Bankruptcy News

Chapter 7 cannot be used to “strip off” a wholly unsecured

lien on principal residence

The United States Supreme Court has reversed the U.S. Court of Appeals for the Eleventh Circuit.  In reversing the U.S. Court of Appeals for the Eleventh Circuit, the United States Supreme Court ruled that a Chapter 7 debtor cannot ”strip off” a wholly-undersecured lien under Bankruptcy Code section 506(d).  The case is  Bank of America, N.A. v. Caulkett, ___ U.S. ___, 2015 WL 2464049 (No. 13-1421, June 1, 2015).

As a result of this ruling, debtors must rely on Chapter 13 bankruptcy filings in order ”strip off” a wholly-undersecured lien under U.S. Bankruptcy laws.