In Re Quiros-Amy
456 B.R. 140
Bankr. S.D. Florida2011Background
- Quiros-Amy filed a Chapter 7 petition in 2009, then a Chapter 13 case in 2010; Contreras filed a Chapter 7 petition in 2010, then a Chapter 13 case in 2010.
- Both cases sought to value and determine secured status of liens on their principal residences; orders found the liens to be junior to senior claims and that the liens would be void upon discharge.
- Debtors obtained an order valuing the properties and declaring the liens unenforceable to the extent they exceeded senior claims, with the third decretal paragraph stating the lien would be void upon discharge.
- Decretal paragraph six provided that the order was not recordable or enforceable until discharge.
- In June 2011, debtors sought to amend the orders so that lien stripping would occur upon completion of the Chapter 13 plan, even without discharge.
- The court ultimately denied the Motions to Amend, concluding Chapter 20 lien stripping is not allowed for debtors ineligible for discharge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chapter 13 allows stripping wholly unsecured junior liens on a debtor's principal residence when discharge is unavailable | Quiros/Contreras: lien stripping should be allowed in Chapter 20 cases | Gendler: Chapter 13 discharge in Chapter 20 is improper; Nobelman bars modification | Chapter 20 liens cannot be stripped; ineligible debtors cannot strip wholly unsecured junior liens. |
| Whether § 1325(a)(5) permits stripping when the lien is not an allowed secured claim due to lack of value | Debtors rely on § 506 to treat such liens as wholly unsecured | Trustee/Ch. 13 framework treats such claims as secured until value is determined | A junior lien in a Chapter 20 case cannot be stripped under § 1325(a)(5) as an unallowed secured claim. |
| Whether pre-BAPCPA practice or congressional intent supports Chapter 20 lien stripping | Gerardin-style reading supports lien strips in Chapter 20 | Dewsnup/Nobelman principles protect secured creditors; no explicit Chapter 20 allowance | Congress intended lien strips to be governed under § 1325(a)(5); Chapter 20 stripping not allowed. |
Key Cases Cited
- Nobelman v. Am. Sav. Bank, 508 U.S. 324 (U.S. 1993) (§ 1322(b)(2) bars modification of principal-residence liens in Chapter 13)
- In re Tanner, 217 F.3d 1357 (11th Cir. 2000) (modification of secured claims except when lien is not on principal residence)
- In re Gerardin, 447 B.R. 342 (Bankr.S.D.Fla. 2011) (district court/Bankruptcy Court allowed strip-off where value is zero; Chapter 7 discharge impact)
- Dewsnup v. Timm, 502 U.S. 410 (U.S. 1992) (lien-stripping principle confined to Chapter 7; not controlling in Chapter 13)
- In re Tran, 431 B.R. 230 (Bankr.N.D. Cal. 2010) (endorses lien-stripping under § 506(a) in Chapter 13; distinguishes from Dewsnup)
- Fisette, 455 B.R. 177 (BAP 8th Cir. 2011) (allows strip-off in Chapter 20 when lien is wholly unsecured under § 506(a))
- In re Jennings, 454 B.R. 252 (Bankr.N.D. Ga. 2011) (permits lien stripping in Chapter 20 under good faith plan)