Creditor ‘Slept on Its Rights'; Result Is Lien Voided

“Chapter 20” debtors who filed for Chapter 7 bankruptcy and less than four years later filed for Chapter 13 protection are ineligible for a discharge but can still take advantage of lien-avoidance tools in a Chapter 13 proceeding, the Ninth Circuit held Oct. 1 (HSBC Bank USA v. Blendheim (In re Blendheim), 2015 BL 321276, 9th Cir., 13-35354, 10/1/15).

Affirming the district court, Judge Jay S. Bybee of the U.S. Court of Appeals for the Ninth Circuit concluded in a 47 page opinion that creditor HSBC Bank USA, National Association’s lien on debtors Robert and Darlene Blendheim’s ...