In re: Miguel Angel Elvira Santana and Liduvina De Jesus Rivera

Opinion

1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF PUERTO RICO 2

3 IN RE: CASE NO. 21-03520-MCF13 4 MIGUEL ANGEL ELVIRA SANTANA Chapter 13 LIDUVINA DE JESUS RIVERA 5

6 xx-xx-5859 7 xx-xx-8034 Debtor(s) FILED & ENTERED ON DEC/11/2023 8

9 OPINION AND ORDER 10

11 The contested legal issue pending resolution in the instant case is 12 whether the Condominio Pine Grove’s judicial lien of $14,119.41 may be stripped- 13 off, either pursuant to 11 U.S.C. 522(f) or because it is a wholly unsecured 14 claim pursuant to 11 U.S.C. § 506(a) as requested by the Debtor. 15 The parties agreed that the valuation of the property is $467,189.99, in 16 their joint pre-trial report (Docket No 154 at 6). The property is encumbered 17 by a first lien with Reverse Mortgage Funding, in the amount of $466,189.99 18 (Proof of Claim number 6-2). The CRIM filed claim number 5-1, with a secured 19 portion in the amount of $3,028.52. The Condominio Pine Grove (HOA) filed claim 20 number 7-2 which pursuant to court order (Docket No. 130) is partially secured 21 in the amount of $14,119.41 with respect to the security interest created by a 22 judicial lien. 23 24 The extent of secured status afforded a claim in bankruptcy is governed 25 by Section 506 of the Bankruptcy Code. 11 U.S.C. § 506. 26 ‘The effect of §506(a) is that ‘a claim that is 27 'secured' under commercial law [may or may not be] a 'secured claim' in the context of the Bankruptcy 28 Code.’ Johnson v. Asset Management Group, LLC (In 29 re Johnson), 226 B.R. 364, 366 (D. Md. 1998). 1 Rather, pursuant to §506(a), a claim is deemed secured only to the extent of the value of the 2 creditor's interest in the debtor's interest in the subject collateral. Accordingly, an allowed secured 3 claim cannot exceed the value of the collateral.’ 4 In re Mann, 249 BR 831, 834 (B.A.P. 1st Cir. 2000). 5 To determine if the value of the Debtor’s collateral is sufficient to 6 cover the HOA’s claim, we use the following mathematical equation. The amount 7 of the first mortgage and the CRIM’s (property tax) claim are subtracted from 8 the value of the property which results in no equity left for HOA’s judicial 9 lien. In other words, $467,189.99 (property value) minus $466,189.99 (first 10 ranking lien) minus $3,028.52 (property tax lien) equals an equity of negative 11 (-$2,028.52). As such, the HOA’s claim has no collateral in support of its 12 secured claim. 13 14 Given that it has no basis or equity to support its secured claim, it is 15 a wholly junior unsecured claim. A wholly unsecured claim is not entitled to 16 the protection of the anti-modification provision for debtor’s principal 17 residence in a chapter 13 case and may be stripped. 11 U.S.C. § 1322(b)(2); 18 Nobelman v American Savings Bank, 508 U.S. 624 (1993); Mann, 249 B.R. at 838. 19 Consequently, with no collateral in support of its secured claim, Condominio 20 Pine Grove’s HOA claim number 7-2 is deemed completely unsecured, pursuant to 21 11 U.S.C. § 506(a). Because the claim is wholly unsecured, there is no need to 22 address the legal issue of whether the judicial lien is impairing the Debtor’s 23 homestead, pursuant to 11 U.S.C. § 522(f). 24 25 26

27 28 29 1 Based on the legal discussion, it is hereby ordered that Condominio Pine 2||Grove’s HOA claim number 7-2 is an allowed unsecured claim in its entirety. 3 IT IS SO ORDERED.

5 In San Juan, Puerto Rico, this 11 day of December, 2023.

6 - □ tcl ch ban 8 Mildred Caban Flores 9 United States Bankruptcy Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29