Reversing the bankruptcy court, the BAP for the Ninth Circuit found that a wholly unsecured junior lienholder’s claim was not allowable as a general unsecured debt against the bankruptcy estate where the chapter 13 debtor had obtained a discharge on her personal liability in a prior chapter 7 bankruptcy. Washington v. Real Time Resolution, Inc., No. 18-1206 (B.A.P. 9th Cir. July 30, 2019).
Gwendolyn Washington obtained a chapter 7 discharge and, five years later, filed for chapter 13 bankruptcy proposing a 100% plan and seeking to strip off a wholly unsecured junior lien on her home. The servicer for the junior lienholder, RTR, filed a proof of claim listing Ms. Washington’s original debt as an unsecured claim under section 506(a), and the bankruptcy court allowed the claim over Ms. Washington’s objection.
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