Debtor can treat a junior mortgage as an unsecured claim without filing an adversary proceeding if the value of the collateral is less than the amount of the junior lien

In this Chapter 13 case, In re Kemp, No. 08-18700 (Bkrtcy.D.N.J., July 17, 2008), the court concluded the debtor could reclassify his secured claim arising from a second mortgage on his residence as an unsecured claim, by stripping creditor’s lien based on residence’s value, without filing an adversary proceeding. The court in held that lien stripping did not challenge either the validity or the extent of lien. It distinguished the recent Third Circuit decision in _In re Mansaray-Ruffin_, No. 05-47 — F.3d —-, (3d. Cir. June 24, 2008) where the court held that a Chapter 13 debtor could not invalidate a lien through a Chapter 13 plan provision, but must file an adversary proceeding instead. Because the _Mansaray-Ruffin_ decision drew a distinction between challenging the validity of a lien and valuing the collateral to which that lien attached to determine the amount of the secured claim, the court concluded that the filing of an adversary proceeding was not required.

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