In re Scantling, 465 B.R. 671, 675–82 (Bankr. M.D. Fla. 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.”

No Author Biography has been linked to this Article.

Related Articles

June 28, 2020
By Cathy Moran, Esq. (Redwood City, CA) Long after the human patients recover from the coronavirus, small businesses will still be ailing. And long nights will be spent deciding whether to try to stay in business. As bankruptcy lawyers, we’re going to see people in pain trying to assess what to do next. Business owners may see the exit heading...
Members
Copy of Hildebrand-2016
September 25, 2022
Where a debtor and debtor’s counsel initiated a Chapter 13 petition in an effort to halt a foreclosure against property held by the debtor’s LLC, and where the debtor took no steps to correct the filing, sanctions would be imposed against debtor’s counsel. (Grabill) In re Scaccia, 2022 WL 1216284 (Bankr. E.D. La. April 25, 2022) Case Summary Scaccia owned...
Members
moran_cathy
October 30, 2022
Spending every dollar they make, and then some, is often how our Chapter 13 clients got into financial trouble. Yet Chapter 13, as practiced, validates the practice of continuing to spend 100% of each month’s income during the life of the plan. In doing so, we, as a society, squander the chance to use Chapter 13 to teach new budgeting...
Members
March 31, 2019
By Wm. Houston Brown, United States Bankruptcy Judge (Retired) Lien Modification - Modification of mortgage on mixed-use property. Reviewing the split of authority on whether a Chapter 13 debtor may modify a mortgage on property used for both business and residential purposes and when the use determination is made, the bankruptcy court adopted the filing date as the appropriate time...
Members
March 17, 2019
By Herbert L. Beskin, Chapter 13 Trustee for the Western District of Virginia (Charlottesville) *Special thanks to Gretchen D. Holland for editing this article. Facts In Vieira v. Gaither (In re Gaither), Bankr. D. S.C., # 18-01317-dd, Adv. Pro. 18 80040-dd, Chapter 7 case; 11/30/18 opinion (Duncan); 2018 Bankr. LEXIS 3816, the Debtors’ son died in an aviation accident in...
Members
April 28, 2019
By William H. Brown, Adviser to The Academy d/b/a ConsiderChapter13.org In the most recent opinion on the issue, as of this writing, the Court in In re Rivera, 2019 WL 1430273 (Bankr. D. Ariz. Mar. 28, 2019), in perhaps still a minority view, concluded that debtors’ default in making all direct postpetition mortgage payments was not a failure to complete...
Members
Copy of Hildebrand-2016
I never set out to be a bankruptcy lawyer, much less a trustee. It was always my intent to be trial lawyer. The thrill of victory, the agony of defeat, and the captive audience of a jury; having to think fast on your feet was exciting. Facing jurors and witnesses with a modicum of confidence was what my view of...
December 15, 2019
Two things taxpayers can do to protect themselves from identity theft is to use strong passwords and keep those passwords secure. While many people use fingerprint or facial recognition technology to protect their devices, sometimes it’s still necessary to use a password. In recent years, cybersecurity experts’ recommendations on what constitutes a strong password has changed. With that in mind,...
August 8, 2021
by William Houston Brown, Adviser, Academy for Consumer Bankruptcy Education, Inc. The Senate Judiciary Committee held a hearing on August 3, 2021, on student loans, and during the Committee hearing, Senator Durbin, Chair of the Committee, stated that he would be introducing an Act to amend student loan discharge provisions in the Bankruptcy Code. That Act was subsequently introduced by...
Members
September 22, 2019
By Jan Hamilton, Chapter 13 Standing Trustee (Topeka, KS) I. The Plan1 A. Notions to Consider before the Plan is Filed… Time for Filing of the Plan. No later than 90 days after the filing of the case, the debtor is required to file a plan, unless the court extends the time if the “need is attributable to circumstances for...
Members

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: