Chapter 13 Mortgage Lien Strips.

[justbroke]

If they did that after the BK filing, that is an egregious violation of the automatic stay; you should then have an attorney (on a contingency basis) go after them for damages and attorney fees.

This may not be the case. The automatic stay in 11 USC 362 does not operate as a stay against "perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection" (11 USC 546(b) which is a Trustee power but references as an exception to the stay in 11 USC 362(a). (11 USC 362(b))

However, I'm confused by what the poster wrote because they must have the creditor listed as secured in the Plan, yet refer to being sued. This is confusing me because I don't know if this lien exists under the UCC or this is a judgment lien. Even if it's a judgment lien that was granted BEFORE the case commenced, they can still perfect it without violating the stay due to the rights in 11 USC 362(b) (11 USC 546(b)).

Furthermore, this is a pro se debtor who may have messed up the Chapter 13 by not dealing correctly with this if it is, in fact, a judgment lien... especially if it impairs the unlimited homestead exemption in Florida.

iv65536, if you start a new thread for this and send me a private message with a link to it, I'll be sure to look at it. It may be better to post this in the Pro Se section as well.

[iv65536]

This may not be the case. The automatic stay in 11 USC 362 does not operate as a stay against "perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection" (11 USC 546(b) which is a Trustee power but references as an exception to the stay in 11 USC 362(a). (11 USC 362(b))

However, I'm confused by what the poster wrote because they must have the creditor listed as secured in the Plan, yet refer to being sued. This is confusing me because I don't know if this lien exists under the UCC or this is a judgment lien. Even if it's a judgment lien that was granted BEFORE the case commenced, they can still perfect it without violating the stay due to the rights in 11 USC 362(b) (11 USC 546(b)).

Furthermore, this is a pro se debtor who may have messed up the Chapter 13 by not dealing correctly with this if it is, in fact, a judgment lien... especially if it impairs the unlimited homestead exemption in Florida.

iv65536, if you start a new thread for this and send me a private message with a link to it, I'll be sure to look at it. It may be better to post this in the Pro Se section as well.

Unfortunately, the circumstances were not stated as clearly as they could have been. However, my reading was that it appeared to be a judgment lien from unsecured debt that is being addressed through the plan - as such, how can it possibly be right for such a creditor to get two bites of the apple when other unsecured creditors get only one?

And now that I think about it, I don't see why the lien could not have been avoided, assuming the property is indeed in Florida.

[justbroke]

Unfortunately, the circumstances were not stated as clearly as they could have been. However, my reading was that it appeared to be a judgment lien from unsecured debt that is being addressed through the plan - as such, how can it possibly be right for such a creditor to get two bites of the apple when other unsecured creditors get only one?

It is not two bites. They took their rights under State and Federal law to get a money judgment entered and then to record the judgment making it secured. This is how it works. Unsecured debt becomes secured debt every single day in this Country through this process.

And now that I think about it, I don't see why the lien could not have been avoided, assuming the property is indeed in Florida.

Since you pay the mortgage, live in the home, and it is titled in your name (along with your mother), you should be able to use the homestead exemption to avoid the lien. This would be done by motion. However, the lien may still be attached to other personal property like cars, boats, trailers, etc.

[mylife]

In regards to the lien strip. On what date does the attorney pull the market value of your home? I checked the value when we first filed and it was less than the first mortgage, now it's about $1000 more.

[PhillyBKLaw]

It's based on the value of your home on the date of filing.

[HHM]

New decision out of Colorado, In re waterman, that allows a 2nd mortgage lien strip in a non-dischargeable chapter 13 bankruptcy.

[justbroke]

New decision out of Colorado, In re waterman, that allows a 2nd mortgage lien strip in a non-dischargeable chapter 13 bankruptcy.

That is really great news!

BTW, is it my eyes, or did the Judge literally just give them the house?

IT IS ORDERED that the Motion to Determine Secured Status Pursuant to 11 U.S.C. §506 filed on November 9, 2010 (Docket #22) is GRANTED and the Residence is determined to be fully unsecured.

[LoveMySinbad]

Newbie here with Question regarding Ch 13 Lien Strip

I am in Florida. We just got off a conference call with BK attorney and we think we are heading to chapter 13 for main purpose of lien stripping 2nd. Question, the home we have the 2nd on we recently vacated about 3 months ago, we were planning to rent it out, but as of yet do not have a tenant. We successfully modified the first with a HAMP modification. This has been our primary residence since 2001 and we just didn't need the huge home anymore and it was costing too much to live there, electric, etc.

This home is still classified as our primary residence and has been for over 10 years.Should we not put a tenant in there until we get through with this chapter 13? The attorney did not seem to care about this situation, but I thought I'd ask here.

[justbroke]

I can tell you that the Florida Middle District Chapter 13 Trustees will not allow an expense for a home that you are not living in! How do you plan to make the payments? If you do rent it out, the payments needs to not only cover the PITI (principle, interest, taxes and insurance), but also any homeowner fees, cost to maintain, and all other costs (such as real estate management, unexpected expenses, empty home, etc).

What I did was MOVE BACK IN to my home!

[LoveMySinbad]

We are able to make the payment because the home we have now, we used retirement funds to pay for, so no mortgage payment. The electric is cheaper, etc. I wonder why the BK attorney did not see this as a problem.? She said as long as the mortgage is current, it is not a problem. hmmmm

[justbroke]

We are able to make the payment because the home we have now, we used retirement funds to pay for, so no mortgage payment. The electric is cheaper, etc. I wonder why the BK attorney did not see this as a problem.? She said as long as the mortgage is current, it is not a problem. hmmmm

Unless the Trustee is sleeping and it goes to Confirmation as-is, I just don't see how it works. I don't know why a Trustee would allow you to keep a "second home" and include the expense for that, to the detriment of unsecured creditors. If you're in a 100% payback plan, then my concerns are moot.

There is just too much math to explain, but if the allowance for a home in your part of Florida is less than the total cost of ownership of the deserted home, then I don't see it being feasible.

Can you explain to me, again, why you even want the headache of renting it???

[dbr]

Question: We have the following scenario:

First Mortgage - $227,500
Second Mortgage - $57,000
HELOC - $28,000

Total Value is $250,000

Can the Second or the HELOC be stripped due to the fact that one of them is totally unsecured? We asked our attorney (paralegal) and she had never seen a situation like this and said she will have to look into it. This would be in Missouri, we have asked about stripping one of them, not both, just one.

[HHM]

Question: We have the following scenario:

First Mortgage - $227,500
Second Mortgage - $57,000
HELOC - $28,000

Total Value is $250,000

Can the Second or the HELOC be stripped due to the fact that one of them is totally unsecured? We asked our attorney (paralegal) and she had never seen a situation like this and said she will have to look into it. This would be in Missouri, we have asked about stripping one of them, not both, just one.

HELOC yes, second mortgage, no. If the house is really worth $250K, then the 2nd mortgage has some equity touching it and nothing can be done.

In chapter 13, lien strips are all or nothing. The inferior liens are either have zero secured value, as in the case of your HELOC, or secured value. If there is so much as 1$ of secured value, then the entire second mortgage sticks (all or nothing).

[dbr]

Silly question but do we have the option of choosing which one gets stripped. The second came first, I would assume that will stay, HELOC goes. Would like to keep heloc and pay down for emergencies after ch 13 when we have the money to do so and second is a balloon with very little chance of refinancing.

[HHM]

Silly question but do we have the option of choosing which one gets stripped. The second came first, I would assume that will stay, HELOC goes. Would like to keep heloc and pay down for emergencies after ch 13 when we have the money to do so and second is a balloon with very little chance of refinancing.

Nope, it is based on order of priority. The 1st is superior to the 2nd, the 2nd superior to the HELOC.

The rule is, the house cannot be worth more than the superior mortgage(s).

http://methnerlaw.com/2011/05/15/2nd-mortgage-lien-strips-it%E2%80%99s-all-or-nothing-in-chapter-13-bankruptcy/