Wells Fargo Bank, N.A. v. Tahisia L. Scantling
754 F.3d 1323
| 11th Cir. | 2014Background
- Scantling filed Chapter 7 in 2009, receiving a discharge in 2010.
- In 2011, Scantling filed Chapter 13 to address liens on her principal residence.
- Residence had three Wells Fargo liens: first lien ~$121k, second ~$79k, third ~$24k.
- Value of the Residence ($118,500) rendered the second and third liens wholly unsecured under §506(a).
- Bank sought to oppose stripping; bankruptcy court held that Scantling could strip the second and third liens in a Chapter 20 case; court ordered automatic extinguishment upon plan completion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a debtor strip off a wholly unsecured junior mortgage in a Chapter 20 case? | Scantling argues §506(a)/1322(b)(2) allow stripping. | Bank argues §1325(a)(5) and §1328(f) prevent stripping without discharge. | Yes; debtor may strip off wholly unsecured junior liens in Chapter 20. |
Key Cases Cited
- Nobelman v. American Savings Bank, 508 U.S. 324 (U.S. Supreme Court 1993) (limits on stripping to avoids undersecured liens when homestead serves as security)
- Dewsnup v. Timm, 502 U.S. 410 (U.S. Supreme Court 1992) (lien valuation cannot avoid secured status by valuation alone)
- Tanner v. FirstPlus Fin. (In re Tanner), 217 F.3d 1357 (11th Cir. 2000) (unsecured junior liens on primary residence may be stripped under §506(a)/§1322(b)(2))
- In re Davis, 716 F.3d 332 (4th Cir. 2013) (majority view endorsing lien-stripping in Chapter 20)
- Branigan v. Davis (In re Davis), 716 F.3d 331 (4th Cir. 2013) (supports lien-stripping in Chapter 20)