Other Lien Stripping Issues

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

A. Chapter 7 – Debtors can’t use Section 506 for lien avoidance. Period.

The strong majority view is that Section 506 has no application in Chapter 7 cases. Only the reorganization cases permit liens to be stripped using §506:

[L]ien strip-off using § 506(a) and § 506(d) in chapter 7 is impermissible because §506 provides no independent power for a debtor to avoid a lien. See e.g. Laskin v. First . . .

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