Chapter 7 Debtor Cannot Strip Underwater Second Homestead Mortgage

Chapter 7 Debtor Cannot Strip Underwater Second Homestead Mortgage

On June 1, 2015, the United States Supreme Court delivered its decision in Bank of America, N.A. vs. Caulkett . The decision was unanimous. The Court held that a chapter 7 debtor cannot utilize Section 506(d) of the U.S. Bankruptcy Code to avoid (“strip”) a second mortgage from his homestead even when the value of the homestead is less than the balance of the first mortgage, i.e., when the second mortgage is, in the vernacular, “entirely underwater”. The Court stated that Section 1322(b)(2) of the Bankruptcy Code might allow a different result in a chapter 13 case.

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Brian Huckabee

Brian Huckabee is a Tulsa, Oklahoma, attorney with a practice concentrated in bankruptcy and business law. He has handled thousands of business and consumer bankruptcy cases in the past three decades, consisting primarily of chapter 7 and 13 cases, but also including numerous chapter 11 business reorganizations. He represents debtors but has credit union and creditor clients. He has served as an Adjunct Settlement Judge in the United States Bankruptcy Court for the Northern District of Oklahoma. He is licensed in all of Oklahoma’s federal judicial districts, but he concentrates in the Northern and Eastern Districts. He is a member of the Bankruptcy Section of the Tulsa County Bar Association. He received a Bachelor of Arts degree with Honors from Oklahoma State University in 1978 and a Juris Doctorate degree from University of Oklahoma in 1981. He has been married for 33 years to a Tulsa attorney, and he has two grown children, one of whom is a Tulsa attorney. He attends Harvard Avenue Christian Church in Tulsa.