Supreme Court Declares 2nd Liens Can’t be Stripped in Chapter 7 Bankruptcy

Bankruptcy, Chapter 7 Bankruptcy, Second lien, Second mortgage, Strip off second lien, strip off second mortgage, Bank of America

The Supreme Court ruled in favor of Bank of America to stop second lien stripping in Chapter 7 bankruptcies.

Banks win out after the Supreme Court ruled on Monday that homeowners cannot rid themselves of a second mortgage by filing for bankruptcy protection. All nine Supreme Court justices unanimously agreed that filing for Chapter 7 bankruptcy will not void a junior mortgage lien when the amount owed by the senior lien surpasses the current amount of the collateral if the homeowner’s claim is both allowed under the bankruptcy code and is secured by a lien.

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