Shelton, et al. v. Citimortgage, No. 12-3555 (8th Cir. 2013)
Annotate this CaseDebtors appealed the bankruptcy court's dismissal of their adversary proceeding. Citimortgage, a secured creditor, held a lien on debtors' primary residence and filed a claim and then debtors filed an objection urging disallowance of the claim as untimely. The parties agreed to the entry of an order disallowing the claim and debtors subsequently initiated an adversary proceeding seeking the avoidance of Citimortgage's lien. Relying on the plain language of 11 U.S.C. 506(d), debtors argued that disallowance of Citimortgage's claim necessarily voided Citimortgage's corresponding lien. Joining the Fourth and Seventh Circuits, the court rejected debtors' argument and agreed with the bankruptcy court that a secured creditor's lien was not void due solely to the fact that the secured creditor filed an untimely claim.
Court Description: Civil case - Bankruptcy. In an appeal from a bankruptcy court order holding that a secured creditor's lien was not void due solely to the fact that the secured creditor filed its claim on an untimely claim, the court joins the Fourth and Seventh Circuits in holding that liens for disallowed claims survive bankruptcy if the sole basis for disallowing the claim was untimeliness.
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