Source: http://www.ncbrc.org/tag/lien-stripping/
Timestamp: 2019-04-20 16:28:05+00:00

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An addition to the debtor’s residential property, which he constructed post-mortgage and pre-bankruptcy petition and which he used as a rental unit, made the property multi-use and rendered the anti-modification provision inapplicable. In re Berkland, No. 17-10821 (Bankr. D. Mass. April 6, 2018).
Three separate debts secured by one mortgage are properly treated as three liens and those junior liens that are wholly unsecured may be stripped in chapter 13. Poole v. First National Bank of Middle Tennessee, No.17-8 (E.D. Tenn. March 19, 2018).
Finding that a wholly unsecured lien may be stripped in chapter 13 even where no proof of claim was filed the Fourth Circuit reversed the district court’s holding to the contrary. Burkhart v. Grigsby (In re Burkhart), No. 16-1971 (4th Cir. March 29, 2018).
The mortgage creditor cancelled the underlying debt when it filed a “cancellation of debt” form with the IRS and the debtors paid income taxes on the cancelled debt. In re Lukaszka, No. 17-242 (Bankr. N.D. Ia. Aug. 4, 2017).
In their proposed chapter 13 plan, James and Darcey Lukaszka sought an order requiring First Federal Credit Union, a junior mortgagee, to release their mortgage lien on the basis that, four years earlier, First Federal had issued the debtors a “cancellation of debt” form, 1099-C, indicating that it was no longer seeking to collect on the debt. As a result, the Lukaszkas reported the almost $60,000.00 debt cancelation to the IRS as income and paid taxes on it.
An unenforceable judgment lien on the debtor’s homestead property, which he owned as a tenancy in the entireties with his non-debtor spouse, was an inchoate lien which created a “cloud” over the title and therefore fell within section 522(f)’s purview for avoidance of a lien that impairs an exemption. CRP Holdings v. O’Sullivan, No.17-6012 (B.A.P. 8th Cir. Sept. 22, 2017).
Where the mortgage servicer’s proof of claim was disallowed for procedural rather than substantive reasons, the debtors were not entitled to have the underlying lien declared void under section 506(d). Kohout v. Nationstar Mortgage,LLC., No. 3:16-CV-1372 (N.D. N.Y. Sept. 11, 2017).
What Makes a Lien “Judicial”?
Where the debtor has a right to due process prior to the fixing of a debt, the lien acquired by the clerk of court’s filing the certificate of the debt is a judicial lien subject to avoidance in bankruptcy. Arkansas Dept. of Workforce Serv. v. Leaks, No. 16-8036 (E.D. Ark. June 14, 2017).
Escrow, insurance and rent do not constitute additional collateral in a deed of trust for purposes of stripping down a mortgage. Jeremy v. J.P. Morgan Bank, No. 15-2369 (4th Cir. March 9, 2017). In an unpublished opinion, the Fourth Circuit rejected Calvert and Jolita Jeremy’s argument that stripping down of their residential debt was not prohibited by the anti-modification provision of section 1322(b)(2) because the debt was collateralized by more than simply their residence. Specifically, the Jeremys pointed to the deed of trust which provided for supplemental collateral including escrow funds, insurance proceeds, and rent. Citing its decision in Birmingham v. PNC Bank, N.A., 846 F.3d 88 (4th Cir. 2017), the court found that the funds listed in the deed of trust were “incidental property” rather than additional collateral.

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