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

Housing downturn bankrupts borrowers



























Richard Burnett |
Sentinel Staff Writer


August 6, 2007



















Article Tools


• E-mail
• Print
• Single page view
• Reprints
• Reader feedback
• text size:





<script src="http://ad.doubleclick.net/adj/trb.orlandosentinel/feature/consumer;ptype=s;slug=orl-bankruptcy0607aug06;rg=ur;ref=orlandosentinelcom;pos=1;sz=88x31;tile=5;ord=79430034?" language="JavaScript" type="text/javascript"></script>










The housing boom may seem a distant memory, but experts say the real-estate
speculation and "creative" financing it generated are now driving many
investors and homeowners into bankruptcy, especially in Central Florida.



Personal bankruptcies in the Orlando area were up 80 percent during the
first half of 2007 -- the biggest rate increase in the federal court system's
Middle District of Florida, which includes Jacksonville and Tampa. Orlando's
jump in bankruptcies also far outstripped the national rate, which was up 43
percent compared with the first six months of 2006.



Orlando bankruptcy lawyer Richard Heller is seeing a lot of people these
days who thought they had placed a sure bet during the recent housing boom.