11th Circuit allows lien stripping in a Chapter 20 (In re Scantling - 2014)

The Debtor previously filed for relief under Chapter 7 and received her discharge in 2010.  In January 2011, the Debtor filed a Chapter 13 case and sought to determine the secured/unsecured status of the second and third mortgages held by Wells Fargo.  Based upon Wells Fargo's valuation the second and third mortgages were wholly unsecured.   The 11th Circuit agreed with the majority view that in a Chapter 13 case could strip off a wholly unsecured mortgage on the debtor's principal residence through use of Sections 506 and 1322(b)(2). Section 1325(a)(5) did not come into play and a debtor's ineligibility for a discharge is irrelevant for strip off purposes in a Chapter 20 case.


The case has a very good discussion on the majority and minority views.  The link to the case follows.


Wells Fargo v. Scantling