Senior Headaches Caused by Junior Liens: Lien Stripping Under § 522(f)

“In evaluating lien avoidance, we often default to the most common scenario: a first mortgage, perhaps a second mortgage, and the debtor’s homestead exemption. The question then becomes, is the total of these obligations more than the value of the property? If so, the judicial liens are avoided. If not, the judicial liens are either partially avoidable or fully secured.But that’s not quite how it works.” What a treat!!!! With no tricks. Judge Gustafson and Law Clerk Omshehe bring subscribers an in-depth look at the sexy topic of stripping.

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arya
Law Clerk to the Hon. John P Gustafson

Arya Omshehe joined the U.S. Bankruptcy Court for the Northern District of Ohio, Western Division, as a Judicial Law Clerk to Judge John P. Gustafson in 2023. A first-generation Iranian American, Arya is the first in his family to graduate from law school and become an attorney. Prior to law school, he worked closely with distressed student loan borrowers, educating them on insolvency and Department of Education repayment assistance plans.

His commitment to client advocacy led him to intern for Judge Diane Finkle in the U.S. Bankruptcy Court for the District of Rhode Island during law school. Additionally, Arya served as an executive editor on the law review board, a teaching and research assistant for various professors and courses, and law clerk at a boutique Rhode Island law firm.

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United States Bankruptcy Judge, Northern District of Ohio

John P. Gustafson was appointed United States Bankruptcy Judge for the Northern District of Ohio in April 2014. In his former life, he was a bankruptcy law clerk, an associate and partner in a law firm representing both debtors and creditors, a solo bankruptcy practitioner representing debtors, banks and trustees, the staff attorney to a Chapter 13 trustee, and from October 2007 to April 2014 he was the Standing Chapter 13 Trustee for the Northern District of Ohio, Western Division. Judge Gustafson regularly writes and speaks on a variety of bankruptcy issues.

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JamesDavis
February 25, 2024
“Over the years courts have struggled to apply the lien-avoidance provisions under § 522(f) to jointly owned property. . . .Things get even more confusing when the debtor owns property as a tenancy by the entireties. That antiquated form of ownership has odd characteristics that do not fit well into the § 522(f) calculation.”
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bobdrummond
October 20, 2024
“Can a Debtor avoid a lien when a creditor holds a secured position that preceded the Debtor’s ownership interest . . . ? Judge Michelle Harner, . . . recently addressed this issue.
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