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Bankruptcy Keyed to Epstein 6th Ed.
Dewsnup v. Timm
Citation:
502 U.S. 410, 112 S.Ct. 773, 116 L.Ed.2d 903 (1992)Facts
In 1978, respondents loaned $119,000 to petitioner Aletha Dewsnup and her husband, secured by a Deed of Trust on two parcels of Utah farmland. Dewsnup defaulted the following year, and respondents issued a notice of default in 1981. Before foreclosure could take place, Dewsnup filed for bankruptcy protection, first under Chapter 11 (which was dismissed) and then under Chapter 7 in 1984. In 1987, Dewsnup filed an adversary proceeding seeking to “avoid” a portion of respondents’ lien pursuant to §506. She argued that since the debt of approximately $120,000 exceeded the fair market value of the land (determined to be $39,000), the Bankruptcy Court should reduce the lien to that value based on the interrelationship between §506(a) and §506(d). The Bankruptcy Court refused, reasoning that once property was abandoned by the trustee, it no longer fell within §506(a)’s reach.
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