On November 17, 2014, the Supreme Court of the United States (SCOTUS) granted certiorari to hear an Eleventh Circuit Court of Appeals case regarding lien stripping. Decisions made by the Eleventh Circuit of the United States Court of Appeals are binding on all districts in the states of Alabama, Georgia and Florida. The issue in this case is whether a chapter 7 debtor may strip off a junior mortgage that is wholly unsecured and discharge that debt in bankruptcy and have no further lien by the junior mortgage holder on his or her property. The current law in the Eleventh Circuit is that a chapter 7 debtor is entitled to strip off a wholly unsecured junior mortgage and that is the decision that Bank of America has appealed to the SCOTUS.
The bottom line is, as of today, if you live in Alabama, Georgia or Florida and have a second mortgage for which there is no equity for that lien to attach, you could likely file a chapter 7 bankruptcy to strip off that lien and discharge it in bankruptcy. You could retain your home with only the secured mortgage, or mortgages, intact.
If the Supreme Court affirms this decision that is currently binding in the Eleventh Circuit, it would open the door for anyone in the United States to seek this type of relief.
If you are currently struggling with a mortgage or any other kind of debt, it is a good idea to seek professional legal assistance as there may be other remedies in bankruptcy that will help you. Please feel free to contact our office nearest you and schedule a free initial consultation to discuss your debt with an attorney who can advise you of your best available options.
- How a Lien on Property Can Effect Your Bankruptcy
- Difference Between Secured and Unsecured Debts
- Judicial Lien’s
Amy K Tanner is a shareholder in several of the Bond & Botes Law Offices. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She focuses primarily on consumer bankruptcy law in the Huntsville and Decatur offices.Read her full bio here.