Bankruptcy - update - US Supreme Court rules on stripping second mortgages

Update on my previous blog "Bankruptcy - US Supreme Court looks at a major change in Chapter 7 bankruptcies."

The US Supreme Court ruled Monday that debtors cannot strip second mortgages.

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"The Supreme Court ruled on Monday that the second mortgages should not be treated as unsecured debt, hence upholding the Dewsnup decision. Justice Clarence Thomas, in delivering the opinion of the court, wrote that, 'Section 506(d) of the Bankruptcy Code allows a debtor to void a lien on his property '[t]o the extent that [the] lien secures a claim against the debtor that is not an allowed secured claim.' 11 U. S. C. §506(d). These consolidated cases present the question whether a debtor in a Chapter 7 bankruptcy proceeding may void a junior mortgage under §506(d) when the debt owed on a senior mortgage exceeds the present value of the property. We hold that a debtor may not, and we therefore reverse the judgments of the Court of Appeals.'" as reported by DSNews

So this case reaffirms the law as it has been in applied in the past. So, debtors will be required to give up their homes to be released from a second mortgage no matter what the property is worth.

If you want assistance, legal representation, or just want to know more about Mark Medvesky or Medvesky Law Office, LLC, check out our website at www.medveskylaw.com.

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