Lien Stripping in Consumer Bankruptcy

Bringing or Defending Actions to Avoid Junior Mortgage Liens

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Thursday, November 8, 2012

Recorded event now available

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Course Materials

This CLE course will provide bankruptcy counsel with a review of how junior mortgage liens can be stripped in consumer bankruptcies, discuss defenses available to the lender to preserve the lien, and outline various litigation approaches for both sides.

Description

With many home mortgages underwater, debtors in consumer bankruptcy are aggressively seeking to shed second or third mortgages via “lien stripping.”

In Chapter 13 bankruptcies, a junior mortgage no longer secured by the property’s equity may be stripped. The junior mortgage becomes part of the debtor’s unsecured debt and may be paid off through the Chapter 13 plan. At the end of the plan period, the remaining unsecured debt is discharged.

In a surprise ruling earlier this year, the 11th Circuit allowed debtors to strip off wholly unsecured liens from homes in a Chapter 7 case. Mortgage lenders have several viable defenses to preserve the mortgage lien and tactics to put roadblocks in the path of the debtor seeking to strip the lien.

Listen as our authoritative panel of consumer bankruptcy practitioners provides counsel with knowledge to represent debtors seeking to strip junior liens and to defend mortgage lenders seeking to preserve their liens.

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Outline

  1. Debtor’s ability to strip junior mortgage liens
    1. Chapter 13 requirements
    2. Adversary proceedings
    3. Chapter 7 bankruptcy options, including In Re McNeal (11th Cir. May 2012)
    4. Litigation tactics
  2. Mortgage lender defenses
    1. Litigation tactics

Benefits

The panel will review these and other key questions:

  • What circumstances permit the debtor to strip a junior lien in a Chapter 13 bankruptcy?
  • What options are available to debtors in a Chapter 7 bankruptcy?
  • What are the lender’s most viable defenses?
  • When may an adversary proceeding be necessary to strip a junior lien?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Cope, Monette
Monette W. Cope
Junior Partner
Weltman Weinberg & Reis Co.

Ms. Cope practices in the firm’s Bankruptcy, Consumer Bankruptcy and Commercial Bankruptcy Groups. She is also...  |  Read More

Stephen M. Trezza
Stephen M. Trezza
Principal
Arizona Law Group of Trezza & Associates

He concentrates on Chapter 7 and Chapter 13 bankruptcy. He is a member of the Tucson Association of Consumer Bankruptcy...  |  Read More

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