Ineligibility of Chapter 13 debtor for discharge does not preclude a plan that permits stripping off wholly-unsecured junior residential mortgages

“Chapter 20” was curtailed by BAPCPA, but it remains vitality for the purpose of lien stripping. The Bankruptcy Appellate Panel holds that the Bankruptcy Code allows a debtor to follow a Chapter 7 with a Chapter 13 in which he proposes to strip wholly unsecured junior liens from his residence. Debtor’s ineligibility for discharge does not bar such lien avoidance; the avoidance will be effective when debtor completes plan payments. The panel further holds that debtor must treat the holders of the avoided liens as general unsecured claimants.

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