## Facts

- Two Chapter 7 debtors owned homes encumbered by senior mortgage liens and junior mortgage liens held by Bank of America.
- In each case, the debt on the senior mortgage exceeded the home’s current value, leaving the junior lien with no realizable value on sale.
- The debtors sought to void (“strip off”) the junior liens under 11 U.S.C. § 506(d), arguing the junior liens did not secure an “allowed secured claim” given the lack of collateral value.
- The bankruptcy court granted the requests to void the junior liens; the district court and the Eleventh Circuit affirmed based on circuit precedent permitting such relief in Chapter 7.

## Issues

1. Whether 11 U.S.C. § 506(d) permits a Chapter 7 debtor to void a junior mortgage lien that is wholly underwater because the senior lien exceeds the collateral’s value.
2. Whether the meaning of “secured claim” in § 506(d) depends on collateral valuation under § 506(a) or instead turns on whether an allowed claim is secured by a lien.

## Decision

- The Supreme Court reversed the Eleventh Circuit and remanded.
- The Court held unanimously that § 506(d) does not allow Chapter 7 debtors to void wholly underwater junior mortgage liens when the creditor’s claim is allowed under § 502 and secured by a lien.
- The Court applied the interpretation of § 506(d) adopted in Dewsnup v. Timm and refused to distinguish between partially underwater and wholly underwater liens.
- The Court rejected reliance on Nobelman v. American Savings Bank as inapposite because it addressed Chapter 13 plan modification, not § 506(d) in Chapter 7.

## Legal Principles

- For purposes of § 506(d) in Chapter 7, a “secured claim” means an allowed claim that is secured by a lien, regardless of whether the collateral value covers any portion of the claim.
- Section 506(a)’s valuation-based bifurcation of claims into secured and unsecured components does not control the meaning of “secured claim” in § 506(d) under Dewsnup.
- A Chapter 7 debtor may not use § 506(d) to “strip down” a partially underwater lien or to “strip off” a wholly underwater junior lien if the claim is allowed and the lien remains valid.
- Stare decisis supported retaining Dewsnup’s construction of § 506(d) absent congressional revision.

## Conclusion

The Court held that § 506(d) cannot be used in Chapter 7 to void a junior mortgage lien solely because it is wholly underwater; if the claim is allowed under § 502 and secured by a lien, the lien survives bankruptcy notwithstanding the absence of collateral value supporting it.


Bank of Am., N.A. v. Caulkett, 575 U.S. 790 (2015)