Category Archives: Chapter 13

Lien Strip in Chapter 13 after Chapter 7 Now Permitted in South Florida: Scantling Decision 11th Circuit

Debtors may now strip off a second mortgage in a chapter 13 even after filing a chapter 7 in Fort Lauderdale chapter 13 cases and other South Florida chapter 13 bankruptcies.   This has been an issue across the country.  In South Florida, the local bankruptcy judges have ruled that a debtor could not eliminate junior mortgage liens after obtaining a chapter 7 discharge.  However, the 11th Circuit Court of Appeals today ruled today in the Scantling case that debtors can eliminate junior liens even in the so-called chapter 20, filing a chapter 13 after a chapter 7. This means that debtors who filed chapter 7 and are not eligible now to file bankruptcy again to obtain a discharge nevertheless can file a chapter 13 to eliminate second mortgages. I would like to thank Patrick Scott for sending me the following analysis: “Jeff Kuntz of my office shared with me today’s new…
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11th Circuit Says No Chapter 20 Lien Strip: Binding Authority?

Suppose a debtor has already filed chapter 7 and discharged his or her debts.  The debtor then files a chapter 13 and attempts to strip off a second mortgage. There have been differing opinions across the country, but locally the judges in the Southern District of Florida have said no.   A debtor who is not eligible to receive a discharge cannot strip a second mortgage. On October 29, 2013 the 11th Circuit held that the lien strip cannot take place in a Chapter 13 after the chapter 7 discharge.  The issue now seems resolved within this circuit which includes Florida-or does it?  See In re Colbourne, 2013 WL 5789159, 2013 US App Lexis 22011.  Colbourne is another unpublished opinion by the 11th Circuit which does not create binding precedent, though should be persuasive.  Also, the case involved non-homestead property.  The court expressly stated that it was not ruling as to junior liens…
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Debt on Stripped Association Liens May Survive When Condo Sold

Though Fort Lauderdale chapter 13 cases routinely enable a debtor to strip the association lien for the amounts due prior to the filing of the bankruptcy, a recent case limits the benefit of eliminating the lien.  This lien stripping of association liens seems to be well settled law amongst the bankruptcy judges in Florida.  Thus a debtor who is way behind to his association, and might be on the eve of foreclosure with the association, can file chapter 13 and eliminate that lien if the property is worth less then the balance of the first mortgage.  (Note that if the association cannot be stripped, the debtor can still pay the arrears plus the current fees over 5 years.) The debtor would continue to owe monthly payments on the current association fees as long as the debtor remains on title. Associations have tried to find a legal argument against this lien strip…
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