## Facts

- Tahisia L. Scantling received a Chapter 7 discharge and later filed a Chapter 13 case (a “Chapter 20” sequence).
- Wells Fargo Bank, N.A. held three mortgage liens on Scantling’s principal residence (first, second, and third).
- The residence was valued at $118,500; the first mortgage claim alone exceeded that value, leaving no equity to secure the second and third liens.
- Scantling moved in the Chapter 13 case to determine the secured status of the second and third mortgages and to void (strip off) those wholly unsecured liens.
- The bankruptcy court allowed strip-off through plan treatment and ordered the junior liens would be extinguished automatically upon completion of payments under the confirmed Chapter 13 plan.
- The district court affirmed; Wells Fargo appealed to the Eleventh Circuit.

## Issues

1. Whether a debtor ineligible for a Chapter 13 discharge due to a prior Chapter 7 discharge may, in a Chapter 13 case, strip off wholly unsecured junior mortgage liens on a principal residence under 11 U.S.C. §§ 506(a) and 1322(b).

## Decision

- The Eleventh Circuit affirmed the district court and bankruptcy court.
- A Chapter 20 debtor may strip off wholly unsecured junior liens on a principal residence using §§ 506(a) and 1322(b), even though the debtor cannot receive a Chapter 13 discharge under § 1328(f).
- Section 1328(f) limits only the availability of a discharge; it does not bar filing Chapter 13, proposing and confirming a plan, or using statutory valuation and claim treatment to eliminate wholly unsecured junior liens upon plan completion.
- The lien avoidance was properly conditioned on completion of payments under the confirmed plan.

## Legal Principles

- Under 11 U.S.C. § 506(a), a creditor holds a “secured claim” only to the extent of the collateral’s value; any deficiency is treated as unsecured.
- Under 11 U.S.C. § 1322(b)(2), the anti-modification protection for claims secured only by a principal residence applies to “secured claims”; a junior lien that is wholly unsecured after § 506(a) valuation may be treated as unsecured and modified/stripped in Chapter 13.
- 11 U.S.C. § 1328(f) bars entry of a Chapter 13 discharge within specified time periods after a Chapter 7 discharge but does not eliminate the debtor’s ability to confirm a Chapter 13 plan that reclassifies and modifies claims.
- In rem lien extinguishment in this setting may be implemented through the confirmed plan and conditioned on plan completion, rather than on entry of a Chapter 13 discharge.

## Conclusion

The Eleventh Circuit held that discharge ineligibility under § 1328(f) does not prevent a Chapter 20 debtor from stripping wholly unsecured junior mortgage liens on a principal residence through § 506(a) valuation and § 1322(b) plan treatment, with lien extinguishment effective upon completion of the confirmed plan payments.


In re Scantling, 754 F.3d 1323 (11th Cir. 2014)