In its Scantling opinion, the Eleventh Circuit held that a Chapter 20 debtor (a chapter 13 debtor who previously filed and concluded a chapter 7 case) could strip off valueless junior liens on her principal residence even thought she was ineligible for a discharge in the chapter 13 case. Full disclosure: our firm, Berger Singerman, represented the appellee, Ms. Scantling. Oral argument was interesting: within one minute of Appellant Wells Fargo’s counsel starting his presentation Judge Tjoflat asked how he was getting around the court’s prior opinion in Tanner, where the court held that a chapter 13 debtor could strip off valueless liens on her principal residence. Wells Fargo’s counsel argued that the 2005 amendments to the Bankruptcy Code, combined with the fact that the debtor there was not a chapter 20 debtor, rendered Tanner not controlling. Another panel member asked Wells Fargo’s counsel if there was any difference to its position if the Bank’s liens were partially secured versus wholly unsecured; counsel responded there was no difference and lien stripping shouldn’t be allowed in either circumstance. But that’s the entire focus of the cases, that is, from the Supreme Court on down federal cases uniformly hold that liens cannot be stripped if even $1.00 in equity exists. The split in the case law is where the lender’s lien, like Wells Fargo’s, is wholly unsecured. Even though Wells Fargo’s counsel exceeded his 15 minute allotment at the podium, he was allowed to present rebuttal. Counsel for Ms. Scantling was not asked a single question during his time at the podium. Now that the only 2 circuit courts to have addressed this issue—the Fourth and Eleventh—have held that a chapter 20 debtor can strip off valueless junior liens on a principal residence notwithstanding ineligibility for a chapter 13 discharge, lower courts in other circuits will at least have to take notice which may well result in the solidification of the majority view in favor of lien stripping by chapter 20 debtors. Bottom line: Mortgage lenders within the Fourth and Eleventh Circuits (and likely other circuits across the country, too) are now at risk of having their junior, valueless liens stripped off by chapter 20 debtors rendering them wholly unsecured creditors meaning—usually—they can expect not more than pennies on the dollar on their lien (former lien) claims, and to add insult to injury they will have been permanently stripped of the chance for recovery if the market rebounds (further).