Stripping a Second Mortgage in Bankruptcy

New: Motion to Avoid Secure Lien and Strip Second Mortgage


by Victoria Ring, CEO of 713Training.Com





When I first learned of a Motion to Avoid Secure Lien and Strip Second Mortgage I was doing a petition review for an attorney. I was told that many courts are requiring that the attorney file a Motion to Avoid Secure Lien along with the Chapter 13 Plan if they intend to propose a stripped mortgage due to unsecure equity.





The attorney I was doing the bankruptcy petition review for did not have a copy of the Motion so I conducted online research to find the pleading for her. During my research I found that <at this time> there is not one specific Motion that is used for all fifty states. Instead, it is a pleading with a variety of different titles, making it difficult to find. This of course is due to the fact that the government is still debating the issue regarding the mortgage industry at this period in our history.





During my research I found an excellent article on the USFN website written by attorney Ken Plott of Lundberg & Associates. Due to copyright infringement I do not have permission to reprint the entire article for you. However, I can quote the following facts from Mr. Plott’s article:





1. Bankruptcy Code 11 U.S.C. Section 1322(b)(2) provides that a Chapter 13 plan may modify the rights of secured creditors, with the exception of <a claim secured only by a security interest in real property that is the debtor’s principal residence.>





2. The courts determined that the standard language in a trust deed or mortgage about <assignment of rents and escrow> does not jeopardize the anti-modification provision.





3. The U.S. Supreme Court in Nobelman v. American Savings Bank, 508 U.S. 324 (1993), analyzed the interplay between Section 1322(b) and Section 506(a) and determined that bifurcation was not proper as it would modify the rights of the secured creditor in contravention of Section 1322(b)(2). However, the court did not address the impact of Section 506(a) upon Section 1322(b)(2) when there is absolutely no value remaining in the collateral securing the claim.





4. It is fair to say that a majority of the jurisdictions now allow a wholly undersecured claim to be stripped and treated as an unsecured claim in a Chapter 13 plan. Some jurisdictions allow this to be done with a provision in the plan while others require an adversary proceeding to comply with Bankruptcy Rule 7001(2), a proceeding to determine the validity, priority or extent of a lien.





To read the entire article titled: “Bankruptcy Update: Reflections on Lien Stripping” online, visit:




http://www.usfn.org/AM/Template.cfm?Section=Home&SECTION=Article_Library&TEMPLATE=/CM/HTMLDisplay.cfm&CONTENTID=11893







For another excellent article about lien stripping, visit:




http://www.lienstripping.com/facts.php







For more information and to purchase your TEMPLATE now, visit:




http://www.713training.com/shop/cart.php?m=product_detail&p=114

1.   What is the number one reason most people cannot get their Chapter 13 Plans to balance when a second mortgage has been stripped?

2.   What is the name of the Motion that attorneys must use when stripping a second mortgage in a Chapter 13 Plan?

3.   In the preparation of the bankruptcy petition, how are unsecured portions of secure liens provided for on the Means Test as well as the Debt Classification?

4.   What are some quick tips to matching up Schedule I to the Means Test in order to reduce deficiency notices from the Trustee's office?

5.   What is the suggested wording for Item 17 of Schedule I and Item 19 of Schedule J which, if eliminated, normally will cause deficiency notices from the Trustee's office, resulting in a loss of time for the law firm?

6.   What are some quick tips regarding exemption selections and how not to commit unauthorized practice of law if you are a non-attorney?

7.   How do you know if a motor vehicle is eligible for a cram down and how is it properly recorded on the bankruptcy petition?

8.   What are some questionable expenses that attorneys need to be aware of before the petition is filed?  Non attorneys need to know this also in order for them to bring their attorney's attention to these questionable expenses.

9.  Although attorneys make the ultimate decision, what are some things non attorneys need to be aware of so they can assist their attorneys in making the best decision possible?

10.  Why is it important to document the benefits to the debtor for the Chapter 13 Plan?  Knowing this information will significantly increase the profits for a law firm as well as improving the rate at which debtors stay in their Chapter 13 Plan.

Kirkland & Ellis Seeks Fee of $18.50 a Minute for Bankruptcy Work

Posted Jan 28, 2009, 08:09 am CST


By Debra Cassens Weiss

Kirkland & Ellis has requested a fee of $1,110 an hour in a corporate bankruptcy, a possible record amount, according to one expert.

The hourly rate breaks down to $18.50 a minute, Bloomberg reports. The law firm is seeking the fee for its representation of titanium dioxide-maker Tronox Inc.

Two other law firms are seeking nearly as much, requesting hourly rates in excess of $1,000, according to the story. They are Sidley Austin, in the restructuring of the Tribune Co., and Skadden, Arps, Slate, Meagher & Flom, representing Circuit City.

Bankruptcy law professor Lynn LoPucki of the University of California at Los Angeles told the wire service that fees for lawyers and other professionals in bankruptcy cases are growing at four times the rate of inflation.

“As the economy gets worse, the bankruptcy lawyers are charging more,” LoPucki told Bloomberg. “It seems that each month one sets a new record for hourly billing rates. $1,110 is, to my knowledge, a record for the debtor’s bankruptcy counsel.”

New software would let iPhones access iTunes libraries from anywhere

Supreme Court Debt Collection Ruling Means More Work for Lawyers

Posted 5 hours, 39 minutes ago
By Debra Cassens Weiss

Lawyers are preparing for an onslaught of collections lawsuits after a U.S. Supreme Court ruling allowing plaintiffs to sue to recover unpaid debt, even if they don’t have a financial stake in the outcome.

Dallas lawyer Craig Jordan told the Houston Chronicle he is already seeing about 10 times the number of collection lawsuits against credit card holders than there were three years ago. Many of the suits are filed on behalf of those who own debt that has been bundled and resold to investors who hope to collect the money.

Richard Alderman, a consumer law professor at the University of Houston, said the resold debt is changing the nature of collection. "What companies used to let slide, now more and more debt collectors are buying the permission and ability to go after the money and are getting more aggressive," Alderman told the Chronicle.

The 5-4 Supreme Court ruling, Sprint v. APCC, held that collection companies had standing to sue on behalf of pay phone providers even though any recovered cash would go to the providers.