McNeal Update(Chapter 7 Lien Strip in South Florida)

The impact of the 11th Circuit McNeal decision is still unclear as we continue to wait for the en banc decision of the Court. The question still remains: can debtors lien strip junior mortgages in chapter 7 in the Southern District of Florida?

Judge Mark has permitted a lien strip in a chapter 7 but only on the basis that the creditor did not object. In re Aragon, 09-27916 RAM(DE 51). However, Judge Mark in the Miami Bankruptcy Division has set a briefing schedule with the caveat that “this court expects to reject the McNeal holding and follow its earlier decision in Gerardin“. In re Martin, 11-42725 (DE 75.)

Judge Ray in the Fort Lauderdale Bankruptcy Division apparently has deferred ruling in In re Wollen, 12-25993. One might speculate whether the courts will be waiting on the 11th Circuit en banc ruling, at least as to any contested matter.

If anyone has more specific information on this issue as to any bankruptcy court rulings regarding McNeal, especially before any of the local judges, please advise and I can post the information. The issue remains open in the Southern District of Florida whether debtors should try to strip a lien in a chapter 7 or proceed with the well-recognized chapter 13 lien strip.



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