Socrateaser, Hope all is well with you. Here’s my question.
A, debtor who is a natural person, successfully stripped off a wholly unsecured 2nd lien on said debtor’s primary residence through a Chapter 11 filing. The case was confirmed 1 year prior, and actually filed 2 years prior from the current date. The case is concluded and the final decree has been issued by the court. The court ordered that said wholly unsecured stripped 2nd lien on debtor’s primary residence be extinguished, as the 2nd mortgage lien holder filed no proof of claim
during the Chapter 11 bankruptcy proceeding. No payment is to made to that creditor. However, the court ordered that the debtor not receive a discharge for any stripped-down secured or unsecured debts, which were included in the plan until all unsecured creditors which did file timely proofs of claim, in the Chapter 11 filing are paid. Debtor was unable to modify the first mortgage on debtor’s primary residence during Chapter 11 filing because of the Chapter 11 exclusion from a debtor being able to modify the first mortgage on an owner occupied property. However, the automatic stay
was still in effect during bankruptcy proceeding and interest continued to accumulate on the first mortgage and no payments were made to the lender.
Debtor is still in arrears for payments on first mortgage of the owner occupied property and is concerned that foreclosure action will begin soon no that the case has concluded and the automatic stay in no longer in effect. Debtor wishes to find a way to modify the first mortgage through a lien stripping by way of a separate Chapter 11 filing in the following manner. Debtor wishes to vest primary residence into one of Debtor’s LLCs, which was formed in a state other than that which the debtor’s primiary residence is located. Debtor is the primary and sole member of said LLC. Debtor then wishes to rent
out primary residence to a bonafide third party, and then debtor wishes to file for Chapter 11 bankruptcy protection
in the district of the state in which the LLC was formed. Debtor then wishes to attempt to lien strip the first mortgage down to the market value of the property, as property is currently encumbered 25% over market value by the 1st mortgage. Debtor (as LLC) then wishes to propose a Chapter 11 plan to pay off the unsecured portion of the first mortgage as a percentage pursuant to a new Chapter 11 plan. Providing that the LLC’s debt obligations
meet the current Chapter 11 requirements, is there some other statute, rule, law or regulation which, would prevent debtor from taking such a plan of action or prevent the LLC (as debtor) from enacting such a plan?
Also, besides a new Chapter 11 filing might there be any other way allowed by the bankruptcy code
in another form of bankruptcy for the debtor to modify the first mortgage as an LLC or as a natural person?
Also, if debtor re-opened prior Chapter 11 case, could the debtor list the prior primary residence as investment property provided that it were rented out and then attempt to lien strip the re-opended Chapter 11 case?