In a chapter 20 case, a wholly unsecured junior lien for which the debtor has no personal liability, does not enter into the calculation in the subsequent chapter 13 case, of either secured or unsecured debt under section 109(e). Asset Management Holdings v. Hernandez, No. 16-1228, 1244 (B.A.P. 9th Cir. April 11, 2017) (unpublished).
Aleli Hernandez filed for chapter 7 bankruptcy and included in her schedules two debts secured by deeds of trust on her residence. More than four years after she obtained a discharge in that case, she filed for chapter 13 bankruptcy and sought to avoid the junior lien on the basis that the senior lien exceeded the value of the property. AMH moved to dismiss on the bases that Ms. Hernandez was ineligible for chapter 13 relief under section 109(e) and, in the alternative, that she filed her petition in bad faith. The bankruptcy court denied the motion and confirmed Ms. Hernandez’s plan. Read More
