480 B.R. 916
E.D. Wis.2012Background
- Lindskog filed a Chapter 7 bankruptcy in Illinois in 2008 and received a discharge on August 19, 2008.
- In 2010 Lindskog filed a Chapter 13 petition in Wisconsin with a proposed plan to pay roughly $43,000 over five years.
- She sought to avoid a wholly unsecured second mortgage lien held by M & I Marshall & Ilsley Bank (now BMO Harris Bank N.A.).
- M & I moved to dismiss the adversary proceeding, arguing Lindskog could not strip a second lien under 11 U.S.C. § 506(d) because she was ineligible for a Chapter 13 discharge.
- The bankruptcy court granted the motion to dismiss, and Lindskog appealed to the district court.
- The district court analyzed the issue under two standards of review and adopted a reasoning that Lindskog could not strip the lien within four years of her Chapter 7 discharge under § 1328(f).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a Chapter 13 debtor ineligible for a discharge strip a wholly unsecured junior lien within four years of a Chapter 7 discharge? | Lindskog relies on Fair that § 1328(f) does not bar lien stripping. | M & I argues lien stripping is impermissible as a de facto discharge under Dewsnup and § 1328(f). | No; four-year bar prevents stripping as de facto discharge. |
Key Cases Cited
- In re Jarvis, 390 B.R. 600 (Bankr.C.D.Ill.2008) (supports lien stripping barred within four years of discharge)
- In re Fair, 450 B.R. 853 (E.D.Wis.2011) (lien stripping not permitted under certain interpretations of § 1328(f))
- In re Sanders, 551 F.3d 397 (6th Cir.2008) (Congress sought to limit multiple discharges in bankruptcy reforms)
- Dewsnup v. Timm, 502 U.S. 410 (Supreme Court) (lien avoidance cannot be obtained post-discharge under § 506(d))