451 B.R. 863
Bankr. E.D. Wis.2011Background
- Debtor Jeannie Lindskog executed a second mortgage on Powers Lake real estate; lien held by M & I Bank.
- Debtor filed chapter 7 in Illinois (Case No. 08-12661) and received a discharge on August 19, 2008.
- Debtor filed a chapter 13 petition on April 29, 2010, less than four years after the chapter 7 filing.
- At filing, Wells Fargo held a first mortgage with ~$346,000 balance; M & I held a second mortgage with ~$93,000 balance; FMV of property was $323,000.
- Property equity was zero or negative; M & I's lien was wholly unsecured at filing.
- Debtor proposed amended chapter 13 plan treating M & I's lien as unsecured and file an adversary to avoid the lien under § 506(d).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a no-discharge chapter 13 debtor avoid a wholly unsecured lien? | Lindskog: no discharge required to strip lien; § 506(d) and plan terms govern unsecured creditors. | M & I: without discharge, lien cannot be avoided; § 1328(f) preserves liens and bars avoidance. | Lien stripping unavailable; case dismissed; plan cannot avoid lien without discharge. |
Key Cases Cited
- In re Tran, 431 B.R. 230 (N.D. Cal. 2010) (no-discharge lien stripping not precluded by code)
- In re Casey, 428 B.R. 519 (Bankr. S.D. Cal. 2010) (lien stripping in no-discharge context evaluated)
- In re Gerardin, 447 B.R. 342 (Bankr. S.D. Fla. 2012) (1325(a)(5) governs lien retention vs discharge)
- In re Jarvis, 390 B.R. 600 (Bankr. C.D. Ill. 2008) (no-discharge plan cannot avoid a lien under §1328(f))
- In re Grignon, 2010 WL 5067440 (Bankr. D. Or. 2010) (emphasizes §1325(a)(5)(B)(i)(I) has in-rem vs unsecured treatment)
- In re Blosser, 2009 WL 1064455 (Bankr. E.D. Wis. 2009) (supports Dewsnup-by-notion of lien persistence)
- In re Lilly, 378 B.R. 232 (Bankr. C.D. Ill. 2007) (avoidance requires discharge or payment of debt)
- In re Fenn, 428 B.R. 494 (Bankr. N.D. Ill. 2010) (analysis of liens with no discharge context)
- In re Woolsey, 438 B.R. 432 (Bankr. D. Utah 2010) (avoidance tied to discharge or payment)
- In re Picht, 428 B.R. 885 (Bankr. D. Colo. 2010) (limits on lien stripping without discharge)