Fisette v. Keller, No. 11-6012 (8th Cir. 2011)
Annotate this CaseDebtor appealed from the bankruptcy court's order confirming his modified Chapter 13 plan over his objection. At issue was whether the bankruptcy court could confirm the debtor's plan which provided for the avoidance of two junior liens on the debtor's principal residence. The court held that 11 U.S.C. 1322(b)(2) did not bar a Chapter 13 debtor from stripping off a wholly unsecured lien on his principal residence. The court also held that the strip off of a wholly unsecured lien on a debtor's principal residence was effective upon completion of the debtor's obligations under this plan and it was not contingent on his receipt of a Chapter 13 discharge. Accordingly, the court reversed the decision of the bankruptcy court and remanded for further proceedings where the debtor must amend his plan to provide for proper treatment of the junior lienholders' claims as unsecured nonpriority claims.
Court Description: Bankruptcy Appellate Panel. Debtor was an aggrieved party with standing to appeal confirmation of his Chapter 13 plan; a debtor may generally strip off a wholly unsecured lien on his principal residence; the strip off of a wholly unsecured lien on a debtor's principal residence is effective upon completion of his obligations under his plan and is not contingent on his receipt of a Chapter 13 discharge; on remand, the debtor must amend his plan to provide for proper treatment of the junior lienholders' claims as unsecured nonpriority claims, and the district court should consider whether the debtor's plan complies with these additional requirements for confirmation.
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