Stripping With A Discharge: As Sexy As Bankruptcy Gets - The Status of Stripping Junior Mortgages Secured Only By Debtor’s Residence in Chapter 13 When the Debtor is Eligible for a Discharge • NACTT Academy

Stripping With A Discharge: As Sexy As Bankruptcy Gets – The Status of Stripping Junior Mortgages Secured Only By Debtor’s Residence in Chapter 13 When the Debtor is Eligible for a Discharge

By: John Gustafson, Standing Chapter 13 Trustee, Northern District of Ohio, Western Division

The United States Supreme Court has held that mortgages on a debtor’s primary residence cannot be modified in a Chapter 13, even if they are undersecured. Nobelman v. American Savings Bank, 508 U.S. 324, 124 L. Ed. 2d 228, 113 S. Ct. 2106 (1993). The question, after Nobelman, was whether the holding, interpreting §1322(b)(2) as prohibiting the cramdown of under-secured liens, should be extended to protect junior liens that are wholly unsecured by any . . .

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