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Didlake v. Wachovia Bank (In re Didlake), (Case No. 09-73166; A.P. No. 11-07003) 6/29/2011

The Court found that the defendant was in default as it failed to timely respond to complaint seeking to determine the value of the defendant's secured interest in property owned by the plaintiffs.  However, the Court ordered plaintiffs to submit authority in support of the legal positions contained in the complaint instead of entering default judgment against the defendant. Court found that credit line deed of trust remained secured by the real property notwithstanding a judgment lien.  Court found  that under sections 101(13A) and 101(27B) the definition of debtor's principal residence includes rents. Thus, fact that credit line deed of trust listed rents as item of collateral did not add any additional collateral to the defendant's security interest beyond those items already listed in the Code. Since the credit line deed of trust was secured only by the plaintiffs' principal place of residence, section 1322(b)(2) prohibited the plaintiffs from modifying the deed of trust; thus the plaintiffs could not cram down the deed of trust despite the assignment of rents provision.  As the aggregate value of first deed of trust and credit line deed of trust exceeded the value of the property, there was no equity in the property to which the judgment lien could attach.  Therefore, Court declared the judgment lien to be wholly unsecured under section 506(a).

Date: 
Wednesday, June 29, 2011
Category: 
Default Judgment
Lien Avoidance
Unsecured Claim
Chapter: 
13