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Big Ninth Circuit Win for ‘Chapter 20’ Debtors

Good news. The Ninth Circuit Court of Appeals has affirmed a Bankruptcy Court decision that the ability to permanently dismiss foreclosure proceedings is still available to debtors who seek Chapter 7 bankruptcy immediately followed by Chapter 13 relief. In that case HSBC filed a proof of claim in the Bankruptcy which was denied by the Bankruptcy Court yet HSBC failed to file a timely objection to the denial of their claim.

Justice League

(CN) – The ability to permanently dismiss foreclosure proceedings is still available to debtors who seek Chapter 7 bankruptcy immediately followed by Chapter 13 relief, the Ninth Circuit ruled Thursday.
Though the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCA) of 2005 prevents these so-called “Chapter 20” debtors from successive discharges, a three-judge panel of the Ninth Circuit said Thursday that “nothing prevents a debtor from taking advantage of the other Chapter 13 tools available to him.”
Even lien-voidance provisions that can permanently bar creditors from foreclosing are not applicable, the court found.
The ruling affirms the decision of a bankruptcy judge and a federal district judge in Washington to disallow HSBC’s lien on the home of Chapter 20 debtors Robert and Darlene Blendheim.
The last judge to deny HSBC relief had said that enforcing the bank’s lien against the Blendheims “creates an extremely harsh result: a debtor who successfully…

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