Underwater Junior Mortgage Strip Off: Should a Court Strip Off a Wholly Unsecured Lien When the Debtor is Ineligible for Discharge?

By Vera Kanova, J.D. Candidate, May 2013, The Pennsylvania State University, The Dickinson School of Law

I. Introduction

Consider a familiar scenario: a woman with unmanageable credit card debt and two underwater mortgages on her principal residence files a Chapter 7 petition and receives a discharge. She has kept her mortgages current, but still struggles to make payments post-discharge. Within a few years, she seeks her bankruptcy counsel's advice, and he tells her that she might be able to file a Chapter 13 case to avoid the second mortgage. Should a . . .

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