{"id":11205,"date":"2012-05-14T15:53:26","date_gmt":"2012-05-14T22:53:26","guid":{"rendered":"https:\/\/fleysherlaw.com\/?p=347"},"modified":"2023-02-22T15:06:04","modified_gmt":"2023-02-22T15:06:04","slug":"lien-stripping-now-possible-with-chapter-7-bankruptcy","status":"publish","type":"post","link":"https:\/\/fleysherlaw.com\/blog\/foreclosure\/lien-stripping-now-possible-with-chapter-7-bankruptcy\/","title":{"rendered":"Stripping an Unsecured 2nd Mortgage in Chapter 7 Bankruptcy. Can it be?"},"content":{"rendered":"\n

Previously, lien stripping was something that could only be done in Chapter 13. However, a recent opinion from the 11th<\/sup> Circuit has changed that rule. Here, a Chapter 7 debtor in Georgia sought to strip off a second mortgage that was totally unsecured. The 11th<\/sup> Circuit reversed the Bankruptcy Court. And, they found that the lien could be stripped off pursuant to the plain language of the Bankruptcy Code.<\/p>\n\n\n\n

It is an old belief that the Supreme Court\u2019s decision in Dewsnup v. Timm precluded a Chapter 7 debtor from stripping off a lien. However, the Supreme Court only addressed stripping down in Chapter 7. Stripping down is the process of reducing a secured claim to the value of the property it secures. There is a very clear difference between the two.<\/p>\n\n\n\n

While this is a Georgia case, 11th<\/sup> Circuit decisions are controlled in Florida; because Florida is part of the 11th<\/sup> Circuit. Accordingly, it will be interesting to see how bankruptcy judges in our district rule when they face this new case law.<\/p>\n\n\n\n

If you have questions about foreclosure<\/a>, loan modification<\/a>, bankruptcy<\/a>, or other alternatives, please feel free to call my office at 954-484-9987<\/a>, send an e-mail to emil@fleysherlaw.com<\/a>, or complete the contact form below.<\/p>\n\n\n\n