4003-2 JR LIEN - MOTION: Avoid Lien: CONSENSUAL: Junior: Debtor's Residence: Motion
LBR 4003-2 governs the procedure for a debtor to file a motion to avoid a lien.
Sometimes the debtor has entered into an agreement to borrow money on the debtor's residence, and grant a junior lien to the lender. The motion follows Bankruptcy Code section 506 under which the debtor asks the court to rule that the value of the residence is less than the total of the higher priority liens and the junior lien and, therefore, the junior lien is unsecured and can be avoided. This is a practice in chapter 13 cases and in chapter 11 cases when the debtor is an individual.
Recently, the Federal Rules of Bankruptcy Procedure allowed this type of lien-avoidance to be sought by filing a motion in a chapter 13 case. The chapter 13 plan must indicate that the debtor intends to file a motion to avoid a junior lien on the debtor's residence.
The court provides forms. See links below.
See Section 2-02 of The Central Guide for guidance on when a lender must be served by certified mail.