The Third Circuit in In Re: Mansaray-Ruffin, 05-4790 (3rd Cir., June 24, 2008) affirmed a Bankruptcy court’s rejection of a debtor’s attempt to invalidate a secured mortgage lien by characterizing the lien as invalid in her confirmed plan. The debtor argued that the claim was successfully invalidated because she treated it as unsecured in her plan, the creditor failed to object and the Bankruptcy Code makes all confirmed plans final. The court ruled that the debtor’s attempt at lien stripping could only be made by filing an adversary proceeding which was not filed. The creditor’s failure to object to the plan did not relieve the debtor from the duty to resolve the validity of the lien by means of an adversary action. This is true, the court found, even though the confirmed plan treated the lien as invalid because due process require that the creditor be notified of the challenge to the lien by the means provided by the Rules,. i.e. an adversary proceeding. A confirmed plan has no preclusive effect on issues that must be raised in an adversary proceeding, if no such proceeding has been brought.
Author
-
Solomon has nearly two decades of experience representing financial institutions, real estate investors and privately owned business entities. Solomon concentrates his practice in the areas of banking, consumer financial services, real estate, business law and related litigation and appellate practice.
