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Timing of Ch. 7 vs. 13 and lien stripping
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Lou:
So if I understand your reasoning (per your last line below), the Chapter 13
purpose is completed when all plan payments are made. Whether or not the
debtor gets a Chapter 13 discharge is irrelevant. In other words, you don't
need a discharge to strip a lien - you only need to complete the payments
under a confirmed plan. Chapter 20 works even though there is no Chapter 13
discharge due to recent Chapter 7.
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
The post was migrated from Yahoo.
David,
I just posted to the List Serv Files under Newsletters, the January
2009 Newsletter that includes my article on Motions to Value and its
effect on lien avoidance. That is the analysis for Chapter 13, upon
which the following analysis follows:
Once the trust purpose (the note) has been extinguished with a
discharge, under California law the lien must be avoided; however, in
a Chapter 7 the real property is property of the estate until the
Trustee abandons, and after that the court really has no jurisdiction
to effectuate the state law, because the Trustee has abandoned it back
to the Debtor. One alternative is that in a subsequent Chapter 13
(Chapter 20), the court will determine value such that the lien does
not "ride through" for two reasons: first, the underlying trust
purpose was discharged in the Chapter 7, and second, the lien is
"wholly undersecured," and therefore, there is no equity against which
the deed of trust can "ride through" against. Remember thought that
there must be an effective reorganization for the Chapter 13 to be
filed in good faith. Past due payments to the first, past due
property taxes (remember, even though client may have paid the first
half, the whole amount was due in December, and so, according to the
Los Angeles County Assessor the second half is also due and includable
as a claim in the Chapter 13 and payable over time), past due income
taxes, nondischargeable debt determined during the course of the
Chapter 7, and reaffirmed debt are all candidates for payments over
time in a Chapter 13. And, so, the lien may be avoided once the
purpose for the Chapter 13 has been fully consummated - the Chapter 13
plan completed in payments.
Lou Esbin
>
> Why does debtor need a discharge in the subsequent C13? The underlying
> personal obligation on the debt was discharged in the prior C7. All
that
> remains is to strip the lien. Is the lien strip effective upon
discharge or
> upon completion of the plan?
>
> David A. Tilem
> Certified Bankruptcy Specialist*
> Law Offices of David A. Tilem (a debt relief agency)
> 206 N. Jackson Street, #201, Glendale, CA 91206
> Tel: 818-507-6000 Fax: 818-507-6800
>
> * Bankruptcy specialist cert. by State Bar of CA Bd of Legal
> Specialization.
> Business bankruptcy specialist cert. by Amer. Bd. of Certification
>
>
>
Behalf Of
> Mark JM
> Sent: Friday, January 23, 2009 9:51 AM
> To: cdcbaa@yahoogroups.com
> Subject: RE: [cdcbaa] Timing of Ch. 7 vs. 13 and lien stripping
>
>
>
>
> Yea, that's the issue.
>
Behalf Of
> Dennis McGoldrick
> Sent: Friday, January 23, 2009 1:37 AM
> To: cdcbaa@yahoogroups.com
> Subject: Re: [cdcbaa] Timing of Ch. 7 vs. 13 and lien stripping
>
>
> Isn't the real problem the fact the Lam strip isn't effective until the
> chapter 13 discharge is issued? And wouldn''t a discharge be
precluded in
> the w/in 4 years chapter 13?
>
> We' posed the question before, but unless a judge would issue a Lam
order,
> effectively immediately, due to the prior 7, there would never be a 13
> dischage and the chapter 20 would therefore be ineffective.
>
> dennis
>
> --- On Thu, 1/22/09, Mark JM wrote:
>
> Subject: [cdcbaa] Timing of Ch. 7 vs. 13 and lien stripping
> To: cdcbaa@yahoogroups.com
> Date: Thursday, January 22, 2009, 4:51 PM
>
> I keep getting the same fact scenarios over and over lately for
people who
> have real property with underwater Deeds of Trust that could be Lam
Motioned
> (lien stripped) in a Chapter 13, but that do not presently have income
> sufficient to do a Chapter 13 plan (even after eliminating the
junior lien
> payments).
>
>
>
> Thus, facing pressure from creditors, they may need to do a Chapter
7 now,
> and do loan modifications with their secured lenders.
>
>
>
> My question is this: Can they do a Chapter 7, get a discharge, then
file a
> Chapter 13 case before four years have passed, and do a lien strip
in the
> new Chapter 13 (would be a 100% repayment plan, because there would most
> likely not be any unsecureds). Theyre not seeking a discharge in
the new
> Chapter 13, only a lien strip and ability to pay something in the new
> Chapter 13 (perhaps).
>
> I think Jeff Hagen was positing this scenario to Judge Mund who gave an
> initial negative response to that. Has anyone tried it? Any other
ideas?
>
>
> ************ ********* ****
>
> Mark J. Markus
>
> Law Office of Mark J. Markus
>
> 11684 Ventura Blvd. PMB #403
>
> Studio City, CA 91604-2652
>
> (818)509-1173 (818)509-1460 (fax)
>
> Toll Free: 1-866-576-6275
>
> web: http://www.bklaw. com/
>
> This Firm is a Qualified Federal Debt Relief Agency (see what this
means at
> http://bklaw. com/bankruptcy- blog/2008/ 09/debt-relief- agencies-
> definition/)
>
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The post was migrated from Yahoo.
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Why does debtor need a discharge in the subsequent C13? The underlying
personal obligation on the debt was discharged in the prior C7. All that
remains is to strip the lien. Is the lien strip effective upon discharge or
upon completion of the plan?
David A. Tilem
Certified Bankruptcy Specialist*
Law Offices of David A. Tilem (a debt relief agency)
206 N. Jackson Street, #201, Glendale, CA 91206
Tel: 818-507-6000 Fax: 818-507-6800
* Bankruptcy specialist cert. by State Bar of CA Bd of Legal
Specialization.
The post was migrated from Yahoo.
I actually did this exact scenario with Judge Kaufman. Debtor
received a Ch7 discharge in 2007. About 1 year later, filed a Ch13
and a successful LAM motion, and a confirmed plan. No discharge,
however. And I believe the order approving the LAM motion should
specifically state that the junior lien is stripped upon completion of
the plan, not upon the receipt of a discharge.
Gerald McNally
McNally & Associates, P.C.
206 N. Jackson St. #100
Glendale, CA 91206
818.507.5100
I actually did this exact scenario with Judge Kaufman.
Debtor received a Ch7 discharge in 2007. About 1 year later, filed a Ch13 and
a successful LAM motion, and a confirmed plan. No discharge, however. And I
believe the order approving the LAM motion should specifically state that the
junior lien is stripped upon completion of the plan, not upon the receipt of a
discharge.
Gerald McNally
McNally & Associates, P.C.
206 N. Jackson St. #100
Glendale, CA 91206
818.507.5100
The post was migrated from Yahoo.
Isn't the real problem the fact the Lam strip isn't effective until the chapter 13 discharge is issued? And wouldn''t a discharge be precluded in the w/in 4 years chapter 13?
We' posed the question before, but unless a judge would issue a Lam order, effectively immediately, due to the prior 7, there would never be a 13 dischage and the chapter 20 would therefore be ineffective.
dennis
The post was migrated from Yahoo.
I keep getting the same fact scenarios over and over lately for people who
have real property with underwater Deeds of Trust that could be Lam Motioned
(lien stripped) in a Chapter 13, but that do not presently have income
sufficient to do a Chapter 13 plan (even after eliminating the junior lien
payments).
Thus, facing pressure from creditors, they may need to do a Chapter 7 now,
and do loan modifications with their secured lenders.
My question is this: Can they do a Chapter 7, get a discharge, then file a
Chapter 13 case before four years have passed, and do a lien strip in the
new Chapter 13 (would be a 100% repayment plan, because there would most
likely not be any unsecureds). They're not seeking a discharge in the new
Chapter 13, only a lien strip and ability to pay something in the new
Chapter 13 (perhaps).
I think Jeff Hagen was positing this scenario to Judge Mund who gave an
initial negative response to that. Has anyone tried it? Any other ideas?
*************************
Mark J. Markus
Law Office of Mark J. Markus
11684 Ventura Blvd. PMB #403
Studio City, CA 91604-2652
(818)509-1173 (818)509-1460 (fax)
Toll Free: 1-866-576-6275
web: http://www.bklaw.com/
This Firm is a Qualified Federal Debt Relief Agency (see what this means at
The post was migrated from Yahoo.