{"id":359,"date":"2012-09-13T19:17:34","date_gmt":"2012-09-13T19:17:34","guid":{"rendered":"https:\/\/mn-bankruptcy.com\/blog\/?p=359"},"modified":"2025-08-11T19:19:02","modified_gmt":"2025-08-11T19:19:02","slug":"fisette-fizzle-lien-strip","status":"publish","type":"post","link":"https:\/\/mn-bankruptcy.com\/blog\/fisette-fizzle-lien-strip\/","title":{"rendered":"Fisette is a Fizzle – Minnesota Chapter 13 Lien Strip Decision Inconclusive"},"content":{"rendered":"

What I am about to say here applies only to Minnesota and the other states in the swath of territory here in the middle of the US which is served by the 8th Circuit Court of Appeals.\u00a0 It is only my opinion.\u00a0 You may find other attorneys who would disagree.<\/p>\n

We have been waiting for the 8th Circuit Court of Appeals to make a final decision on lien stripping.\u00a0 I’ve been telling people for months that I\u00a0would really like to see what the appeal court has to say before I get seriously into lien strip work.<\/p>\n

In a bankruptcy\u00a0context, when\u00a0 you see talk about “lien stripping,”\u00a0it is about a process in Chapter 13 cases where a second mortgage can be treated as if it was unsecured.\u00a0 This can be done, if it is permissible at all, in Chapter 13 cases where the value of the house is lower than the balance on the first mortgage, so that there literally is no security\u00a0to support\u00a0the second mortgage.\u00a0 The second mortgage becomes no longer a mortgage on the house, no longer a lien that must be paid if you want to keep the house.\u00a0 It is to be treated like any other unsecured debt.\u00a0 Usually in Chapter 13 the unsecured creditors get paid very little, only a fraction of the full amount of the debt.<\/p>\n

A lower court – the Bankruptcy Appellate Panel (or BAP) – ruled about two years ago in the Fisette<\/em> case that the procedure is permissible.\u00a0 The decision was promptly appealed to the 8th Circuit Court of Appeals, and we have been waiting for a decision ever since.\u00a0 Finally the big decision <\/a>was released yesterday.\u00a0 I practially held my breath as I tried to figure out what the decision said.\u00a0I printed a\u00a0hard copy for myself to I could go over it more carefully.\u00a0 \u00a0It started out reading in a fairly positive way.\u00a0As I flipped through the pages,\u00a0at first I thought I was seeing a decision in favor of lien stripping.\u00a0\u00a0A footnote on page 3 of the decision listed a string of\u00a0cases from other courts which say that lien stripping is\u00a0an acceptable procedure.\u00a0 The opinion, however, comes to an abrupt\u00a0end with the words, “The appeal is dismissed for lack of jurisdiction.”<\/p>\n

Only “final” orders can be appealed.\u00a0 The court said they didn’t think the order being appealed was final.\u00a0 They sent it back to the lower court for “further judicial activity,” whatever that means.\u00a0 They don’t seem to have decided a thing, and it’s very disappointing.<\/p>\n

It is true that they did not overturn the\u00a0BAP decision.\u00a0\u00a0That means that the BAP decision, which said that lien stripping is OK, is the current law of the 8th Circuit.\u00a0 However, the lower court judge this is\u00a0apparently\u00a0being sent back to is reputed to be\u00a0very much against the lien stipping idea.\u00a0 There is likely to be another lower court decision which again will\u00a0be appealed.\u00a0 It’s hard to tell, but the process could take years before we have the clarity I was\u00a0hoping for.<\/p>\n

It will take a while before the legal community in these parts has this decision fully digested.\u00a0 It is very early to say what the meaning of it really is.\u00a0 I’ll try to keep you posted.<\/p>\n

This post is for general information purposes only, is not legal advice, and does not create an attorney-client relationship.\u00a0\u00a0Please consult the attorney of your choice concerning the details of your case.\u00a0 I am a debt relief agency, helping people file for relief under the federal bankr<\/p>\n","protected":false},"excerpt":{"rendered":"

What I am about to say here applies only to Minnesota and the other states in the swath of territory here in the middle of the US which is served by the 8th Circuit Court of Appeals.\u00a0 It is only my opinion.\u00a0 You may find other attorneys who would disagree. We have been waiting for … <\/p>\n

Continue reading “Fisette is a Fizzle – Minnesota Chapter 13 Lien Strip Decision Inconclusive”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,69,140],"tags":[],"class_list":["post-359","post","type-post","status-publish","format-standard","hentry","category-bankruptcy","category-chapter-13","category-lien-stripping"],"yoast_head":"\nCircuit Court fails to provide lien stripping decision for Minnesota.<\/title>\n<meta name=\"description\" content=\"The long awaited decision concerning Minnesota bankruptcy lien stripping is inconclusive. 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You can find me in MInnetonka near I-394 and Hopkins crossroad. It's ten or fifteen minutes from downtown Minneapolis. You can see parts of Plymouth, Minnesota, Golden Valley, Minnesota and St. Louis Park, Minnesota from the high ground in front of my building. If you take a look at the map, you can see that most of St. Louis Park is closer to my office than many parts of Minnetonka.\",\"sameAs\":[\"http:\/\/www.mn-bankruptcy.com\"],\"url\":\"https:\/\/mn-bankruptcy.com\/blog\/author\/davekelly\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Circuit Court fails to provide lien stripping decision for Minnesota.","description":"The long awaited decision concerning Minnesota bankruptcy lien stripping is inconclusive. 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Sometimes that seems like a long time, and other days I feel as if I just started. These days my practice is devoted entirely to counseling folks concerning their financial problems and representing them in Chapter 7 and Chapter 13 bankruptcy. One thing I don't do is credit repair. When asked about matters concerning credit scores, I like to say \"I'm a very good source of unreliable information about that.\" What I mean is that I hear a lot about it from my clients who often report back to me how they are doing after their bankruptcy is completed, sometimes even years later; but having heard some stories from a few people doesn't qualify me to give any advice. I spend a lot of time with my clients. I want to be sure we get it right. There are civil and criminal penalties for concealing or providing incorrect information in a bankruptcy care, and my goal is to keep myself and my clients as far away from problems like that as possible. 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