Central District Consumer Bankruptcy Attorney's Association

I've never done a Chapter 13 Plan let alone a 20 but I think answering the
following questions will help you figure out your situation:
1. You said, "normally one would include the unsecured portion of the
to-be-stripped lien". If you avoid a lien, isn't the whole thing unsecured?
2. You said, "the unsecured portion of any senior liens". If you only avoid
the 4th lien, how are there unsecured portions of senior liens? Is that 506
bifurcations on non-primary residence property?
3. You said, "in this case, since it was discharged, I presume these do NOT
get included as unescured claims correct?"
I would think that if a lien is avoided (no in rem claim) and if there
is no personal claim because of the Chapter 7, then that claim can be
objected to 100%.
However, if you're bifurcating under 506(b), the undersecured "half" of
the claim is just transformed into an unsecured claim. There is nothing
that strips its in rem claim.
I don't know if this was your question but I'll rephrase my answer. When
someone buys a piece of property they sign a contract and a deed is
recorded. The contract you can think of as privity of contract and is the
note. The deed of trust that refers to the note you can think of as privity
of estate. Privity of contract gives personal liability for the loan and
privity of estate gives the property itself liability for the loan.
Now your client files for protection under chapter 7. The personal
liability is discharged, there is no more privity of contract (no in
personam claim against Debtor). However, there is privity of estate because
of the deed of trust (in rem liability).
Now Debtor files for Chapter 13 and avoids the lien. If there is no lien
(hence no in rem liability) and no in personam liability then what claim
does the creditor have against the estate? I'd say none ]
I didn't do case law research on this so I don't know how the 9th has ruled
on this but this is how it should work.
Sincerely,
Michael Avanesian
Attorney and Counselor at Law
818-817-1725
On Mon, Apr 22, 2013 at 11:10 PM, Mark J. Markus wrote:
> **
>
>
> I'm doing my first Chapter 20 case (13 after a 7) and want to be clear on
> a couple of things.
>
> Debor has 4 mortgages against her real estate, which were all in existence
> when she filed her Chapter 7 case a year ago. Thus, they were all
> discharged, and their liens remain. We're doing a 13 now to attempt to
> lien strip the 4th mortgage (and praying we get a judge that allows it).
>
> Anyway, when structuring the plan, normally one would include the
> unsecured portion of the to-be-stripped lien and the unsecured portion of
> any senior liens, in the Class 5 general unsecured class. But in this
> case, since it was discharged, I presume these do NOT get included as
> unescured claims correct? And if so, this becomes a de facto 100% plan
> after all other payments are made (we're also doing a vehicle cramdown and
> attorneys' fees in the plan).
>
> Does that sound right?
>
> *************************
> 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)
> web: http://www.bklaw.com/
> Certified Bankruptcy Law Specialist--The State Bar of California Board of
> Legal Specialization
> This Firm is a Qualified Federal Debt Relief Agency (see what this means
> at
> http://www.bklaw.com/bankruptcy-blog/20 ... efinition/
> )
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I've never done a Chapter 13 Plan let alone a 20 but I think answering the following questions will help you figure out your situation:1. You said, "normally one would include the unsecured portion of the to-be-stripped lien". If you avoid a lien, isn't the whole thing unsecured?
2. You said, "the unsecured portion of any senior liens". If you only avoid the 4th lien, how are there unsecured portions of senior liens? Is that 506 bifurcations on non-primary residence property?
3. You said, "in this case, since it was discharged, I presume these do NOT get included as unescured claims correct?" re is no personal claim because of the Chapter 7, then that claim can be objected to 100%.
However, if you're bifurcating under 506(b), the undersecured "half" of the claim is just transformed into an unsecured claim. There is nothing that strips its in rem claim.

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