Stripping in 7 – Yes or No? McNeal v. GMAC

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

For technical “binding precedent” reasons, the 11th Circuit has reversed the lower courts, and permitted the stripping of wholly unsecured 2nd mortgage in a Chapter 7 case.

The basis for the decision is a pre-Dewsnup holding of the 11th Circuit, in 1989, allowing mortgage stripping in Chapter 7 cases.

The holding in McNeal v. GMAC Mortg., LLC (In re McNeal), 2012 U.S. App. LEXIS 9589 (11th Cir May 11, 2012) is based on the concept that Dewsnup – which involved an attempt to cramdown a . . .

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