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Interesting 9th Cir BAP case regarding challenging
I don't know what proposition this case stands for but there can be some
advantages to avoiding the lien of an otherwise oversecured creditor.
One that came to my mind was someone with a lot of tax debt. Sell the house
and pay all the tax debt and attorney fees.
Another advantage could be negotiation leverage. A secured creditor faced
with the prospect of being paid 50 cents on the dollar when it was
otherwise over secured could be open to a nice settlement in your client's
favor. I don't know if there is an implied duty to pursue this for the
benefit of all creditors, just thinking.
You could also pay the claim off interest free -- particularly potent in
chapter 11. Other tricks in chapter 11 too.
I don't understand the case though. If the lien is avoided, what happens if
the case is dismissed. Can there be a subsequent nonjudicial foreclosure
action, or is the lien gone as a matter of law (and therefore, the power to
sell also gone).
Sincerely,
Michael Avanesian
On Wed, Nov 26, 2014 at 9:42 AM, Shannon Doyle
sdoyle@ebankruptcyassistants.com [cdcbaa] wrote:
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> The Court finds that debtors have a cognizable legal theory to challenge
> the secured status of a mortgage lenders proof of claim in chapter 13
> based on improper chain of title. I am wondering though the practical
> effects of denying a lender secured status. Wouldnt the debtor> now be non-exempt (given typical CA house values)? This case addresses the
> validity of the lien so I assume the lender would still have an unsecured
> claim. In theory, it would be great if debtors could cramdown their
> primary residence but most debtors cant afford to do it. A client of mine
> wants to pursue this argument against a lender but I am not sure it would
> really benefit the debtor. Any thoughts would be appreciated.
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> Happy Thanksgiving!
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> [image: Shannon Picture]
> [image: Shannon A Doyle]
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I don't know what proposition this case stands for but there can be some advantages to avoiding the lien of an otherwise oversecured creditor.One that came to my mind was someone with a lot of tax debt. Sell the house and pay all the tax debt and attorney fees.Another advantage could be negotiation leverage. A secured creditor faced with the prospect of being paid 50 cents on the dollar when it was otherwise over secured could be open to a ni
The post was migrated from Yahoo.