Drawing A Bright Line In The Fog: Eleventh Circuit Precedent For Challenging McNeal

more+
less-

As most mortgage lenders know by now, on May 11, 2012, the Eleventh Circuit issued an unpublished decision in McNeal v. GMAC Mortgage, LLC (In re McNeal) , 477 Fed. App’x 562, holding that a chapter 7 debtor can “strip off” (extinguish) a lien that is no longer secured by the current value of the collateral pursuant to 11 U.S.C. § 506(d). This ruling may cause surprise, if not confusion, for most mortgage lenders, considering that since the inception of bankruptcy law in America over one hundred years ago, liens have generally survived a bankruptcy liquidation case untouched. Notwithstanding the perplexities of McNeal , there is still hope for a reversal. This article will explore some of the inequities that result from a bankruptcy court's application of McNeal in the context of valuing property in bankruptcy, and point to the Eleventh Circuit's own precedent as grounds for challenging the decision in McNeal.

MUCH ADO ABOUT NOTHING: THE PRECEDENTIAL EFFECT OF MCNEAL -

McNeal is not binding on any bankruptcy court in the Eleventh Circuit. As bankruptcy courts following McNeal have recognized, McNeal is only persuasive authority. In her decision in In re Malone, Judge Diehl provides a well-reasoned analysis of the flawed reasoning of McNeal in light of the clear and binding precedent from the United States Supreme Court in Dewsnup v. Timm, 502 U.S. 410, 418 (1992). As Judge Diehl implies, the Eleventh Circuit likely misconstrued the Supreme Court’s holding in Dewnsup...

Please see full Alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Burr & Forman | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×