PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 12-1156

In Re: JOSE ALFREDO PINEDA ALVAREZ,

Debtor.

-------------------------

JOSE ALFREDO ALVAREZ; MEYBER L. ALVAREZ,

Plaintiffs – Appellants,

v.

HSBC BANK USA, NATIONAL ASSOCIATION,

Defendant – Appellee,

and

NANCY SPENCER GRIGSBY,

Trustee.

------------------------

LARTEASE MARTRELL TIFFITH,

Court-Assigned Amicus Counsel.

Appeal from the United States District Court for the District of 

Maryland, at Greenbelt. Marvin J. Garbis, Senior District 

Judge. (8:11-cv-02886-MJG; 10-31729; 11-00067)

Argued: September 17, 2013 Decided: October 23, 2013
2

Before GREGORY, DAVIS, and KEENAN, Circuit Judges.

Affirmed by published opinion. Judge Keenan wrote the opinion, 

in which Judge Gregory and Judge Davis joined.

John Douglas Burns, BURNS LAW FIRM, LLC, Greenbelt, Maryland, 

for Appellants. Lartease Martrell Tiffith, O'MELVENY & MYERS, 

LLP, Washington, D.C., as Court-Assigned Amicus Counsel. 
3

BARBARA MILANO KEENAN, Circuit Judge:

In this case, we consider a district court’s judgment 

upholding a bankruptcy court’s refusal to “strip off” a 

“valueless lien” against certain real property that a debtor 

owned with his non-debtor spouse as tenants by the entireties.1 

On appeal, the debtor and his spouse contend that the bankruptcy 

court erred in refusing to strip off the lien on the ground that 

the spouse’s property interest was not part of the bankruptcy 

estate. 

Upon our review, we conclude that the statutory provisions 

authorizing a strip off, and applicable Maryland property law, 

do not permit a bankruptcy court to alter a non-debtor’s 

interest in property held in a tenancy by the entirety. 

Therefore, we hold that the bankruptcy court correctly 

determined that it lacked authority to strip off the debtor’s 

valueless lien because only the debtor’s interest in the estate, 

rather than the complete entireties estate, was before the 

bankruptcy court. We affirm the district court’s judgment. 

 

 1 The term “debtor” means a person who has filed a 

bankruptcy petition. See 11 U.S.C. § 101(13). 
4

I.

A.

We begin by describing the statutory framework for 

stripping off a valueless lien in a bankruptcy proceeding. 

Generally, a creditor’s lien on real property passes through 

bankruptcy unaffected and “stays with the real property until 

the foreclosure,” based on the bargained-for agreement between a 

mortgagor and mortgagee. Dewsnup v. Timm, 502 U.S. 410, 417 

(1992); accord Cen-Pen Corp. v. Hanson, 58 F.3d 89, 92 (4th Cir. 

1995). Thus, while a discharge in bankruptcy eliminates a 

lienholder’s in personam rights against a debtor, the 

lienholder’s in rem rights in the collateral property ordinarily 

remain intact despite a discharge. Dewsnup, 502 U.S. at 418 

(citing Johnson v. Home State Bank, 501 U.S. 78, 84 (1991)); 

Cen-Pen Corp., 58 F.3d at 92. 

This Court recently determined, however, consistent with 

every other circuit to have considered the question, that in a 

typical Chapter 13 proceeding, a bankruptcy court has the 

authority to strip off a completely valueless lien on a debtor’s 

primary residence, thereby eliminating a lienholder’s in rem

rights against the collateral property (strip off or lien 

strip). Branigan v. Davis, 716 F.3d 331, 335-36 (4th Cir. 2013) 

(citing other circuit cases addressing the issue). We explained 
5

that such authority is based on application of 11 U.S.C. 

§§ 506(a) and 1322(b)(2).2 Id. at 335.

To effectuate a lien strip, a bankruptcy court first 

considers the valuation provision contained in § 506(a), which 

states: 

An allowed claim of a creditor secured by a lien on 

property in which the estate has an interest . . . is 

a secured claim to the extent of the value of such 

creditor’s interest in the estate’s interest in such 

property . . . and is an unsecured claim to the extent 

that the value of such creditor’s interest . . . is 

less than the amount of such allowed claim.

11 U.S.C. § 506(a)(1). Thus, the status of a lienholder’s claim

“as secured or unsecured depends on the value of the 

collateral.” Branigan, 716 F.3d at 335. 

A bankruptcy court next applies § 1322(b)(2), which 

addresses the debtor’s reorganization plan and permits debtors 

in such plans to modify the rights of holders of unsecured 

claims.3 “The end result is that section 506(a), which 

 2 In their complaint in the bankruptcy court, the Alvarezes 

cited 11 U.S.C. § 506(a) and (d), and § 1322(b)(2), in their 

request for a lien strip. However, before the formal briefing 

in this appeal began, this Court decided Branigan and held that 

the statutory basis for a strip off is found in 11 U.S.C. §§ 

506(a) and 1322(b), without application of § 506(d). In the 

Alvarezes’ brief, they acknowledge our holding in Branigan and 

concede that § 506(d) does not provide statutory support to 

complete a lien strip. 

3 Under 11 U.S.C. § 1322(b)(2), a debtor’s plan may “modify 

the rights of holders of secured claims, other than a claim 

secured only by a security interest in real property that is the 

(Continued)
6

classifies [completely] valueless liens as unsecured claims, 

operates with section 1322(b)(2) to permit a bankruptcy court, 

in a Chapter 13 case, to strip off a lien against a primary 

residence with no value.” Branigan, 716 F.3d at 335.

When a bankruptcy court confirms a debtor’s reorganization 

plan, the plan binds the debtor and his creditors. 11 U.S.C. 

§ 1327(a). A lien strip becomes effective and permanently 

eliminates a lienholder’s in rem rights against the collateral 

property upon completion of a debtor’s reorganization plan. 

Branigan, 716 F.3d at 338. 

B.

In the present case, Jose Alvarez (Mr. Alvarez) filed a 

Chapter 13 petition in the United States Bankruptcy Court for 

the District of Maryland. In that petition, Mr. Alvarez 

identified his property, including his interest in his primary 

residence located in Maryland (the property or the entireties 

property). The property is owned by Mr. Alvarez and his wife, 

Meyber L. Alvarez (Mrs. Alvarez), as tenants by the entireties. 

Mrs. Alvarez was not a party to Mr. Alvarez’s bankruptcy 

petition, nor did she file a separate bankruptcy petition.

 

debtor’s principal residence, or of holders of unsecured claims, 

or leave unaffected the rights of holders of any class of 

claims.”
7

At the time Mr. Alvarez’s bankruptcy petition was filed, 

the property had a value of $442,400.00 and was encumbered by 

two mortgage liens.4 The first-priority mortgage lien, held by 

Chase Home Finance, had a balance of $447,572.84. HSBC Mortgage 

Service (HSBC) held the second-priority mortgage lien with a 

balance of $75,455.08. Thus, the value of the property when the 

petition was filed was less than the full amount owed on the 

first-priority lien, rendering the second-priority lien 

valueless.

In accordance with the Federal Rules of Bankruptcy 

Procedure, Mr. and Mrs. Alvarez jointly filed a complaint in the 

bankruptcy court against HSBC. In their complaint, the 

Alvarezes maintained that because HSBC’s lien was completely 

valueless and, thus, was unsecured under 11 U.S.C. § 506(a), 

they were entitled to strip off the lien.5

 The bankruptcy court 

denied the requested relief, concluding that the lien on the 

 4 According to an appraisal completed a few weeks after the 

bankruptcy petition was filed, the property had a value of 

$440,000.

5 In their complaint, Mr. and Mrs. Alvarez sought entry of 

default judgment based on the fact that HSBC had not filed a 

response to their action. Although the bankruptcy clerk of 

court initially entered a default, the bankruptcy court 

ultimately denied the motion to enter default judgment. On 

appeal, this Court appointed amicus curiae counsel to present 

argument opposing Mr. and Mrs. Alvarez’s position. 
8

entireties property could not be stripped because both tenants 

by the entireties had not filed a petition for bankruptcy.6 

The district court affirmed the bankruptcy court’s 

decision, and the Alvarezes timely filed the present appeal. We 

have jurisdiction under 28 U.S.C. § 158(d). See Educ. Credit 

Mgmt. Corp. v. Kirkland, 600 F.3d 310, 314 (4th Cir. 2010); Sumy 

v. Scholssberg, 777 F.2d 921, 922-23 (4th Cir. 1985). 

II.

The question before us is whether a bankruptcy court, in a 

Chapter 13 case filed by only one spouse, can strip off a 

valueless lien on property that the debtor and his non-debtor 

spouse own as tenants by the entireties. This is an issue of 

first impression among federal appellate courts, and bankruptcy 

courts have reached different conclusions in answering the 

question. Compare In re Hunter, 284 B.R. 806 (Bankr. E.D. Va. 

2002) (applying Pennsylvania law and concluding that an 

individual debtor spouse cannot strip off a lien on entireties 

property), and In re Pierre, 468 B.R. 419 (Bankr. M.D. Fla. 

2012) (reaching same result under Florida law), with, e.g., In 

re Strausbough, 426 B.R. 243 (Bankr. E.D. Mich. 2010) (applying 

 6 The bankruptcy court later denied the Alvarezes’ motion 

for reconsideration. 
9

Michigan law and determining that an individual debtor can strip 

a valueless lien on entireties property). 

When we review a district court’s judgment affirming a 

bankruptcy court’s decision, we employ a de novo standard and 

consider directly the bankruptcy court’s findings of fact and 

conclusions of law. Branigan, 716 F.3d at 334 (citing Morris v. 

Quigley, 673 F.3d 269, 271 (4th Cir. 2012)). We will not 

reverse the bankruptcy court’s factual findings absent clear 

error and review that court’s legal conclusions de novo. Id.

Also, because this appeal involves a debtor’s rights in real 

property, we consider established principles of Maryland law 

regarding property held in a tenancy by the entirety. See

Butner v. United States, 440 U.S. 48, 54 (1979) (“Congress has 

generally left the determination of property rights in the 

assets of a bankrupt’s estate to state law.”). 

Under Maryland law, a tenancy by the entirety is a joint 

tenancy of spouses with rights of survivorship between the 

spouses. Schlossberg v. Barney, 380 F.3d 174, 178 (4th Cir. 

2004) (citing Bruce v. Dyer, 524 A.2d 777, 780 (Md. 1987)). In 

such an estate, the property is not owned by either spouse 

individually, but by the marital unit, with each spouse having 

an undivided interest in the whole property. Id.; Arbesman v. 

Winer, 468 A.2d 633, 640 (Md. 1983). 
10

A tenancy by the entirety is created under Maryland law 

only when the four essential common law unities co-exist. 

Bruce, 524 A.2d at 780 (internal citation omitted). Those 

unities require “that the tenants enjoy identical interests; 

enjoy identical, undivided possession; and that the tenancy 

commence at the same time via the same instrument.” Id. 

While both spouses are alive, a tenancy by the entirety can 

be severed only by divorce or by the joint action of both 

spouses. Id. at 781. One spouse alone cannot alienate, convey, 

or encumber his or her interest in the entireties property. 

United States v. Gresham, 964 F.2d 1426, 1430 n.7 (4th Cir. 

1992) (citing Beall v. Beall, 434 A.2d 1015, 1021 (Md. 1981)). 

Also, the tenancy cannot be severed by individual judgment 

creditors during the tenants’ joint, married life. Beall, 434 

A.2d at 1021.

When an individual files a bankruptcy petition, a 

bankruptcy estate is created by operation of law. 11 U.S.C. 

§§ 301, 541(a). Subject to some exceptions not relevant here, 

11 U.S.C. § 541 mandates that a debtor’s bankruptcy estate 

contain “all legal or equitable interests of the debtor in 

property as of the commencement of the case.” 11 U.S.C. 

§ 541(a)(1). Thus, under this provision, a debtor’s undivided 

interest in entireties property is part of that debtor’s 

bankruptcy estate. In re Ford, 3 B.R. 559, 571 (Bankr. D. Md. 
11

1980), aff’d sub nom. Greenblatt v. Ford, 638 F.2d 14 (4th Cir. 

1981). 

In the present case, the district court and the bankruptcy 

court relied on In re Hunter, a bankruptcy court decision 

addressing the issue before us. See 284 B.R. 806. There, as in 

this case, only one of the tenants by the entireties had filed a 

petition in bankruptcy. Id. at 809. Applying Pennsylvania law 

governing tenancy by the entirety, the bankruptcy court 

determined that it lacked authority to strip off a valueless 

lien on property owned by the debtor and his spouse as tenants 

by the entireties because only the debtor’s interest in the 

entireties property, rather than the whole of the property, was 

before the bankruptcy court. Id. at 813-14. 

In addressing a related issue, this Court considered the 

special nature of a tenancy by the entirety under Maryland law, 

and held that when an individual owning property in such a 

tenancy files a bankruptcy petition, thereby creating a 

bankruptcy estate, such action “does not sever the estate of 

tenancy by the entirety” created under Maryland law. 

Greenblatt, 638 F.2d at 14-15. Relying on this reasoning in 

Greenblatt, the Alvarezes assert that the whole of their 

entireties property necessarily became part of Mr. Alvarez’s 

bankruptcy estate, because the entireties estate was not severed 
12

by his filing of the individual bankruptcy petition. We 

disagree with the Alvarezes’ argument. 

Our decision in Greenblatt v. Ford summarily affirmed the 

rationale applied by the bankruptcy court in that case. 638 

F.2d at 15. In its decision, the bankruptcy court made clear 

that when an individual who owns property in a tenancy by the 

entirety files for bankruptcy,

[t]he asset which becomes a part of the [bankruptcy] 

estate is only [the debtor’s] interest as it existed 

immediately before the commencement of the case . . . 

[his] individual undivided interest as a tenant by the 

entirety.

In re Ford, 3 B.R. at 575. 

The bankruptcy court in that case further explained that 

because a bankruptcy trustee obtains only custody of a debtor’s 

interest in entireties property, the filing of an individual 

bankruptcy petition and the creation of an individual bankruptcy 

estate do not sever the unities of a tenancy by the entirety. 

See id. at 570. Therefore, under our precedent and in 

accordance with principles of Maryland law, only Mr. Alvarez’s 

interest in the entireties property, and not the whole of the 

entireties property owned by the marital unit, became part of 

his bankruptcy estate. See Greenblatt, 638 F.2d at 14-15. 

Additionally, as we have explained, to achieve a lien 

strip, a Chapter 13 debtor’s reorganization plan ultimately 

modifies the unsecured creditor’s rights and removes the in rem
13

component of the lien. 11 U.S.C. § 1322(b)(2); Branigan, 716 

F.3d at 335, 338. A debtor’s reorganization plan, upon 

confirmation by the bankruptcy court, binds only the debtor and 

that debtor’s creditors. 11 U.S.C. § 1327(a). Therefore, the 

bankruptcy court is without authority to modify a lienholder’s 

rights with respect to a non-debtor’s interest in a property 

held in a tenancy by the entirety. 

The Alvarezes nevertheless contend that Mrs. Alvarez and 

her interest in the entireties property are properly before the 

bankruptcy court, because Mr. and Mrs. Alvarez filed a joint 

complaint seeking to strip off the lien. The Alvarezes maintain 

that their act of jointly filing the complaint satisfied the 

requirement of Maryland law that tenants by the entireties act 

together to alter their interests in their entireties property. 

See Beall, 434 A.2d at 1021. 

We find no merit in this argument. By filing their 

complaint, the Alvarezes asked the bankruptcy court to determine 

that HSBC’s lien was valueless and unsecured, and to permit a

lien strip. Indeed, this Court has held that a debtor must take 

affirmative action to strip a lien. Cen-Pen Corp., 58 F.3d at 

92-93. 

Here, however, the Alvarezes’ complaint did not bring Mrs. 

Alvarez’s interest in the property before the court. The filing 

of the complaint did not alter the property rights contained in 
14

Mr. Alvarez’s bankruptcy estate or the power of the court to 

bind only the debtor and his creditors in any reorganization 

plan. See 11 U.S.C. § 1327(a). Thus, the Alvarezes were not 

entitled to obtain the removal of the lien against their 

entireties property without submitting both parties to the 

burden of a bankruptcy filing. See In re Hunter, 284 B.R. at 

813. 

Our conclusion is not altered by the Alvarezes’ reliance on 

11 U.S.C. § 363(h),7 which permits a bankruptcy trustee in 

limited circumstances to dispose of a non-debtor spouse’s 

 7 This provision states: 

[T]he trustee may sell both the estate’s interest, 

under subsection (b) or (c) of this section, and the 

interest of any co-owner in property in which the 

debtor had, at the time of the commencement of the 

case, an undivided interest as a tenant in common, 

joint tenant, or tenant by the entirety, only if—

(1) partition in kind of such property among the 

estate and such co-owners is impracticable;

(2) sale of the estate’s undivided interest in such 

property would realize significantly less for the 

estate than sale of such property free of the 

interests of such co-owners;

(3) the benefit to the estate of a sale of such 

property free of the interests of co-owners outweighs 

the detriment, if any, to such co-owners; and

(4) such property is not used in the production, 

transmission, or distribution, for sale, of electric 

energy or of natural or synthetic gas for heat, light, 

or power. 

11 U.S.C. § 363(h).
15

interest in entireties property. Under § 363(h), a trustee can 

sell a bankruptcy petitioner’s interest in entireties property 

as well as the interest of a non-debtor spouse under specified 

circumstances. This provision represents a narrow legislative 

exception to the general common-law rule prohibiting any 

unilateral severance of an entireties estate. See In re Hunter, 

284 B.R. at 812. Moreover, the Bankruptcy Code does not 

authorize a bankruptcy court to eliminate a lienholder’s rights 

with respect to a non-debtor’s interest in property or to 

contravene state law regarding entireties property to eliminate 

an in rem component of a lien. 

We therefore hold that the bankruptcy court did not err in 

concluding that it lacked authority in a Chapter 13 proceeding 

to strip off a valueless lien on Maryland property held in a 

tenancy by the entirety, when only one tenant spouse had filed a 

bankruptcy petition. Accordingly, we affirm the district 

court’s judgment upholding the bankruptcy court decision. 

AFFIRMED