsecured when debtors' appraiser undervalued property by at least ½% of value.).
Luchini v. JPMorgan Chase Bank, N.A. (In re Luchini), 511 B.R. 664 (Bankr. E.D. Cal. June 4, 2014) (Sargis) (Consistent with binding effect of confirmed plan under § 1327(a), upon completion of payments, debtor entitled to judgment that stripped junior lien treated as unsecured is void under § 506(d).).
Martin v. CitiFinancial Servs., Inc. (In re Martin), 491 B.R. 122 (Bankr. E.D. Cal. Apr. 10, 2013) (Sargis) (Confirmation of plan providing zero payment to junior mortgage stripped lien and rendered debt unsecured.).
In re Frazier, 448 B.R. 803, 809-10 (Bankr. E.D. Cal. Mar. 31, 2011) (Sargis) (Citing Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), wholly unsecured second mortgage can be stripped off notwithstanding lien retention provisions added by BAPCPA to § 1325(a)(5)(B) and notwithstanding that debtors are ineligible for discharge because of § 1328(f). Wholly unsecured lienholder does not have an allowed secured claim and cannot claim the protections in § 1325(a)(5)(B). Lien stripping is not discharge dependent because a discharge in and of itself "does not exonerate the debtor of the obligation or remove a lien. . . . It is the completion of the plan and performance under the new contract created under the Bankruptcy Code which result in the debtors having the right to demand and receive the release of the lien. The granting or denying of a discharge does not alter or remove the lien, and is not the basis for the court to deny a motion to value a creditor's secured claim.").
In re Barberena, No. 08-14946-B-13, 2009 WL 330248 (Bankr. E.D. Cal. Jan. 28, 2009) (unpublished) (Lee) (Claim secured by principal residence and other real property is subject to modification; plan may be partially funded through sale of property if good faith, feasibility and adequate protection are satisfied.).
In re Serda, 395 B.R. 450 (Bankr. E.D. Cal. Oct. 17, 2008) (Lee) (To determine whether junior mortgage is subject to modification, when debtor intends to retain property, proper standard is fair market value rather than liquidation value. Court accepts value by appraiser for lender, who used private sales of comparable properties, rather than appraiser for debtor, who based value on bank-owned properties sold or listed for sale.).
Northern District of California
In re Rascon, 321 B.R. 48, 52 (N.D. Cal. Feb. 18, 2005) (White) (A debtor's Chapter 13 plan which specifically mentions a creditor by name and states that the value of the property securing one of the creditor's two claims is equal to the amount of the claim secured by a first lien implies that the creditor's second lien is void under § 506 and the property vested in the debtor free of the junior lien. After completion of the debtor's Chapter 13 plan, the creditor asserted that its junior $100,000 lien on the property was still in place. The debtor reopened the bankruptcy case for a determination of the extent of the lien. Although unchallenged liens pass through bankruptcy unaffected, "a creditor's lien may be avoided through the Chapter 13 plan confirmation process where the basis for avoidance is lack of collateral value. . . . The lien stripping effect of § 506 is consistent with § 1322(b)(2) . . . . [C]onfirmation of a plan can void an unsecured lien if the creditor is 'provided for by the plan.' . . . Therefore, to satisfy due process requirements, and thus 'provide for' the creditor, a plan must provide notice that is 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.'" The debtor's plan identified the creditor by name and accurately characterized the claims. Accordingly, of the creditor's liens, one in the amount of $250,000 had been treated fully secured, and the second, in the amount of $100,000, had been treated unsecured in its entirety pursuant to § 506(a).).
In re Rascon, 321 B.R. 48 (N.D. Cal. Feb. 18, 2005) (White) (Distinguishing Enewally v. Washington Mutual Bank (In re Enewally), 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), plan that treated creditor's first mortgage as fully secured and treated creditor's second mortgage as a wholly unsecured claim did not bifurcate a single secured claim into separate claims and thus was not a modification for purposes of § 1322(b)(2).).
In re Rosa, 521 B.R. 337, 341-42 (Bankr. N.D. Cal. Dec. 10, 2014) (Novack) (Rejecting In re Akram, 259 B.R. 371 (Bankr. C.D. Cal. Mar. 6, 2001) (March), and In re Gounder, 266 B.R. 879 (Bankr. E.D. Cal. Sept. 24, 2001) (McManus), after discharge of personal liability in a prior Chapter 7 case and stripping off of wholly unsecured junior lien in current Chapter 13 case, junior lienholder does not have an allowable unsecured claim. "No one disputes that the Akram junior lienholders held a secured claim as of the Chapter 13 petition date. Yet the court does not cogently explain why, after eliminating their in rem rights through a motion to value, these lienholders held allowed, unsecured claims for discharged debts. Disallowing their unsecured claims does not undermine in any sense the [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),] or [Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991),] holdings. . . . [I]f these creditors do not have an allowable unsecured claim against the Chapter 13 debtor, they do not have an allowable unsecured claim that must be paid through the Chapter 13 plan. Moreover, Congress knows how to turn a nonrecourse claim into a recourse obligation (see § 1111(b)(1)), and no such text can be found in § 506(a)(1). . . . [T]his court's analysis does not run afoul of Johnson v. State Home Bank. There, the Supreme Court determined that a Chapter 7 discharge does not eliminate a secured creditor's in rem rights against real property in a subsequent Chapter 13 case, and that this in rem remedy constitutes a claim (against the debtor's real property) in that Chapter 13. The Supreme Court did not hold nor suggest that this allowed secured claim would, by definition, be an allowed, unsecured claim if a § 506(a)(1) motion renders the secured claim valueless. . . . [T]he Gounder court's attempt to protect Dewsnup is better suited for a bad faith objection.").
In re Casas, No. 12-50227-ASW, 2014 WL 5499115 (Bankr. N.D. Cal. Oct. 28, 2014) (Weissbrodt) (Lien strip allowed when junior lienholder's appraiser's unsupported assumptions about condition of comparable properties precluded finding that property value exceeded balance of senior mortgage. Creditor had burden of persuasion with respect to value when no property value was stated in creditor's proof of claim.).
In re Bragg, No. 14-10395, 2014 WL 5396199, at *1 (Bankr. N.D. Cal. Oct. 22, 2014) (Jaroslovsky) (Wholly unsecured junior lien avoided after contest of appraisers. "Though the court is not naive enough to believe that hired experts are always neutral, the court is bothered by the obvious advocacy of [creditor's] appraiser for its position. He was combative under cross examination, and he did not explain why he chose to inspect the [ ] property in the company of a principal of [creditor]. The court accordingly heavily discounts his testimony, notwithstanding his qualifications as an appraiser. The [debtors'] appraiser testified convincingly that he was not given any instructions by the [debtors] other than to state his opinion of a fair value.").
In re Hey, No. 13-51106-ASW, 2014 WL 2522419 (Bankr. N.D. Cal. June 3, 2014) (Weissbrodt) (Junior mortgage was void and would be stripped when lienholder failed to establish that value of property exceeded senior mortgage.).
In re Dwight, No. 13-10653, 2013 WL 5707813, at *1 (Bankr. N.D. Cal. Oct. 15, 2013) (Jaroslovsky) (Petition date controls valuation of residence for purposes of stripping junior mortgage. "[U]nlike other chapters a Chapter 13 plan must be filed at the same time as the petition or within a few days thereafter and the debtor must begin performing the plan immediately. . . . It is unfair to deny debtors a right due to the passage of time when the delay in obtaining a date for an evidentiary hearing may well be caused by the court's crowded docket, the caseload of a Chapter 13 trustee, or difficulty obtaining an appraisal. The better rule is that the petition date is the relevant date absent an inordinate delay not present here.").
In re Borno, No. 12-11039, 2012 WL 6600344 (Bankr. N.D. Cal. Dec. 18, 2012) (Jaroslovsky) (Wells Fargo proved excusable neglect for relief from default valuation of junior lien; bank had opportunity to prove claim, provided it paid debtor's counsel $300.).
In re Alvarez, No. 12-41768 MEH, 2012 WL 5296195 (Bankr. N.D. Cal. Oct. 25, 2012) (Hammond) (Debtors ineligible for discharge because of § 1328(f) can strip wholly unsecured junior lien on plan completion.).
In re Robinson, No. 11-71082 MEH, 2012 WL 5296124 (Bankr. N.D. Cal. Oct. 25, 2012) (Hammond) (Although debtors were not eligible for discharge because of prior Chapter 7 discharge, stripping of wholly unsecured junior lien was permissible on plan completion.).
In re Vo, No. 11-73404, 2012 WL 5180701 (Bankr. N.D. Cal. Oct. 18, 2012) (Efremsky) (Ineligibility for discharge did not preclude plan stripping wholly unsecured lien.).
In re Pecho, No. 11-49052, 2012 WL 5180341 (Bankr. N.D. Cal. Oct. 18, 2012) (Efremsky) (Plan proposing to strip wholly unsecured lien was in good faith, and ineligibility for discharge did not preclude lien stripping.).
In re North, No. 11-72843, 2012 WL 4919788 (Bankr. N.D. Cal. Oct. 15, 2012) (Efremsky) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien. Lienholder does not have an allowed secured claim, § 1325(a)(5)(B) does not apply and lien stripping becomes permanent upon completion of all plan payments.).
In re Balaoing, No. 11-52030-ASW, 2011 WL 5885784 (Bankr. N.D. Cal. Nov. 22, 2011) (Weissbrodt) (To determine whether junior lien was supported by value, court need not determine exact value of property, only whether value exceeded first mortgage. Weighing competing appraisals, value was less than first priority deed of trust; therefore, junior mortgage was wholly unsecured.).
In re Garcia, No. 10-55411 SLJ, 2011 WL 867344, at *2 (Bankr. N.D. Cal. Mar. 10, 2011) (Johnson) (Citing In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. June 25, 2010) (Jellen), "the power to strip off wholly unsecured junior liens on real property is not conditioned on a debtor's right to a discharge under § 1328(f), but on the debtor's compliance with chapter 13 plan and confirmation requirements under §§ 1322 and 1325." That pro se debtors filed Chapter 13 on May 24, 2010, and received a discharge in a simultaneously pending Chapter 7 case on May 25, 2010, does not bar either eligibility for Chapter 13 or the strip-off of a wholly unsecured junior lien.).
In re Rossiter, No. 10-14030, 2011 WL 479011, at *1 (Bankr. N.D. Cal. Feb. 3, 2011) (Jaroslovsky) (Junior mortgage was unsupported by value and avoidable under § 506(a)(1). Debtor's expert on value was more credible than bank's expert, who "has an ongoing relationship with the Bank and has done very many appraisals for it.").
In re Schneider, No. 10-11878, 2011 WL 66045, at *1 (Bankr. N.D. Cal. Jan. 10, 2011) (Jaroslovsky) (Wholly unsecured tax lien can be treated as unsecured for distribution purposes, but lien cannot be stripped off unless taxes are determined to be dischargeable in an adversary proceeding. Motion can be used to value tax liens at zero for plan treatment purposes, but liens would not be avoided unless adversary proceeding determined that tax debt was dischargeable. Section 506(a) "can be used to permanently remove a lien only to the extent that the lien secures a dischargeable debt. The debtors have cited no authority, nor has the court found one, for avoidance of a tax lien securing nondischargeable taxes. When the tax lien secures a nondischargeable tax, it will remain as a lien on the property after bankruptcy notwithstanding valuation unless the underlying tax debt has been fully satisfied pursuant to the debtors' plan.").
In re Bowles, No. 10-31259DM, 2010 WL 4286219 (Bankr. N.D. Cal. Oct. 25, 2010) (Montali) (Debtor can strip off junior lien on property acquired postpetition from a revocable trust when value at petition would not support the lien; timing of valuation remains an open question, and lienholder can request further hearing with respect to value at time debtor acquired title if lienholder thinks value changed. Property was in name of revocable trust at petition. Neither § 506(a) nor Bankruptcy Rule 3012 fixes time limit on when estate may acquire interest in property, and property acquired postpetition becomes property of estate under § 1306(a).).
In re Tran, 431 B.R. 230, 235, 236-37 (Bankr. N.D. Cal. June 25, 2010) (Jellen) ("[T]he Bankruptcy Code does not condition a chapter 13 debtor's right to strip off a wholly unsecured junior lien on the debtor's eligibility for a discharge. . . . [S]uch right is conditioned on the debtor's obtaining confirmation of, and performing under, a chapter 13 plan that meets all of the statutory requirements[; however,] . . . if a chapter 13 case is filed primarily to avoid a junior lien in an effort to skirt the Supreme Court's holding in [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)], then such a filing would not be in good faith, and such a case should be dismissed." If totality of circumstances demonstrated that debtor filed Chapter 13 solely to avoid second deed of trust when avoidance was not available in Chapter 7, and when no independent reason exists for Chapter 13 filing, lack of good faith in filing case would be cause for dismissal under § 1307(c). In decision involving two unrelated debtors: one debtor lacked good faith and case was dismissed because filing was solely for purpose of avoiding lien that would be unavoidable in Chapter 7 and debtor was ineligible for discharge; but second case was not dismissed because debtor had justifications for filing Chapter 13 other than lien avoidance. Section 109 does not condition eligibility for Chapter 13 on debtor's eligibility for discharge, nor does it preclude Chapter 13 relief to debtor who has received recent Chapter 7 discharge. Section 1325(a) and (b) do not condition confirmation on debtor's being eligible for discharge. Under § 349(b)(1)(C), dismissal of bankruptcy case reinstates lien that had been avoided under § 506(d), but Chapter 13 case in which confirmed plan is completed is not dismissed at conclusion of plan; rather, case is closed under § 350(a). Section 1325(a)(5)(B)(i)(II) conditions lien modification of a secured claim on completion of the plan rather than on discharge. "Permitting a chapter 13 debtor in a no-discharge case to strip off of [sic] a junior lien would not deprive the lienholder of its right of redemption during the course of the chapter 13 proceeding, if for example, the holder of a senior lien were to obtain relief from § 362(a)'s automatic stay. This is so because, as stated above, the court can condition any permanent modification or stripping on the debtor's performance and completion of the debtor's chapter 13 plan. And if such a chapter 13 case is dismissed or converted to chapter 7 prior to full plan performance, the lien would remain intact, under § 349(b)(1)(C) in the case of a dismissal, or under Dewsnup in the case of a conversion to chapter 7."), aff'd, No. 03035 CW, 2011 WL 3862010 (N.D. Cal. Aug. 31, 2011) (Wilken).).
In re Rosas, No. 08-11146, 2010 WL 1610123, at *1 (Bankr. N.D. Cal. Apr. 20, 2010) (unpublished) (Jaroslovsky) (Wells Fargo's wholly unsecured third mortgage was voided by § 506(d), and avoidance of wholly unsecured second mortgage did not improve Wells Fargo's position. "The flaw in Wells Fargo's logic is its assumption that a lien is not voided under § 506(d) until a motion is brought to value it. However, unlike other avoidance sections which provide that a trustee or debtor may avoid a lien or transfer (e.g., § 522(f), § 547(b), § 548(b), § 549(a)), § 506(d) provides that a lien not secured by value in collateral is void. This distinction is clearly noted in § 551, which differentiates between avoided transfers and liens void under § 506(d). This means that a motion under § 506(d) is technically not brought to avoid a lien, but only to declare that it is already void as a matter of law. There is therefore no need for the debtor to bring motions in reverse order of seniority to avoid juniors moving up a notch.").
In re Vallejo, No. 08-56732-MM, 2010 WL 520698 (Bankr. N.D. Cal. Feb. 9, 2010) (unpublished) (Morgan) (Determining value on petition date, junior mortgage was not supported by any equity, and lien would be avoided on entry of discharge. If case were dismissed or converted before discharge, order would cease to be effective and lien would be retained under nonbankruptcy law.).
In re Alizotis, No. 09-33061DM, 2010 WL 318400 (Bankr. N.D. Cal. Jan. 20, 2010) (unpublished) (Montali) (Rejecting downward adjustment in value by debtor's witness, mortgage lien may not be modified under § 1322(b)(2) when value was sufficient to satisfy lien.).
In re Perez, No. 09-31907 SFC, 2009 WL 3809603 (Bankr. N.D. Cal. Nov. 10, 2009) (unpublished) (Carlson) (To determine value of residence, no deduction should be made for cost of sale when plan provided for debtor to retain property; value was less than first mortgage, leaving junior mortgage wholly unsecured and subject to lien stripping.).
In re Whitaker, No. 08-11218, 2008 WL 5749928, at *1 (Bankr. N.D. Cal. Dec. 16, 2008) (unpublished) (Jaroslovsky) (Motion to strip off second mortgage lien was denied because of evidence that second mortgage had some value; without deciding appropriate valuation date, "good argument" is made for confirmation date, and denial of stripoff is "without prejudice to consideration of an amended plan if real estate values continue to fall.").
Southern District of California
Hart v. San Diego Credit Union, 449 B.R. 783, 789-93 (S.D. Cal. Mar. 1, 2010) (Sammartino) (Rejecting In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 8, 2008) (Gorman), when debtors are not eligible for discharge because of § 1328(f), lien avoidance occurs under § 506(d) based on valuation; it is not appropriate to condition stripping of wholly unsecured junior mortgages on plan completion and discharge. "Appellees . . . contend that lien avoidance under § 506(d) is inappropriate because [of] . . . § 506(d)(2). . . . This argument is unavailing. The 'unless' provision applies only when the claim is not an allowed claim due solely to the failure to file a proof of such claim. Here, the claim is not an allowed secured claim because the claim is wholly unsecured given that the value of the first deed is greater than the value of the Home, not only because no proof of claim was filed. . . . [T]he Bankruptcy Court erred in making avoidance of the wholly unsecured claim conditional upon plan completion and discharge. There is no discharge requirement in this district prior to avoidance or stripping of a lien under section 506, and the Court will not impose one absent more guidance from this district or the Ninth Circuit in the absence of plain language in the Bankruptcy Code. Further, the no-discharge restriction of section 1328(f) does not alter this Court's opinion regarding the applicability of [§] 506(d) avoidance.").
In re Tremblay, No. 11-09732-MM13, 2012 WL 2915367 (Bankr. S.D. Cal. July 16, 2012) (unpublished) (Mann) (Junior mortgage was wholly unsecured and subject to stripping; value was fixed at petition date.).
In re Kelley, No. 09-17318-LA13, 2011 WL 3107720 (Bankr. S.D. Cal. July 19, 2011) (unpublished) (Bowie) (For reasons stated in In re Victorio, 454 B.R. 759 (Bankr. S.D. Cal. July 8, 2011) (Bowie), debtors not eligible for discharge because of § 1328(f) cannot strip off wholly unsecured junior lien. Plan is also not confirmable because it purports to discharge unpaid balance of any stripped-off debt notwithstanding that debtors are not eligible for discharge.).
In re Victorio, 454 B.R. 759, 774-81, 781 (Bankr. S.D. Cal. July 8, 2011) (Bowie) (Citing Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), Chapter 13 debtors ineligible for discharge because of § 1328(f) can strip off wholly unsecured mortgage without violating protection from modification in § 1322(b)(2), but strip-off is not permanent. Disagreeing with In re Okosisi, 451 B.R. 90 (Bankr. D. Nev. May 16, 2011) (Markell): "With a wave of the virtual wand of 11 U.S.C. § 506(a), one instantly determines that for purposes of the Chapter 13 case the creditor's bundle of state law rights in the property have disappeared. That is the instruction of the Ninth Circuit Court of Appeals in In re Zimmer . . . . [T]he disappearance occurs immediately under [Scovis v. Henrichsen (In re Scovis), 249 F.3d 975 (9th Cir. May 11, 2001) (D.W. Nelson, Brunetti, Kozinski)], even before formally resorting to procedures of avoidance of lien interests. . . . [B]efore enactment of BAPCPA, even when a debtor was eligible for a discharge, the only way to make 'permanent' a lien strip under § 506(d) and § 1322(b) was to earn a discharge. . . . 'A debtor who files a Chapter 13 case despite not being eligible for a discharge, nevertheless has the power to modify a secured creditor's rights under Section 1322(b)(2), and the power to pay the creditor's claim with interest at the Till rate under Section 1325(a)(5)(B)(ii). Without a discharge, however these modifications are effective only for the term of the plan.' . . . [T]he Okosisi court . . . invents the idea that enactment of § 1328(f) 'created a fourth option' . . . . [T]his Court does not believe a court-invented 'fourth option' is either appropriate or necessary . . . . There is nothing . . . which even hints that Congress intended to change the pre-existing state of the law that the only way a debtor could make a lien strip 'permanent' was through a discharge . . . . [D]ebtors in a Chapter 20 case cannot 'permanently' avoid a wholly unsecured junior lien without a discharge, or without paying it in full. They could not do so before BAPCPA, and there is nothing in the 2005 amendments that even hints that Congress believed that any ending other than conversion or dismissal was possible, much less desirable." With respect to the wholly unsecured mortgage holder's claim: "CitiMortgage still has an unsecured claim in this case, in accordance with [Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991),] and 11 U.S.C. § 102 . . . . [O]nly the personal liability was discharged, while Johnson and § 102 make clear CitiMortgage continues to have a claim against the estate."), aff'd, 470 B.R. 545 (S.D. Cal. Feb. 24, 2012) (Anello).).
In re Hill, 440 B.R. 176, 181 (Bankr. S.D. Cal. Nov. 29, 2010) (Mann) (Debtors ineligible for Chapter 13 discharge because of prior Chapter 7 discharge can confirm plan that strips off wholly unsecured junior lien; lien retention provisions added to § 1325(a)(5) by BAPCPA are not applicable when there is no value to secure lien. Applying Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991), wholly unsecured lien was converted to in rem lien after debtors received Chapter 7 discharge. Creditor's in rem, nonrecourse debt was treated as unsecured in plan. Section 1325(a)(5)(B)(i)(I) only applies to holders of allowed secured claims, and wholly unsecured claim is governed by § 1325(a)(4). Wholly unsecured claim was subject to modification under § 1322(b)(2). Lien stripping in Chapter 13 cases is not accomplished under § 506(d) because of Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992). "Since § 506(d) does not permit lien strips in Chapter 7 cases, the Bankruptcy Code operates to prevent it from being the statutory basis for lien strips in reorganization cases as well. Under a bankruptcy specific rule of statutory construction, § 103(a), § 506(d) must apply in all bankruptcy cases if it is to apply in any." However, under § 1322(b)(2), lien stripping is specifically permitted in Chapter 13, without resort to § 506(d). If plan otherwise complies with statutory protections, nothing in Code conditions right to modify or strip off lien on eligibility for discharge. Creditor did not object to confirmation of plan, treating its claim as wholly unsecured. Debtors acted in good faith in proposing plan.).
In re Paigah, No. 09-19804, 2010 WL 4625861 (Bankr. S.D. Cal. Nov. 4, 2010) (unpublished) (Mann) (Junior mortgage was undersecured but not wholly unsecured, and lien cannot be stripped off.).
In re Jazo, No. 09-16609-JM13, 2010 WL 3947303, at *1 (Bankr. S.D. Cal. Sept. 28, 2010) (unpublished) (Bowie) (Debtors ineligible for Chapter 13 discharge because of prior Chapter 7 discharge within four years could invoke lien-stripping mechanism in §§ 506(a) and 1322(b) with respect to wholly unsecured junior mortgage; however, plan could not permanently avoid or discharge underlying debt. When ineligible for discharge, debtors can delay payment during life of plan, but "they cannot make the debt go away other than by payment in full or discharge, and discharge is not available in this case.").
In re Malamatos, Nos. 10-11857-MM13, 10-08483-MM13, 2010 WL 3724202 (Bankr. S.D. Cal. Sept. 13, 2010) (unpublished) (Mann) (Second mortgage was wholly unsecured, and lien can be stripped in separate cases filed by mother and son who owned primary residence as joint tenants. Both debtors filed motions for valuation and avoidance of second deed of trust. Further hearing was necessary to determine lender's motion for stay relief contending that property was not necessary to effective reorganization and that one debtor was ineligible for discharge.).
In re Zamora, No. 09-14453-JM13, 2010 WL 3186767 (Bankr. S.D. Cal. Aug. 9, 2010) (unpublished) (Bowie) (Third mortgage was unsupported by value and was avoidable; second mortgage had value and was not avoidable.).
In re Casey, 428 B.R. 519, 523, 524 (Bankr. S.D. Cal. Apr. 19, 2010) (Bowie) (Not bad faith for debtor ineligible for Chapter 13 discharge to invoke lien stripping under § 1322(b); court did not decide whether lien stripping was allowable. "A debtor may file a Chapter 13 petition when no discharge is available because of a prior discharge in a Chapter 7. A Chapter 20 debtor may propose to invoke various otherwise applicable provisions of the Bankruptcy Code during the pendency of the case, but without a discharge the only way to make the debt go away is to pay it in full at the amount it would be under nonbankruptcy law. . . . In this Court's view, . . . a debtor may file a Chapter 13 although not eligible for a discharge, subject to all the requirements of 11 U.S.C. § 1325, as well as the rest of the Bankruptcy Code. . . . Suppose a debtor were to propose a plan invoking § 1322(b)(2) or, perhaps, § 506(d) to avoid a creditor's secured interest and treat it as an unsecured claim. In theory, that may be permissible, but whether it is will turn on how the debtor proposes to pay the creditor. For example, if the debtor proposes to pay the debt in full over the life of the plan, such a plan may well be in good faith if feasible. On the other hand, would a plan be in good faith if it proposed to pay the creditor little or nothing over the term of the plan, in effect postponing or delaying payment of the nondischargeable debt owed to the creditor? Would that constitute unreasonable delay under § 1307(c)? Those questions, and others, are left for a motion or case where they are squarely presented.").
In re Burnett, 427 B.R. 517, 520-21 (Bankr. S.D. Cal. Apr. 2, 2010) (Bowie) (Because discharge is not a condition for avoidance of a wholly unsecured lien under § 1322(b)(2), when plan cites § 1322(b)(2) and conditions lien avoidance on completion of plan, debtor is precluded to argue that lien was avoidable under § 506(d) without plan completion and trustee is precluded to argue that discharge is an additional condition on lien avoidance. "Whatever may be the merits of debtor's argument that § 506(d) provides a separate and independent path to lien avoidance in a Chapter 13 case, debtor chose to travel the path of her Chapter 13 plan and § 1322(b)(2). Having done so—and succeeded—debtor cannot now be heard to say 'no, I meant to take the other route'. The § 506(d) issue debtor attempts to raise in this case will have to await a case that squarely presents the issue. This case does not. . . .[D]ischarge is a desirable condition for a § 1322(b)(2) lien strip, but the Court does not have the authority to impose it. . . . [T]he Court finds and concludes that the availability of a discharge in Chapter 13 is not, in itself, a requirement for eligibility to file a Chapter 13 case or, within that case to seek a lien avoidance pursuant to § 1322(b)(2).").
In re Grant, 423 B.R. 320, 322 (Bankr. S.D. Cal. Jan. 26, 2010) (Bowie) (Debtor with CMI greater than applicable median family income cannot contend that a mortgage is wholly unsecured for purposes of Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), and then deduct secured debt payments on that mortgage under § 707(b)(2)(A)(iii). "The premise of debtor's ability to strip off a junior lien . . . is that the debt on the junior lien is unsecured. . . . [D]ebtor cannot have it both ways, precisely because § 707(b)(2)(A)(iii) permits deduction only of payments on secured debts that will be contractually due in the next 60 months. The statute does not permit a deduction for contractually due payments on unsecured debts.").
In re Pereira, 394 B.R. 501, 507 (Bankr. S.D. Cal. Aug. 25, 2008) (Adler) (Although Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), permits stripoff of wholly unsecured mortgage without filing adversary proceeding, when plan specified adversary proceeding to determine stripoff and value of property, plan is not confirmable over objection of trustee until stripoff has been determined. "The matter of stripping off National City's allegedly wholly unsecured lien should be litigated prior to, or in connection with the hearing on confirmation of the Plan because the Trustee needs to know how to treat the claim to administer the plan. Additionally, the Plan needs to clearly and conspicuously specify when the § 506(a) hearing to value the Residence will take place." Junior mortgage holder was not served with plan or notice of hearing on confirmation sufficient to determine stripoff or valuation.).
Hawaii
In re Beck, No. 13-1825, 2014 WL 4549014 (Bankr. D. Haw. Sept. 12, 2014) (Faris) (Wholly unsecured junior liens of apartment owners' association and IRS could be avoided.).
In re Horner, No. 11-02925, 2012 WL 2603541 (Bankr. D. Haw. July 5, 2012) (Faris) (Second mortgage unsupported by value was subject to modification and unsecured treatment in plan.).
In re Queja Cadiz, No. 09-01903, 2010 WL 4916575 (Bankr. D. Haw. Dec. 1, 2010) (Faris) (Junior mortgage was wholly unsecured, and confirmed plan would strip off mortgage.).
Idaho
Scott v. Countrywide Home Loans, Inc. (In re Scott), 376 B.R. 285, 291, 293 (Bankr. D. Idaho Sept. 4, 2007) (Pappas) ("[V]alueless lien may be stripped under a chapter 13 plan[,]" citing Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer). Having previously held "that an adversary proceeding is not required to strip a lien; it may be accomplished through the chapter 13 plan confirmation process, In re Millspaugh, 302 B.R. [90] at 97-98 [Bankr. D. Idaho Oct. 24, 2003) (Myers),]" court finds plan contains clear lien-stripping language. Although nothing but plan was sent to Countrywide, lender and its privy Mortgage Electronic Registration Systems, Inc. "were afforded sufficiently clear and conspicuous notice and information about the proposed treatment of the second deed of trust lien so as to satisfy the requirement of due process.").
Montana
In re Brown, No. 10-60467-13, 2010 WL 4052941 (Bankr. D. Mont. Oct. 14, 2010) (Kirscher) (Applying Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Schwarzer), second mortgage creditor's claim was secured and not subject to avoidance.).
In re Mastel, No. 09-60784-13, 2010 WL 234971 (Bankr. D. Mont. Jan. 15, 2010) (Kirscher) (Plan can "cure by sale" when real property is not protected from modification and can be partitioned and sold under state law; lien holder will be paid in full from sale proceeds and is adequately protected by equity until sale.).
In re Schreiner, No. 07-61139-13, 2008 WL 163647 (Bankr. D. Mont. Jan. 17, 2008) (unpublished) (Kirscher) (Applying Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220 (9th Cir. Dec. 24, 2002) (D.W. Nelson, T.G. Nelson, Scwarzer), Wells Fargo's wholly unsecured mortgage may be stripped.).
Nevada
In re Okosisi, 451 B.R. 90, 93-102 (Bankr. D. Nev. May 16, 2011) (Markell) (Wholly unsecured junior lien on principal residence can be stripped off notwithstanding that debtors are not eligible for discharge when Chapter 13 case was filed in good faith, conditioned that debtors complete payments under plan. "[T]he antimodification protection of Section 1322(b)(2) only operates to benefit creditors who may be classified as secured creditors after operation of Section 506(a). See Zimmer v. PSB Lending Corp. (In re Zimmer), 313 F.3d 1220, 1226 (9th Cir. [Dec. 24,] 2002) [(D.W. Nelson, T.G. Nelson, Schwarzer)]. . . . [I]t is permissible for a debtor to provide that a lien will be avoided through a chapter 13 plan, making such avoidance permanent upon successful completion of the chapter 13 plan and so long as confirmation of the plan is not subsequently set aside. . . . [T]he discharge itself has no affect [sic] on liens. . . . [A] prerequisite to the application of Section 1325(a)(5)(B) is that the claim first be classified as 'an allowed secured claim' within the meaning of Section 1325(a)(5). Under [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] and Zimmer, . . . when a creditor is wholly unsecured after application of Section 506(a), the creditor has only an unsecured claim for purposes of Section 1322(b)(2). . . . Section 1325(a)(5) . . . applies only to secured claims . . . . BAPCPA added Section 1328(f), and thus opened up the possibility of a fourth option, the completion of all plan payments without a discharge. In this post-BAPCPA regime, lien avoidance actions are still undone if the chapter 13 case is converted or dismissed . . . . At the successful completion of all payments in a no-discharge chapter 13 case, . . . the proper result is for the court to close the case without discharge. . . . Because the no-discharge case is closed without discharge, rather than dismissed, the code sections that reverse any lien avoidance actions contained within a chapter 13 plan upon conversion or dismissal are not implicated, and, thus, do not act to prevent the permanence of the lien avoidance. . . . Once a debtor successfully completes all plan payments required by a chapter 13 plan, the provisions of the plan become permanent, and the lien avoidance is, similarly, permanent. Support for this conclusion is found in Section 1327 . . . . [C]onfirmation of a chapter 13 plan 'vests all of the property of the estate in the debtor,' . . . 'free and clear of any claim or interest of any creditor provided for by the plan.' . . . [I]nterest encompasses liens on real property. . . . [L]iens avoided through a confirmed chapter 13 plan remain avoided so long as the plan and the order confirming it remain in effect. . . . The Debtors have a valid bankruptcy purpose in filing the present chapter 13 case, as the plan accomplishes a reorganization that was not possible in their previous chapter 7 and 'represents their best effort[s] to pay creditors.'").
Oregon
In re Collins, No. 10-32098-tmb13, 2010 WL 5173840, at *3-*4 (Bankr. D. Or. Dec. 15, 2010) (Brown) (Debtor ineligible for discharge because of § 1328(f)(1) cannot strip off wholly unsecured junior mortgage. Debtor owned rental property subject to a wholly unsecured second lien. Plan proposed that debtor would file an adversary proceeding to void and "strip off" junior lien, subject to reinstatement at dismissal or conversion. "[E]ven if the Woodside Property is not his principal residence, Debtor must treat PNC's secured claims in accordance with the requirements of § 1325(a)(5). . . . PNC holds a claim secured by Debtor's real property. The fact that the value of that secured claim may be less than the amount of the underlying debt does not change PNC's status as the holder of an allowed secured claim provided for by the Plan. Accordingly, absent PNC's consent, Debtor must either surrender the collateral or provide for full payment of the underlying debt, determined under non-bankruptcy law. . . . Even if Debtor were to provide for full payment of PNC's debt, I would not confirm the Plan. I do not find the Woodside Property is necessary for an effective reorganization.").
In re Grignon, No. 10-34196-tmb13, 2010 WL 5067440, at *4-*5 (Bankr. D. Or. Dec. 7, 2010) (Brown) (Following In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. June 25, 2010) (Jellen), and rejecting In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman), debtor not eligible for discharge because of § 1328(f) can strip off wholly unsecured junior mortgage when current Chapter 13 case is filed in good faith. "I agree with the reasoning in Tran. Under BAPCPA, a Chapter 13 debtor who has received a Chapter 7 discharge within 4 years of filing the Chapter 13 may not receive a discharge. § 1328(f). However, nothing in the Code prohibits a debtor who is ineligible for a Chapter 13 discharge from filing a Chapter 13 case. Nor is there anything in the Code which prohibits such a debtor from stripping off a wholly unsecured lien. . . . [T]he lien will not be avoided by confirmation of the Amended Plan. Rather, the Debtors will need to take additional action to avoid the lien. . . . [O]ur local forms make clear[ ] the option of using a motion to avoid a lien is only available to debtors who are eligible for discharge. Therefore, Debtors must file an adversary proceeding. The Debtors should be able to record any judgment obtained in the adversary proceeding in the real property records.").
Washington
Western District of Washington
In re Montiel, 572 B.R. 758, 761-63 (Bankr. W.D. Wash. June 28, 2017) (Heston) (Valuation for purposes of stripping off wholly unsecured junior lien on residence is determined as of petition date without regard to when motion or adversary proceeding is filed. In a Chapter 13 case filed in August 2014, confirmed plan provided that debtors would file an adversary proceeding or a motion to avoid the wholly unsecured lien of Guaranty Bank. Motion to avoid lien was filed in 2017. “[T]he Code provides courts with discretion to value property based on the purpose of the valuation and its proposed use or disposition . . . . [T]here is a lack of consensus amongst the bankruptcy and district courts as to the actual date for determining the value of the collateral. . . . [A] seeming majority, have held that the petition date is the correct date for valuation, while a few others have held that the confirmation date is the correct date. . . . [T]he Court determines the date of valuation in this case is the petition date . . . . [T]he purpose of valuation under § 1322(b)(2) is to determine the status of the claim held by a junior lien creditor against the Debtors’ primary residence . . . . For purposes of confirming a plan, the petition date is the critical and logical date for determining the status of claims and generally establishing the respective rights of debtors and creditors . . . . The petition date is also the point for determining other critical confirmation issues, including the value of property to be distributed in the plan on account of claims. . . . The confirmation date is inappropriate because the date of valuation would change based on arbitrary factors that have nothing to do with Guaranty Bank’s claim.”).
In re Blenheim, No. 09-10283-MLB, 2011 WL 6779709, at *5-*9 (Bankr. W.D. Wash. Dec. 27, 2011) (Barreca) (Debtors can void first mortgage lien after claim was disallowed, and ordinarily plan can strip off wholly unsecured junior lien; but not equitable to treat junior lien as wholly unsecured after voiding first lien and not good faith to pay nothing to unsecured creditors after stripping both liens. Also, best-interests-of-creditors test bars confirmation because there would be value for unsecured creditors in a Chapter 7 case after voiding first lien. Debtors were ineligible for discharge because of § 1328(f). Motion to disallow Litton's first position lien was granted when Litton did not respond. In subsequent adversary proceeding, bankruptcy court voided Litton's first lien based on disallowance of its claim. Motion to avoid second position lien was also granted. Plan paid nothing to unsecured creditors. "[A] debtor need not be eligible for a Chapter 13 discharge to file a Chapter 13 plan that proposes to strip a wholly unsecured lien from a debtor's residence. . . . The lien avoidance will become permanent not upon a discharge, as would happen in a typical Chapter 13 case, but upon completion of all payments as required by the plan. . . . [I]t is not per se prohibited for Debtors to propose a Chapter 13 plan stripping the First or Second Position Lien on their Residence, notwithstanding their lack of eligibility for a Chapter 13 discharge. . . . In the context of Chapter 20 lien strip cases, courts in the Ninth Circuit have articulated and focused on the following four factors: (1) whether debtors have a need for bankruptcy other than to do a lien strip, (2) whether the debtors acted equitably in proposing a plan, (3) whether the debtors are insolvent and are devoting all of their income to the plan, and (4) whether the debtors used serial filings to avoid payment to creditors. . . . Here, . . . Debtors have valid reorganization goals other than lien stripping. . . . [T]o deal with fraud claims and other issues . . . [to repay] a secured debt owed . . . for past-due homeowners association dues . . . . Here, the Court cannot find that Debtors acted equitably in proposing their Plan. . . . [A]t the time the Order Stripping Second Position Lien was entered, the factual predicates underpinning the Motion to Avoid Second Position Lien were no longer true. The Second Position Lien was no longer junior, nor was it wholly unsecured. Rather, the Second Position Lien was fully secured. . . . Debtors should not have submitted the Order Stripping Second Position Lien . . . . Debtors had a duty of candor to the Court. It was inequitable and not in good faith for Debtors to retain the signed Order Stripping Second Position Lien . . . . Debtors propose to 'have their cake and eat it too,' by incorporating the Order Voiding First Position Lien, and yet based on the amount and priority of that First Position Lien, also stripping the Second Position Lien upon completion of the Plan. . . . [P]ermitting confirmation of this Plan which would ultimately void both the First Position and Second Position Liens would bestow an unwarranted windfall on the Debtors, and would be inequitable and constitute an unfair manipulation of the Code. . . . [G]iven that Debtors' Plan proposes to strip both the First and Second Position Liens on the Residence, with neither creditor receiving any payments under the Plan as either a secured or unsecured creditor, the Court cannot conclude that creditors are not harmed by this Plan.").
J. Tenth Circuit
Woolsey v. Citibank, N.A. (In re Woolsey), 696 F.3d 1266, 1274-79 (10th Cir. Sept. 4, 2012) (Gorsuch, Holmes, Matheson) (Until Supreme Court retreats from Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), Chapter 13 debtor cannot void a wholly unsecured junior mortgage using only § 506(d). Repudiating "the only possible winning argument they may have had," debtors' plan proposed to strip off wholly unsecured junior lien, relying only on lien-voiding language in § 506(d). "Dewsnup has created more than a little 'methodological confusion[]'. . . . [T]he Dewsnuppian departure from the statute's plain language is the law. . . . [E]very federal court of appeals to consider the question has already refused to extend Dewsnup's definition of the term 'secured claim' to other statutory provisions using that term in Chapter 13, where the focus is on reorganization rather than liquidation. . . . So it is that Dewsnup has lost every away game it has played: its definition of 'secured claim' has been rejected time after time elsewhere in the code and seems to hold sway only in § 506(d). . . . [O]f all the circuit courts approving of lien stripping in reorganization cases, not a single one has taken up the Woolseys' invitation to do so using § 506(d). Instead, they have relied exclusively on other statutory provisions particular to those chapters. . . . [M]any courts have already identified one apparently promising candidate in § 1322(b)(2). . . . [N]o fewer than six circuits have already read [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] this way and held a debtor may invoke § 1322(b)(2) to remove a wholly unsecured lien, even if that lien is secured against the debtor's principal residence. . . . [T]he Woolseys didn't choose to pursue this line of argument . . . . [W]e opt today against forcing a § 1322(b)(2) argument onto the unwilling Woolseys and leave that statute and its meaning for another day when a bankruptcy petitioner actually wants to pursue the question."), aff'g 438 B.R. 432, 437-38 (Bankr. D. Utah Oct. 8, 2010) (Thurman) (Plan stripping off wholly unsecured junior lien must provide that lien will be retained until full payment under nonbankruptcy law or until debtors receive discharge. Interpretation of allowed secured claim in § 1325(a)(5) must be consistent with the way the Supreme Court read § 506(d) in Dewsnup v. Timm, 502 U.S. 410, 416, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992). Mortgage creditor filed proof of claim to which no objection had been filed. Allowed claim is also "secured" and must be treated in manner consistent with § 1325(a)(5) requirement that lien be retained until debtor makes full payment or receives discharge. "The Court believes this outcome is not only demanded by the statutory language as explained by the Supreme Court, but is also the best outcome to prevent debtors from avoiding or satisfying a lien in chapter 13 without completing a plan in chapter 13. . . . The Court sees nothing prohibiting a debtor from treating a mortgage as unsecured pursuant to § 506(a) and then avoiding or deeming it satisfied upon receipt of a discharge at the completion of the plan. Such relief being available at the completion of the plan provides an incentive for debtors to fulfill their plans.").
Egbune v. Kiel (In re Egbune), No. CO-16-006, 2016 WL 6996129 (B.A.P. 10th Cir. Nov. 30, 2016) (unpublished) (Nugent, Somers, Hall) (Third lien was not stripped off property when order stripping second lien made no mention of third lien, third lien was scheduled as secured and third lienholder withdrew its objection to confirmation when debtor assured creditor that its lien was not affected by plan.).
Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (B.A.P. 10th Cir. Dec. 12, 2005) (Bohanon, Cornish, Michael) (Agreeing with majority view, § 1322(b)(2) permits avoidance of wholly unsecured mortgage.).
Colorado
McPherson v. Green Tree Servicing, LLC (In re McPherson), No. 13-cv-00536-RBJ, 2013 WL 6657599 (D. Colo. Dec. 17, 2013) (unpublished) (Jackson) (Confirmation precludes motion to strip wholly unsecured junior lien. Plan was confirmed without determination of value of property, junior lien was left intact, and debtor was bound by plan.).
Zeman v. Waterman (In re Waterman), 469 B.R. 334, 338-41 (D. Colo. Mar. 13, 2012) (Arguello) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured lien on primary residence. "[T]he parties agree that the anti-modification provision [§ 1322(b)(2)] does not apply because the junior lien held by First National Bank against Debtor's Residence is wholly unsecured. . . . [Section] 1325(a) does not preclude Debtor from stripping off the lien. . . . [Section] 1328(f)(1) is clear: it prohibits only 'a discharge of all debts provided for in the plan.' . . . [S]tripping off a lien is not the same thing as being discharged from personal liability for the debt underlying that lien. . . . [B]ankruptcy courts should carefully scrutinize a Chapter 20 debtor's plan to ensure that it was proposed in good faith. However, the fact that some Chapter 20 debtors may not propose their plans in good faith is not reason to bar every Chapter 20 debtor from utilizing the lien stripping tools made available to him by Congress."), aff'g 447 B.R. 324 (Bankr. D. Colo. Apr. 7, 2011) (Brooks) (Embracing In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. June 25, 2010) (Jellen), and declining to follow In re Mendoza, No. 09-22395 HRT, 2010 WL 736834 (Bankr. D. Colo. Jan. 21, 2010) (unpublished) (Tallman), debtor not eligible for discharge because of § 1328(f) can avoid wholly unsecured junior lien consistent with § 506.).
In re Fling, No. 14-24256 HRT, 2015 WL 5168379 (Bankr. D. Colo. Sept. 1, 2015) (Tallman) (Wholly unsecured nonrecourse lien would be avoided upon completion of confirmed plan; nonrecourse creditor must be treated as unsecured creditor in plan if timely claim filed.).
In re Lopez, 512 B.R. 663, 671 (Bankr. D. Colo. July 1, 2014) (Tallman) (Condominium association lien is a statutory lien not protected from modification by § 1322(b). To the extent association's lien took priority over senior mortgage under state law, association's claim was secured; remainder of claim was unsecured and could be stripped. Under state law, association's lien "ran with the land." "[T]he unsatisfied statutory lien for unpaid assessments is enforceable against the property in the hands of a transferee . . . . But the fact that an unsatisfied lien in favor of a property owners association may continue to be enforced against the property after a transfer does not distinguish the [association's] statutory lien from any other type of lien. . . . [A]n unsatisfied mortgage is enforceable against the encumbered property in the hands of a transferee. . . . [Also] its covenants—as distinct from its statutory liens—do 'run with the land.'. . . Debtor's obligation to pay postpetition assessments continues and postpetition liens that arise with respect to unpaid assessments are unaffected by [a confirmed plan].").
In re Wilcox, 438 B.R. 428 (Bankr. D. Colo. Sept. 7, 2010) (Tallman) (Trustee cannot upset settlement between debtor and credit union that resolved lien-stripping motion with modification of loan that included reduced debt and smaller monthly payment. Credit union voluntarily modified loan, and § 1322(b)(2) cannot be asserted by trustee to block settlement.).
In re Mendoza, No. 09-22395-HRT, 2010 WL 736834, at *3-*4 (Bankr. D. Colo. Jan. 21, 2010) (unpublished) (Tallman) (Citing In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman), debtor not eligible for discharge because of § 1328(f)(1) cannot strip off wholly unsecured mortgage notwithstanding Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (B.A.P. 10th Cir. Dec. 12, 2005) (Bohanon, Cornish, Michael) (Section 1322(b)(2) does not prohibit modification of a wholly unsecured claim.). "In In re Jarvis, . . . the court held that the avoidance of a lien is contingent upon the debtor's completing a plan and receiving a discharge. . . . [P]rior to the enactment of § 1328(f), courts consistently held that 'because a portion—the in rem portion—of a creditor's claim against a debtor remains after the Chapter 7 discharge, the permanent modification of that claim [could] only be effected by completing the terms of the Chapter 13 and receiving a discharge notwithstanding the discharge of personal liability in the prior case.' . . . Allowing Debtors to avoid Litton's second mortgage lien through this subsequent Chapter 13 filing would be tantamount to granting them a discharge as to that debt, and would thereby render the bar set forth in section 1328(f) inoperable. . . . '[L]ien stripping under these circumstances does not appear to comport with Congressional intent, as evidenced by the 4-year bar between a Chapter 7 discharge and eligibility for a Chapter 13 discharge, and the provisions allowing avoided liens to "spring back" on conversion or dismissal of the Chapter 13 case.'").
Kansas
In re Picht, 443 B.R. 874 (Bankr. D. Kan. Feb. 4, 2011) (Berger) (After remand, debtors could surrender partially secured residence under § 1325(a)(5)(C); because debtors' in personam liability was discharged in prior Chapter 7 case, bank lacked standing to object under disposable income test and bank had no entitlement to distributions on account of its discharged deficiency. Bank could not retain payments that had been made under original confirmed plan because confirmation had been vacated on appeal. Chapter 13 trustee was obligated to recover, for benefit of bankruptcy estate, assets that had been used to pay dividends under vacated confirmation order.), remanded by 428 B.R. 885 (B.A.P. 10th Cir. May 4, 2010) (Thurman, Rasure, Romero), rev'g No. 08-20677, 2009 WL 1766820 (Bankr. D. Kan. June 20, 2009) (unpublished) (Berger), remanded by 403 B.R. 707 (B.A.P. 10th Cir. Apr. 14, 2009) (Michael, Brown, Starzynski), rev'g and remanding 396 B.R. 76 (Bankr. D. Kan. Sept. 26, 2008) (Berger).).
In re Hoch, No. 08-13181, 2009 WL 2252144 (Bankr. D. Kan. July 27, 2009) (unpublished) (Nugent) (Second mortgage cannot be stripped when debtors failed to prove value less than amount of first mortgage.).
Foster v. Onyx Inv., L.L.C. (In re Foster), No. 05-7020, 2006 WL 3518161 (Bankr. D. Kan. Mar. 15, 2006) (unpublished) (Karlin) (Lien of successor to Onyx Investment had been properly stripped to completely unsecured in Chapter 13 plan; court granted permanent injunction against Onyx's foreclosure and ordered release of its lien. Prior to debtors' filing, second mortgage holder (but apparently third lienholder, behind seller's contract for deed) Empire Funding Corporation had filed Chapter 11, but debtors never received notice of filing. Onyx acquired Empire's mortgage and used Empire's proof of claim form to file late claim in debtor's Chapter 13. The trustee objected to untimely claim, but Onyx did not appear, and objection was sustained. The plan clearly stated that Empire was unsecured. Onyx waited until after debtors' discharge to initiate foreclosure, triggering reopening of case and debtor's adversary proceeding. Court found there was violation of automatic stay in Empire's Chapter 11 by debtors' lien stripping, but equitable considerations, including that debtors had no notice of Empire's filing and that Onyx had ample opportunity to participate in Chapter 13 case, prevented stripping from being void, citing Job v. Calder (In re Calder), 907 F.2d 953 (10th Cir. June 29, 1990) (Tacha, Seth, Brown). Lien stripping could occur in plan rather than in adversary proceeding, citing Centex Home Equity Co., L.L.C. v. Woodling (In re Woodling), Nos. 03-40183, 03-7102, 2004 Bankr. LEXIS 1751 (Bankr. D. Kan. Oct. 14, 2004).), aff'd, Onyx Investments, L.L.C. v. Foster, No. 06-4053-SAC, 2007 WL 1347696 (D. Kan. May 8, 2007) (Crow).).
Utah
Walk v. Thurman, No. 2:12-CV-00511 BSJ, 2012 WL 3292934 (D. Utah Aug. 10, 2012) (unpublished) (Jenkins) (Until Tenth Circuit settles issue of lien stripping raised in Carroll v. Key Bank, No. 2:10-cv-01055-CW, 2011 WL 6338912 (D. Utah Dec. 19, 2011) (Waddoups), mandamus is not appropriate to compel bankruptcy judge to comply with one district court's decision. Mandamus is not substitute for direct appeal. There is no "law of district" requiring all district judges to follow each other's precedent.).
Carroll v. Key Bank, No. 2:10-cv-01055-CW, 2011 WL 6338912 (D. Utah Dec. 19, 2011) (Waddoups) (Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), does not prohibit stripping of wholly unsecured liens in Chapter 13 cases. Tenth Circuit has not directly addressed issue but dicta suggests it will follow other appellate courts declining to extend Dewsnup beyond Chapter 7, citing Morris v. St. John National Bank (In re Haberman), 516 F.3d 1207, 1213 (10th Cir. Feb. 22, 2008) (O'Brien, Brorby, Gorsuch). Griffey v. U.S. Bank (In re Griffey), 335 B.R. 166 (B.A.P. 10th Cir. Dec. 12, 2005) (Bohanon, Cornish, Michael) held that § 1322(b)(2) did not apply to wholly unsecured claims. Key Bank's wholly unsecured lien was void under § 506(d).), rev'g and remanding No. 10-02259, 2010 WL 3895537, at *3, *3 n.15 (Bankr. D. Utah Oct. 1, 2010) (unpublished) (Mosier) (Wholly unsecured third mortgage lien cannot be voided under § 506(d) because Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992), applies to Chapter 13 cases; other possible remedies are reserved. "Because § 506(d) does not allow a debtor to 'strip down' a creditor's lien if the creditor has a claim that is allowed pursuant to § 502, a debtor may not 'strip off' a creditor's lien if the creditor has a claim that is allowed pursuant to § 502." Court did not "opine on the availability of other Bankruptcy Code sections to effect a modification of a wholly unsecured creditor's lien.").
K. Eleventh Circuit
Wells Fargo Bank, N.A. v. Scantling (In re Scantling), 754 F.3d 1323, 1327-29 (11th Cir. June 18, 2014) (Tjoflat, Moore, Schlesinger) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien. In Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), "[t]his court determined that a wholly unsecured lien on a debtor's principal residence is not protected from modification under § 1322(b)(2). . . . The majority view recognizes a strip off of the unsecured mortgage is allowed under the theory that a 'Chapter 13 debtor need not be eligible for a discharge in order to take advantage of the protections afforded by Chapter 13.' . . . The BAPCPA 'did not amend' §§ 506 or 1322(b), 'so the analysis permitting lien-stripping in Chapter 20 cases is no different than that in any other Chapter 13 case.' . . . Guided by Tanner, we find the reasoning of the majority view persuasive . . . . [A] debtor, in a Chapter 13 setting, may strip off an unsecured mortgage on the debtor's principal residence. This strip off is accomplished through the § 506(a) valuation procedure that determines that the creditor does not hold a secured claim. Once this determination has been made, pursuant to § 1322(b)(2), the creditor's 'rights' are modified by avoiding the lien to which the creditor would otherwise be entitled under nonbankruptcy law. . . . [Section] 1325(a)(5) is not involved, and the debtor's ineligibility for a discharge is irrelevant to a strip off in a Chapter 20 case. The BAPCPA did not amend §§ 506 or 1322(b), so the analysis permitting strip offs in Chapter 20 cases is no different than that in any other Chapter 13 case."), aff'g 465 B.R. 671, 675-82 (Bankr. M.D. Fla. Feb. 24, 2012) (Williamson) (Debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien. "[Johnson v. Home State Bank, 501 U.S. 78, 111 S. Ct. 2150, 115 L. Ed. 2d 66 (June 10, 1991),] recognized a debtor's right to file a chapter 20 case. . . . [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992),] recognized that § 506(d), by itself, is insufficient to strip a lien on a debtor's homestead. . . . [Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 (June 1, 1993),] only dealt with a claim that was partially undersecured. In Nobelman, it was the existence of some collateral for the bank's claim that made the bank a 'holder' of a 'secured claim' that brought into play § 1322(b)(2)'s anti-modification provision . . . . [Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch),] . . . held that § 1322(b)(2)'s anti-modification provision does not bar a chapter 13 debtor from stripping off a wholly unsecured lien on the debtor's principal residence. . . . Section 1325(a)(5), by its terms, only applies to 'allowed secured claims.' And as Tanner . . . made clear, the holder of a wholly unsecured junior mortgage does not have a 'secured claim.' . . . [T]he pro-lien stripping courts recognize that upon confirmation of a plan in a chapter 20 case, the holder of a wholly unsecured junior mortgage lien holds neither a secured claim . . . nor an unsecured claim enforceable against the debtor—by virtue of the prior discharge. Confirmation of the plan in such cases, instead, implements the debtor's right under § 1322(b)(2) to modify—not the claim—but the 'rights' that the holder of the previously discharged claim has under applicable nonbankruptcy law. . . . [T]hose rights include 'the right to retain the lien until the debt is paid off.' It is this right that can be modified by strip off in a chapter 20 case. This is exactly what Tanner and the other circuit court cases recognized . . . . There is nothing in BAPCPA's legislative history to suggest—nor has any court ever held—that the new provision in § 1325(a)(5)(B) was intended to abrogate the court's analysis in Tanner. Nor is there anything in BAPCPA's legislative history that suggests Congress added § 1328(f) to limit a debtor's right to strip off a wholly unsecured junior mortgage . . . . [T]he bankruptcy court must still determine whether the chapter 13 plan was filed in good faith. . . . [I]t is only after a debtor has successfully completed all plan payments required by the chapter 13 plan that the provisions of the plan—including any lien avoidance—become permanent.").
Colbourne v. Ocwen (In re Colbourne), No. 12-14722, 2013 WL 5789159, at *2 n.6 (11th Cir. Oct. 29, 2013) (unpublished) (Martin, Fay, Edmondson) (Partially secured first lien that is not protected from modification by § 1322(b)(2) cannot be crammed down because of § 1325(a)(5) when debtor is not eligible for discharge under § 1328(f). In a footnote: "We acknowledge that courts have approached differently the issue of lien-stripping in 'Chapter 20' cases. Because the majority of cases that permit lien-stripping . . . involve the stripping off of wholly unsecured second-priority liens on principal residences—not the cram down of undersecured first-priority liens on investment property—we see their guidance less applicable to the facts of this appeal.").
Alabama
Northern District of Alabama
In re Sullivan, 386 B.R. 355 (Bankr. N.D. Ala. Feb. 28, 2008) (Stilson) (Appraisal testimony established that mortgage has value and may not be modified under § 1322(b)(2).).
In re Clardy, No. 06-71703-CMS-13, 2007 WL 1697007, at *2 (Bankr. N.D. Ala. June 12, 2007) (unpublished) (Stilson) (Quoting Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357, 1360 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), "'[t]he better reading of sections 506(a) and 1322(b)(2), therefore, protects only mortgages that are secured by some existing equity in the debtor's principal residence'"; $1,200 value above first mortgage prevents modification of second mortgage.).
Florida
Middle District of Florida
In re Hilaire, No. 6:14-bk-05195-ABB, 2015 WL 3979071, at *3 (Bankr. M.D. Fla. Mar. 19, 2015) (Briskman) (Chapter 13 debtor's power to strip off wholly unsecured lien of landowners' association and void lien at discharge trumps state law that imposes personal liability on future purchaser of property. "A strip off modifies the rights of a lienholder such that the lienholder's claim is not secured in the bankruptcy case and, upon discharge of the debtor, the lien is void and the lienholder may not seek to enforce the lien under nonbankruptcy law. This analysis is equally applicable to homeowner association liens as it is to mortgages. . . . The Creditor is not entitled to resurrect a stripped off lien upon sale of the Property by invoking . . . the Florida Statutes. To do so undermines the effect of the Bankruptcy Code and runs afoul of Congress's intent to permit the avoidance of certain liens in bankruptcy permanent upon discharge of a debtor. . . . [T]he Florida Statute[ ] does not preempt the Bankruptcy Code's authority to strip wholly unsecured junior liens just as it [is] unable to preempt other state statutes. The applicability of [the state law] is not comprehensive or absolute where it creates conflict with other state statutes. . . . The ability to reimpose liability on a lien stripped off in bankruptcy is beyond the scope and authority of . . . the Florida Statutes.").
Alexander v. JP Morgan Chase Bank, N.A. (In re Alexander), No. 3:13-ap-544-JAF, 2014 WL 3672135 (Bankr. M.D. Fla. July 23, 2014) (Funk) (After valuation hearing with competing experts, second mortgage lien was wholly unsecured, would be stripped off, and claim treated as unsecured.).
In re Plummer, 484 B.R. 882 (Bankr. M.D. Fla. Jan. 14, 2013) (Williamson) (Condominium association lien on principal residence could be stripped off when first mortgage exceeded value of condominium, but debtor remained obligated as unit owner for assessments becoming due after petition.).
In re Pierre, 468 B.R. 419 (Bankr. M.D. Fla. Mar. 16, 2012) (Jennemann) (With respect to tenancy by the entireties property, unprotected lien on investment property cannot be crammed down when only one spouse files; both spouses must file and both must be eligible for discharge before lien stripping is available.).
In re Dang, 467 B.R. 227 (Bankr. M.D. Fla. Mar. 12, 2012) (Glenn) (Citing Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), debtor ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien on principal residence. Section 1325(a)(5) does not apply because the lien that survived discharge in prior Chapter 7 case is not a secured claim in the Chapter 13 case. Plan and case were filed in good faith when debtor was ineligible for Chapter 13 in previous bankruptcy case and filed subsequent Chapter 13 case to deal with liens that survived discharge.).
In re Slate, No. 6:11-bk-15737-ABB, 2012 WL 293591, at *1 (Bankr. M.D. Fla. Feb. 1, 2012) (Briskman) ("This Court has held in numerous decisions a debtor requires a Chapter 13 discharge to carry out an intended strip off or cramdown of a mortgage lien. Where a debtor is ineligible to receive a discharge in a Chapter 13, any modifications to the creditor's rights are not permanent and have no binding effect once the plan ends.").
In re Rosa, No. 6:10-bk-07799-ABB, 2011 WL 6257305 (Bankr. M.D. Fla. Dec. 15, 2011) (Briskman) (Wholly unsecured lien of former spouse was void and could be stripped off in plan, but dependent on discharge.).
In re Judd, No. 6:11-bk-04093-ABB, 2011 WL 6010025, at *3-*4 (Bankr. M.D. Fla. Dec. 1, 2011) (Briskman) (Wholly unsecured junior liens on homestead and on investment property cannot be crammed down or stripped off when debtors are not eligible for discharge under § 1328(f); debtors cannot avoid this outcome by filing $1 claims on behalf of junior lienholders. "Debtors are attempting to circumvent the discharge prohibition of 11 U.S.C. Section 1328(f) and the anti-modification provision of 11 U.S.C. Section 1322(b) through their filing of Claim[s] . . . . The Debtors, by filing these claims, are attempting to value the secured second-priority mortgage claims of CitiMortgage and CitiBank . . . at $1.00. Such treatment, if allowed, would constitute a de facto cramdown or strip-off of these liens in violation of 11 U.S.C. Sections 1322(b), 1325(a)(5), and 1328(f). . . . Those allowed claims have value and must be treated in the alternative manners prescribed by 11 U.S.C. Section 132[5](a)(5). . . . A creditor holding an allowed secured claim . . . retains its lien until the debt is paid or the lien is otherwise extinguished pursuant to nonbankruptcy law or the debtor receives a discharge pursuant to Section 1328(f). 11 U.S.C. § 1325(a)(5)(B). . . . The Debtors cannot modify the mortgage liens . . . without a Chapter 13 discharge.").
In re Poorvin, No. 6:11-bk-01018-ABB, 2011 WL 5572607 (Bankr. M.D. Fla. Nov. 15, 2011) (Briskman) (Debtor's motion to vacate prior Chapter 7 discharge to avoid § 1328(f) and modify undersecured mortgage is denied; debtor lacked standing to seek revocation of discharge under plain language of § 727(d).).
In re Attaway, No. 6:09-bk-17777-ABB, 2011 WL 10945121, at *1 (Bankr. M.D. Fla. Feb. 18, 2011) (Briskman) (Debtors cannot reopen Chapter 7 case to vacate discharge so that they become entitled to discharge under § 1328(f)(1) and able to strip off lien on residence. "Where a debtor is ineligible to receive a discharge in a Chapter 13, any modifications to the creditor's rights are not permanent and have no binding effect once the plan ends." Allowing debtors to vacate Chapter 7 discharge would allow them to avoid § 1328(f).).
In re Gomez, 456 B.R. 574, 576-77 (Bankr. M.D. Fla. Feb. 8, 2011) (Briskman) (Under §§ 727(d) and 727(e)(1), debtor cannot vacate Chapter 7 discharge entered two years earlier to overcome effect of § 1328(f) on lien stripping in current Chapter 13 case. Debtor was not eligible for discharge in current Chapter 13 case under § 1328(f)(1) because of Chapter 7 discharge two years earlier. Debtor moved to reopen prior Chapter 7 case and to revoke or vacate discharge. In current Chapter 13 case, debtor sought to cram down liens on investment property and to strip off wholly unsecured liens. "Chapter 13 allows for the modification [of] secured claims, with certain exceptions, but a Chapter 13 discharge is required to be able to permanently modify such claims. . . . Where a debtor is ineligible to receive a discharge in a Chapter 13, any modifications to the creditor's rights are not permanent and have no binding effect once the plan ends. . . . A debtor does not have standing to seek revocation of her discharge pursuant to the plain and unambiguous language of Section 727(d). . . . Aurora seeks to reopen her Chapter 7 case and vacate her Chapter 7 discharge because it prevents her from receiving a discharge in her Chapter 13 case pursuant to 11 U.S.C. Section 1328(f). Aurora requires a Chapter 13 discharge to carry out her intended cramdown and strip off of the mortgage liens encumbering her real property. The relief Aurora seeks is not authorized by the Bankruptcy Code and is contrary to the fundamentals of bankruptcy.").
In re Perez Gomez, No. 6:09-bk-13656-ABB, 2010 WL 5289498 (Bankr. M.D. Fla. Dec. 7, 2010) (Briskman) (Without discussion, court adopts In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. July 9, 2008) (Gorman). Debtor ineligible for Chapter 13 discharge cannot modify and strip off wholly unsecured mortgage.).
In re Vega, No. 6:10-bk-11229-ABB, 2010 WL 9546028 (Bankr. M.D. Fla. Nov. 30, 2010) (Briskman) (Debtor ineligible for discharge because of § 1328(f) cannot cram down partially secured first mortgage.), aff'd sub nom., In re Trujillo, No. 5:10-cv-646-OC-32, 2012 WL 8883694 (M.D. Fla. Aug. 10, 2012) (Corrigan).).
In re Colbourne, 458 B.R. 598 (Bankr. M.D. Fla. Nov. 10, 2010) (Briskman) (Debtor ineligible for discharge could not permanently modify claim of mortgage holder or car lender; motions to value claims denied.).
In re Cooper, No. 6:08-BK-11960-ABB, 2009 WL 4258301, at *3 (Bankr. M.D. Fla. Nov. 17, 2009) (Briskman) (Consistent with § 1322(b)(5) and (e), plan can bifurcate claim secured by property that was not debtor's principal residence, pay arrearages in 59 monthly payments and then pay balance of allowed secured claim with a balloon payment in 60th month; citing In re Davis, 343 B.R. 326 (Bankr. M.D. Fla. May 3, 2006) (Proctor), equal-monthly-payment requirement in § 1325(a)(5)(B)(iii) does not apply "where the debtor's proposed unequal periodic payments to cure his long-term secured debt arrearages complied with 11 U.S.C. Section 1322(b)(5).").
In re Cuenca, No. 6:09-bk-04414-ABB, 2009 WL 3580921 (Bankr. M.D. Fla. Oct. 28, 2009) (unpublished) (Briskman) (Junior mortgage was wholly unsecured and may be stripped off under §§ 506(d) and 1322(b)(2).).
In re Smith, No. 6:07-BK-05041-ABB, 2008 WL 4572393 (Bankr. M.D. Fla. Feb. 21, 2008) (unpublished) (Briskman) (Second mortgage is wholly unsecured based on written valuations submitted by debtors and creditor; lien may be stripped under § 1322(b)(2).).
Southern District of Florida
Stonebridge Gardens Section Two, Condo. Ass'n, Inc. v. Campbell, No. 13-61280-CIV, 2014 WL 229191, at *2 (S.D. Fla. Jan. 21, 2014) (Rosenbaum) (Condominium association lien is subordinate to senior mortgage and may be stripped off because lien is wholly unsecured. "Although the statute allows a condominium association to hold subsequent purchasers liable for past-due assessments, including a first mortgagee if it acquires title through foreclosure, it does not give the association priority lien rights. . . . [O]nce title is transferred, the association must record a new claim of lien if the person to whom title was transferred fails to pay the past-due assessment within thirty days. . . . Thus, although the association preserves its right to payment, it does not necessarily acquire a superior lien.").
In re Ramirez, No. 13-20891-AJC, 2014 WL 1466212, at *4 (Bankr. S.D. Fla. Apr. 7, 2014) (Cristol) (Sixty-month plan that concludes with balloon payment to take out first mortgage on income-producing duplex is feasible when significant equity in property and earning capacity of debtor combine with strong incentive to complete plan that crams down unprotected mortgage. "Permitting the Debtor to structure his plan with affordable payments for the next five years and the opportunity to refinance in month 60 using the equity in his home is 'consistent with the Congressional intent to provide Chapter 13 debtors with flexibility in structuring their plans . . . [t]he policy behind Chapter 13 is to encourage individuals to pay their debts as opposed to simply obtaining a discharge under Chapter 7. We recognize this statutory goal and seek to preserve it.'").
In re Sain, No. 13-13325-BKC-LMI, 2013 WL 5852496, at *3 (Bankr. S.D. Fla. Oct. 30, 2013) (Isicoff) (Debtors' right to strip off the wholly unsecured lien of the homeowners' association and to discharge their personal liability cannot compromise a subsequent owner's in personam liability for the unpaid assessments. "The Florida Statutes, as well as each of the Declarations, unequivocally provide that a subsequent purchaser is liable for unpaid assessments of the prior owner. That independent statutory liability is secured by a lien on that subsequent owner's interest in the parcel or condominium at issue.").
In re Alvarez, No. 11-44246-BKC-AJC, 2012 WL 1425097 (Bankr. S.D. Fla. Apr. 24, 2012) (Cristol) (Disagreeing with Strausbough v. Co-op Services Credit Union (In re Strausbough), 426 B.R. 243 (Bankr. E.D. Mich. Mar. 25, 2010) (Rhodes), one tenant by entirety could not cram down modifiable mortgage.).
In re Gilbert, No. 11-28496-EPK, 2012 WL 1983338, at *6, *7 (Bankr. S.D. Fla. Feb. 28, 2012) (Kimball) (Mortgage that was not protected from modification may be treated under combination of §§ 1322(b)(2) and 1322(b)(5). After debt is bifurcated under § 506(a) into secured and unsecured claims, "[t]here is nothing in sections 506(a) or 1322(b) leading the Court to conclude that the Debtor's obligation to cure arrears under section 1322(b)(5) is [a secured] obligation in addition to payment in full of Aurora's allowed secured claim." "In order to satisfy the requirements of 11 U.S.C. § 1322(b)(5): (a) The Debtor's chapter 13 plan must provide for regular monthly payments to Aurora during the term of the plan and thereafter until Aurora's allowed secured claim of $90,500 is paid in full. The Debtor and Aurora must calculate the monthly payment amount under the terms of the parties' existing loan agreement, as though the Debtor had not commenced this case and without regard to bifurcation of Aurora's claim under 11 U.S.C. § 506(a), based on the full loan balance as reduced over time, taking into account the original maturity date and the then current interest rate. Aurora must credit part of each monthly payment to interest, calculated by applying the then current interest rate to Aurora's allowed secured claim, as reduced by prior payments of principal under this sub-paragraph 2(a) and by payments of arrears under sub-paragraph 2(b), below, and must credit the remainder of each monthly payment to Aurora's allowed secured claim until it is paid in full. (b) The Debtor's chapter 13 plan must provide for payment in full of the arrearage on Aurora's loan, in the aggregate amount of $21,019.08, in monthly installments over the term of the plan. Each payment of arrears under the Debtor's plan must be applied by Aurora in reduction of its allowed secured claim. If the loan agreement and applicable non-bankruptcy law require that interest be paid on the arrearage pursuant to section 1322(e), the Debtor's plan must provide for payment of such interest on a monthly basis and such interest will not be applied in reduction of Aurora's allowed secured claim but will be received by Aurora as additional interest on its loan." The deficiency claim would be treated as unsecured.).
In re Quiros-Amy, 456 B.R. 140, 147 (Bankr. S.D. Fla. Sept. 19, 2011) (Olson) (Citing In re Gerardin, 447 B.R. 342 (Bankr. S.D. Fla. Mar. 28, 2011) (Mark, Isicoff, Cristol), debtor ineligible for discharge because of § 1328(f) cannot strip off wholly unsecured junior lien because of lien retention requirement in § 1325(a)(5)(B)(i). "The very nature of a Chapter 20 case renders it impossible for the junior lienholder to have anything other than an 'allowed secured claim' against the bankruptcy estate because . . . (1) the debtor's in personam liability was discharged in the prior Chapter 7 case; (2) the junior lienholder continues to have a claim . . . ; (3) the junior lienholder's claim in the subsequent Chapter 13 case is enforceable against property of the debtor . . . ; (4) since the junior lienholder's claim cannot be an unsecured claim and cannot be disallowed under 11 U.S.C. § 502(b)(1), it must be an 'allowed secured claim' . . . . The junior lienholder's claim must accordingly be treated under 11 U.S.C. § 1325(a)(5).").
In re Agustin, 451 B.R. 617 (Bankr. S.D. Fla. June 27, 2011) (Olson) (Rejecting In re Jerrils, No. 09-23346-BKC-PGH, 2010 WL 297941 (Bankr. S.D. Fla. Jan. 13, 2010) (unpublished) (Hyman), debtors may not stack §§ 506(a)(1), 1322(b)(2) and 1322(b)(5) to bifurcate unprotected mortgage, adjust interest rate and extend payments on secured portion beyond life of plan. To take advantage of § 1322(b)(5) and extend payments beyond life of plan, debtors must maintain regular contract payments, including both interest rate and monthly amount. Alteration in any manner of contract payments beyond life of plan would not constitute "maintaining payments.").
In re Granda, No. 10-34473-AJC, 2011 WL 2533002 (Bankr. S.D. Fla. June 23, 2011) (Cristol) (Market value of home was less than first mortgage claim, reducing second mortgage to unsecured, but order would not be recordable or enforceable until debtors received discharge. Property could not be sold or refinanced without further order of court.).
In re Gerardin, 447 B.R. 342, 345-52 (Bankr. S.D. Fla. Mar. 28, 2011) (Mark, Isicoff, Cristol) (Rejecting In re Tran, 431 B.R. 230 (Bankr. N.D. Cal. June 25, 2010) (Jellen), and embracing In re Fenn, 428 B.R. 494 (Bankr. N.D. Ill. May 17, 2010) (Cox), debtors not eligible for discharge because of § 1328(f) must satisfy lien retention requirement in § 1325(a)(5)(B)(i)(II) and cannot strip off wholly unsecured junior liens. "In [Dewsnup v. Timm, 502 U.S. 410, 112 S. Ct. 773, 116 L. Ed. 2d 903 (Jan. 15, 1992)], the Supreme Court held that § 506(d) did not mean that a lien would be modified based solely upon a § 506(a) valuation. Instead, it held that § 506(d) acts to avoid liens only if the underlying claim is disallowed. . . . Dewsnup does not preclude lien stripping in chapter 13 cases. However, a chapter 13 debtor may not strip down a lien secured solely by a debtor's principal residence. 11 U.S.C. § 1322(b)(2); Nobelman v. American Savings Bank, 508 U.S. 324, 113 S. Ct. 2106, 124 L. Ed. 2d 228 [(June 1, ]1993). Nonetheless, in the Eleventh Circuit, as well as several other circuits, a debtor may strip off a lien even if it is secured solely by a debtor's principal residence, if the creditor's claim is completely unsecured because the property is worth less than the senior liens. Tanner v. First-Plus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. [July 13,] 2000) [(Black, Carnes, Kravitch)]. . . . However, Tanner is inapposite. The Eleventh Circuit focused its attention on the interplay between section 506(a) and section 1322(b)(2) in light of the Nobelman holding. It did not consider how section 1325(a) and a prior bankruptcy discharge might impact the treatment of a lien. . . . [A] § 506(a) valuation must be implemented in conjunction with another provision of the Bankruptcy Code to accomplish the strip down or strip off of a lien. . . . [Section] 1325 is the applicable section, and . . . lien stripping may not be accomplished under § 1325 when a debtor is ineligible to receive a discharge. . . . In Johnson v. Home State Bank, 501 U.S. 78, 11 S. Ct. 2150, 115 L. Ed. 2d 66 ([June 10,] 1991), the Supreme Court ruled that a creditor with an obligation secured by a lien on a debtor's property, but which creditor has no in personam claim against a debtor due to a prior bankruptcy discharge, nonetheless has a claim against a debtor in a subsequent chapter 13 case. . . . [T]he Court interprets that ruling to mean that the claim that exists after the Debtors' chapter 7 discharge is a secured claim. . . . For debtors to strip off a lien in a chapter 13 case, their proposed treatment of the secured claim must comply with 11 U.S.C. § 1325(a)(5). . . . This Court rejects the analysis of Tran and its progeny and agrees with the many other courts which have held that a debtor's inability to receive a discharge in a 'Chapter 20' case prevents a debtor from stripping wholly unsecured liens in a Chapter 13 plan as the actual strip off or lien avoidance only occurs at discharge. . . . The Court believes the Fenn court got it right. . . . [A] debtor who is ineligible for a chapter 13 discharge may not strip down or strip off a lien.").
In re Gruenberg, No. 10-36992-BKC-AJC, 2011 WL 1115001 (Bankr. S.D. Fla. Mar. 24, 2011) (Cristol) (Homeowners' association failed to prove equity to support its lien for maintenance and association dues; lien would be avoided upon entry of discharge. Unlicensed and unregistered salesperson could not qualify as valuation expert.).
In re Elibo, 447 B.R. 359, 364 (Bankr. S.D. Fla. Mar. 15, 2011) (Kimball) (When mortgage was not protected from modification, § 1322(b)(2) and (b)(5) are not mutually exclusive; using subsections in conjunction permits bifurcation but requires curing default and maintaining interest rate and monthly payment. Rejecting In re Enewally, 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), and agreeing with In re McGregor, 172 B.R. 718 (Bankr. D. Mass. Oct. 21, 1994) (Queenan): "[T]o the extent section 1322(b)(2) is implicated by claim bifurcation under section 506(a), a debtor may employ subsections (b)(2) and (b)(5) together to modify the rights of a secured creditor and cure and maintain payments beyond the life of the plan until the allowed secured claim is paid in full. However, a debtor may not modify the interest rate on a loan and extend payments beyond the life of the plan under section 1322(b)(5). Such plan treatment may only be accomplished under section 1322(b)(2) and the time restrictions of section 1322(d) would apply.").
In re Avendano, No. 09-36558-BKC-AJC, 2010 WL 5058390 (Bankr. S.D. Fla. Dec. 3, 2010) (Cristol) (Without deciding valuation date—petition or effective date of plan—junior mortgage was wholly unsecured and could be stripped off; creditor has allowed unsecured claim, and lien is retained until discharge. If case is converted or dismissed, lien is not avoided.).
In re Valdes, No. 09-26712-BKC-AJC, 2010 WL 3956814, at *4, *3 (Bankr. S.D. Fla. Oct. 4, 2010) (Cristol) (Citing Washington Mutual Bank v. Enewally (In re Enewally), 368 F.3d 1165 (9th Cir. May 27, 2004) (Canby, Rymer, Thomas), "[a] debtor may not use § 506(a) in combination with § 1322(b)(5) to reduce the secured claim and repay the claim over a period exceeding the plan. . . . Section 1322(b)(2) does not allow a modified secured debt to be paid over a period of time longer than the plan terms[.]" Plan can modify secured claim that is not protected by § 1322(b)(2) but can't then provide new promissory note extending beyond plan life. Absent consent of creditor, secured claim that is subject to modification, after valuation under § 506, must be paid in full over life of plan under § 1325(a)(5), "at which time the lien will be discharged, or the secured creditor must be paid the arrearage and regular monthly contract payments through the plan consistent with 11 U.S.C. § 1322(b)(2), and at the conclusion of the plan the unsecured portion of the lien will be discharged." Debtor's interpretation of Code "would allow a Chapter 13 debtor to cram down the claim of a secured creditor of the principal amount of the creditor's lien, at a reduced interest rate—which rate is lowered under [Till v. SCS Credit Corp., 541 U.S. 465, 124 S. Ct. 1951, 158 L. Ed. 2d 787 (May 17, 2004),] based upon the increased assurance of payment under a plan—and, then replace the less risky payment scheme under a plan with a promissory note to the creditor to be paid over a lengthy period of time exceeding the plan terms." When plan proposes to modify payment terms, all payments must be completed during plan duration. If contract terms are not modified, debtor may maintain principal and interest payments called for by note during life of plan and thereafter.).).
In re Valls, No. 09-35347-BKC-LMI, 2010 WL 2745951 (Bankr. S.D. Fla. July 6, 2010) (unpublished) (Isicoff) (After consideration of conflicting appraisals, second mortgage was wholly unsecured and would be void upon entry of discharge; if case were converted or dismissed, junior lien would be restored as valid lien. Property may not be sold or refinanced without notice and further order.).
In re Gonzales, No. 07-14968-BKC-AJC, 2010 WL 1571172 (Bankr. S.D. Fla. Apr. 20, 2010) (unpublished) (Cristol) (Junior lien held by condominium association may be avoided as wholly unsecured, leaving allowable unsecured claim. Under Florida law, condominium associations are entitled to lesser of six months' unpaid condominium assessments or 1% of original mortgage.).
In re Jerrils, No. 09-23346-BKC-PGH, 2010 WL 297941 (Bankr. S.D. Fla. Jan. 13, 2010) (Hyman) (When real estate was not principal residence, debtors may bifurcate and continue paying secured claim over term of original note, extending beyond length of plan; plain language of § 1322(b) allows conjunctive relief using combination of § 1322(b)(2) and (b)(5).).
In re Santiago, No. 08-15360-BKC-LMI, 2009 WL 3515705, at *3 (Bankr. S.D. Fla. Oct. 29, 2009) (unpublished) (Isicoff) (Plan cannot replace note on nonresidential property with new note in amount equal to value of real property payable over 27½ years. Even if new note constituted property under § 1325(a)(5)(B), plan cannot distribute property over period exceeding plan term. Debtor may modify payments on note—in which case payments must be completed during plan term—or maintain payments under note, curing any prepetition default. "Because the Plan seeks to modify the payment terms of the Note, albeit indirectly, and circumvent the payment requirements of the Bankruptcy Code, the Sixth Amended Plan fails to satisfy the requirements of 11 U.S.C. § 1322(c) and 11 U.S.C. § 1325(a)(5) and is not confirmable.").
Georgia
Northern District of Georgia
In re Beam, 510 B.R. 399 (Bankr. N.D. Ga. Mar. 27, 2014) (Drake) (Wholly unsecured junior mortgage could not be stripped when confirmed plan treated creditor as secured. Plan could not be modified to reclassify creditor as unsecured—debtor bound by res judicata effect of confirmed plan.).
In re Bouie, No. 13-1184-WHD, 2014 WL 2006573 (Bankr. N.D. Ga. Mar. 27, 2014) (Drake) (Citing Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Kravitch, Black, Carnes), after battle of appraisers, wholly unsecured junior lien is void and will be extinguished upon entry of discharge in Chapter 13 case; stripped claim is allowed as general unsecured claim.).
In re Anderson, No. 12-51191-MGD, 2012 WL 2930108 (Bankr. N.D. Ga. June 15, 2012) (Diehl) (Plan could modify mortgage secured by nonresidential real property, to pay value of collateral within life of plan with stipulated interest.).
Moore v. Delta Cmty. Credit Union (In re Moore), No. 11-01051, 2012 WL 2870710 (Bankr. N.D. Ga. May 15, 2012) (Drake) (Credit union's lien was wholly unsecured and would be void on entry of discharge; in event of dismissal or conversion, lien would remain valid.).
In re Jennings, 454 B.R. 252, 255-60 (Bankr. N.D. Ga. July 11, 2011) (Mullins) (Subject to review for good faith, debtors ineligible for discharge because of § 1328(f) can strip off wholly unsecured junior lien without violating antimodification protection in § 1322(b)(2); § 1325(a)(5) does not apply after application of § 506(a). Citing Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), "[t]he anti-modification provision only protects the rights of creditors classified as holders of secured claims after applying section 506(a). . . . Plan completion voids the lien. Discharge cannot be the legal mechanism that voids the lien. . . . There is an accruing split of authority among courts across the country regarding the permissibility of chapter 20 lien stripping. . . . [T]his split of authority can be grouped into three approaches. In the first approach courts hold that chapter 20 lien stripping is impermissible because it amounts to a de facto discharge. . . . [T]he second approach permit[s] chapter 20 lien stripping; however after plan consummation, without a discharge, the parties' pre-bankruptcy rights are reinstated. . . . [T]he third approach allow[s] chapter 20 lien stripping because nothing in the Bankruptcy Code prevents it. . . . [N]othing in the Bankruptcy Code prevents chapter 20 lien stripping. Pursuant to BAPCPA, Congress was deliberate in only prohibiting discharge in a chapter 20 case. . . . Lien-stripping is one of the tools in the chapter 13 toolbox. And use of the chapter 13 lien stripping tool is not conditioned on discharge eligibility. . . . Although Debtors may strip the liens securing the claims of the second mortgagees, the plans must treat the allowed claims as unsecured claims. . . . [S]ection 1325(a)(5) does not apply. . . . [I]f the plan is filed in good faith, a chapter 20 debtor may strip off the lien of a wholly underwater second mortgage in a chapter 13 plan.").
In re Baker, No. 10-67569-PWB, 2010 WL 2836785, at *1 n.1 (Bankr. N.D. Ga. June 28, 2010) (unpublished) (Bonapfel) (Wholly unsecured junior mortgage was subject to avoidance as to debtor's interest only, and in event of dismissal or conversion, lien would not be affected by lien stripping. Schedule A reflected that debtor owned property jointly with nondebtor spouse. "[O]nly the Debtor's (presumably) one-half interest is property of the estate. Because Ms. Baker's one-half interest is not property of the estate, the lien continues to exist on her interest in the property.").
In re Tessema, No. A10-64124-PWB, 2010 WL 2600723, at *1 (Bankr. N.D. Ga. June 1, 2010) (unpublished) (Bonapfel) (Motion to determine secured status of junior mortgage was denied without prejudice when plan did not provide for claim and attempt to strip off wholly unsecured junior mortgage required specific motion or adversary proceeding. Although Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), recognized right to strip off wholly unsecured residential lien in Chapter 13, "[s]ections 506(a) and (d) do not provide an independent mechanism for this result. Because the Debtors seek to modify a secured creditor's rights, a motion or adversary proceeding is appropriate. But the relief sought by motion or complaint must be predicated on a chapter 13 plan that provides for such a modification.").
Southern District of Georgia
Etheridge v. CitiMortgage Inc. (In re Etheridge), 546 B.R. 896 (Bankr. S.D. Ga. Jan. 28, 2016) (Davis) (In dicta, Bank of America, N.A. v. Caulkett, __ U.S. __, 135 S. Ct. 1995, 192 L. Ed. 2d 52 (June 1, 2015), calls into question whether Tanner v. FirstPlus Financial, Inc. (In re Tanner), 217 F.3d 1357 (11th Cir. July 13, 2000) (Black, Carnes, Kravitch), remains good law.).
Davis v. Springleaf Fin. Servs., Inc. (In re Davis), 547 B.R. 480 (Bankr. S.D. Ga. Sept. 9, 2015) (Davis) (Wholly unsecured junior lien may be stripped off upon entry of Chapter 13 discharge.).
In re Braden, 516 B.R. 672, 679 (Bankr. S.D. Ga. Sept. 18, 2014) (Dalis) (Failure to serve lien-strip motion in compliance with Bankruptcy Rule 7004(h) was not ground to set aside order stripping junior lien under either Federal Rule 59(e) or 60(b) when creditor had actual notice of motion and creditor had no evidence that property was worth more than value presented by debtor. "Service of process required under Rule 7004 is . . . not constitutionally mandated. . . . [A] movant must both identify a technical inadequacy in the notice provided and establish the denial of a right to due process in order to prove a judgment is void. . . . A party afforded actual notice consistent with constitutional standards cannot claim a violation of its constitutional due process rights simply because the technical requirements for service of process were not met.").
In re Smith, 514 B.R. 331, 338 (Bankr. S.D. Ga. July 23, 2014) (Davis) (Adversary proceeding required to strip off wholly unsecured junior mortgage lien. "[A]n attack on a mortgage lien or security deed based solely on 'value' is . . . an attack on its 'validity' under state law if that state law holds that a security deed remains viable after a bankruptcy discharge. . . . [N]othing in Georgia law renders the in rem elements of a deed to secure debt avoidable or invalid simply because it has no underlying monetary value to secure the balance . . . . The avenue to contest 'validity' is created in Rule 7001(2) . . . . [T]he procedural safeguards inherent in that rule should not be disregarded based on narrow definitions of 'validity' adopted by many courts.").
Best v. GMAC Mortg. LLC (In re Best), No. 11-06015, 2012 WL 2905748, at *6 (Bankr. S.D. Ga. July 5, 2012) (Dalis) (Debtor failed to show that junior lien was wholly unsecured; confirmed plan purporting to strip lien was not adequately noticed to lienholder. Valuation provision was not clear. GMAC's claim was listed as undersecured or partially secured, which was inconsistent with lien's being wholly unsecured. "The notice required to strip off a wholly unsecured lien through a chapter 13 plan includes two aspects: (1) Notice of the plan must be satisfactory under the circumstances and (2) the valuation provision in the plan must be 'clear and unambiguous.'").
L. D.C. Circuit
District of Columbia
In re Tyus, No. 09-00003, 2009 WL 3246286 (Bankr. D.D.C. Oct. 3, 2009) (unpublished) (Teel) (Observing that attempt to strip lien on residential real property required adversary proceeding, issue was moot when IRS was not asserting real property lien.).
In re Swiatkowski, No. 09-00168, 2009 WL 3202611 (Bankr. D.D.C. Sept. 29, 2009) (unpublished) (Teel) (Motion to avoid junior deed of trust denied without prejudice to filing an adversary proceeding when it would be necessary for court to determine value and relative priority of competing liens.).