In re Free
In re Free, … BR… (9th Cir. BAP 12/17/15) BAP case number WW-14-1395-JuKiF: Good decision for debtors. Debtors filed a chapter 7 and received their discharge. The discharge released them from personal liability on two wholly-unsecured junior liens that encumbered their real property. Before the chapter 7 was closed, Debtors file a chapter 13 intending to strip off the two junior liens in the in the chapter 13 plan. Trustee moved to dismiss, arguing they were ineligible for chapter 13 because their debt exceed the 109(e) limits. The bankruptcy court agreed. On appeal the BAP reversed, holding in personam liability on undersecured debt that is discharged in a chapter 7 is not counted toward the unsecured debt limit in a subsequent chapter 13 case.