Alex Dugan Interviewed on LXBN TV Concerning U.S. Supreme Court’s Decision in Chapter 7 Bankruptcy Case

Bankruptcy attorney and co-author of Bradley’s Financial Services Perspectives , Alex Dugan was interviewed by Colin O’Keefe of LXBN TV regarding the U.S. Supreme Court’s recent ruling in Bank of America v. Caulkett.Considered a victory for financial institutions, the Court ruled that a debtor in a Chapter 7 case cannot “strip off,” or void, wholly unsecured junior mortgages under section 506 (d) of the Bankruptcy Code.

“One thing this ruling highlights is the continued disparity and treatment between wholly underwater second mortgages in Chapter 13 and Chapter 7 cases,” Dugan states.“The Court’s ruling could trigger a potential shift in some debtors choosing to file Chapter 13, instead of Chapter 7, in order to seek lien striping of their wholly underwater second mortgage.”

In the video below, Dugan also explains how the ruling could provide junior lien holders with leverage in loss mitigation discussions and how it resolves the circuit split between Chapter 7 and Chapter 13 with respect to permissible treatments of junior mortgage liens.