In Re Dang
467 B.R. 227
Bankr. M.D. Fla.2012Background
- Debtor Brenda Dang, after a prior Chapter 7 discharge (Mar. 8, 2011), filed a current Chapter 13 case (Apr. 25, 2011).
- Property: homestead at 14421 Woodfield Circle North, valued at $159,000, encumbered by three mortgages totaling $316,366.
- Plan proposes to continue first and second mortgages outside the Plan; seeks to strip the third mortgage (Bank of America) as wholly unsecured.
- Debtor previously pursued lien-stripping against Bank of America in the prior Chapter 13 and adversary proceeding; default judgment entered in 2011.
- Trustee amended objection argues Debtor cannot strip under §1325(a)(5) because no discharge in current case.
- Court applies Tanner to determine if a wholly unsecured lien may be modified despite passing through a prior Chapter 7.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a wholly unsecured residential lien be modified in Chapter 13 after a prior Chapter 7 discharge? | Dang seeks modification under §1322(b)(2) per Tanner. | Trustee contends no modification since discharged before and no current discharge. | Yes; wholly unsecured lien may be modified. |
| How should the lien status be determined when a lien survived a prior Chapter 7? | Lien survives as a secured claim by Johnson/§506 logic. | Lien remains secured unless value proves otherwise. | Determine status under §506(a); lien can become unsecured. |
| Does §1325(a)(5) apply to wholly unsecured liens after §506(a) classification? | If unsecured, §1325(a)(5) does not apply. | Some courts apply §1325(a)(5) to secured liens; may block modification. | §1325(a)(5) does not apply to wholly unsecured liens. |
| Does Debtor's lack of current discharge defeat plan confirmation and modification rights? | Plan may still modify unsecured lien without discharge. | Discharge requirement may bar modification. | Discharge absence does not bar modification of wholly unsecured lien; plan may still be confirmed if good faith and other requirements satisfied. |
Key Cases Cited
- In re Tanner, 217 F.3d 1357 (11th Cir. 2000) (wholly unsecured residential liens may be modified under 1322(b)(2))
- Nobelman v. American Savings Bank, 508 U.S. 324 (Supreme Court 1993) (valuation under §506(a) governs status of secured claim)
- Johnson v. Home State Bank, 501 U.S. 78 (Supreme Court 1991) (surviving lien remains a claim and can be included in Chapter 13)
- In re Gruenberg, 2011 WL 1115001 (Bankr. S.D. Fla. 2011) (well-settled law that undersecured liens may be stripped)
- In re Okosisi, 451 B.R. 90 (Bankr. D. Nev. 2011) (repeat filers may use §506(a) to determine secured status)
- In re Jennings, 454 B.R. 252 (Bankr. N.D. Ga. 2011) (repeat filers may strip lien where first case pursued stripping)
- In re Gerardin, 447 B.R. 342 (Bankr. S.D. Fla. 2011) (surviving lien treated as secured; post-½§506(a) modification permitted)
- In re Quiros-Amy, 2011 WL 4526081 (Bankr. S.D. Fla. 2011) (improper to treat surviving lien as anything other than a secured claim initially)