October Term 2014 · Docket 13-1421
Can debtors strip underwater mortgages in Chapter 7 bankruptcy?
Debtors seek to remove liens on homes worth less than their debt. Lenders argue this strips their security interest.
Verified source milestones
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Ms. Spinelli argued debtors can strip underwater mortgages and keep homes.
Mr. Bibas argued claims without value are unsecured and liens are void.
questions_and_answers
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 11, lines 21-39 — Transcript, file page 11, lines 21-39
- Official Supreme Court Transcript — file page 11, lines 3-11 — Transcript, file page 11, lines 3-11
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
- Official Supreme Court Transcript — file page 3, lines 7-17 — Transcript, file page 3, lines 7-17
- Official Supreme Court Transcript — file page 4, lines 9-17 — Transcript, file page 4, lines 9-17
- Official Supreme Court Transcript — file page 5, lines 11-25 — Transcript, file page 5, lines 11-25
- Official Supreme Court Transcript — file page 5, lines 45-11 — Transcript, file page 5, lines 45-11
- Official Supreme Court Transcript — file page 6, lines 27-33 — Transcript, file page 6, lines 27-33
- Official Supreme Court Transcript — file page 6, lines 45-5 — Transcript, file page 6, lines 45-5
- Official Supreme Court Transcript — file page 7, lines 25-27 — Transcript, file page 7, lines 25-27
- Official Supreme Court Transcript — file page 7, lines 31-35 — Transcript, file page 7, lines 31-35
- Official Supreme Court Transcript — file page 7, lines 41-43 — Transcript, file page 7, lines 41-43
- Official Supreme Court Transcript — file page 8, lines 27-43 — Transcript, file page 8, lines 27-43
- Official Supreme Court Transcript — file page 9, lines 27-33 — Transcript, file page 9, lines 27-33
A citizen's guide to the whole case
What this case is about
This case tests whether Section 506(d) voids liens on underwater mortgages. Debtors want to keep homes and drop debt. Lenders want to preserve their security interest in the property.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
How the case got here
The Supreme Court heard oral argument in this case on March 24, 2015.
Official sources for this section
- Official Supreme Court Transcript — file page 3, lines 7-17 — Transcript, file page 3, lines 7-17
What each side wants
Debtors want to remove underwater mortgage liens and keep their homes.
Lenders want to preserve their security interest in the property value.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
What each side says
Debtors argue Section 506(d) voids liens on claims with no value.
Lenders argue debtors cannot strip liens and prevent access to appreciation.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
What the justices asked
Justice Sotomayor asked how a lender forecloses if the trustee sells the property.
Justice Scalia asked why the Court should not limit prior precedent to specific facts.
Official sources for this section
- Official Supreme Court Transcript — file page 11, lines 21-39 — Transcript, file page 11, lines 21-39
- Official Supreme Court Transcript — file page 11, lines 3-11 — Transcript, file page 11, lines 3-11
- Official Supreme Court Transcript — file page 4, lines 9-17 — Transcript, file page 4, lines 9-17
- Official Supreme Court Transcript — file page 5, lines 11-25 — Transcript, file page 5, lines 11-25
- Official Supreme Court Transcript — file page 5, lines 45-11 — Transcript, file page 5, lines 45-11
- Official Supreme Court Transcript — file page 6, lines 27-33 — Transcript, file page 6, lines 27-33
- Official Supreme Court Transcript — file page 6, lines 45-5 — Transcript, file page 6, lines 45-5
- Official Supreme Court Transcript — file page 7, lines 25-27 — Transcript, file page 7, lines 25-27
- Official Supreme Court Transcript — file page 7, lines 31-35 — Transcript, file page 7, lines 31-35
- Official Supreme Court Transcript — file page 7, lines 41-43 — Transcript, file page 7, lines 41-43
- Official Supreme Court Transcript — file page 8, lines 27-43 — Transcript, file page 8, lines 27-43
- Official Supreme Court Transcript — file page 9, lines 27-33 — Transcript, file page 9, lines 27-33
Why it matters
This dispute determines whether debtors can eliminate underwater mortgage debt. It affects the balance between fresh starts and lender security.
Official sources for this section
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 11, lines 21-39 — Transcript, file page 11, lines 21-39
- Official Supreme Court Transcript — file page 11, lines 3-11 — Transcript, file page 11, lines 3-11
- Official Supreme Court Transcript — file page 3, lines 7-17 — Transcript, file page 3, lines 7-17
- Official Supreme Court Transcript — file page 4, lines 9-17 — Transcript, file page 4, lines 9-17
- Official Supreme Court Transcript — file page 5, lines 11-25 — Transcript, file page 5, lines 11-25
- Official Supreme Court Transcript — file page 5, lines 45-11 — Transcript, file page 5, lines 45-11
- Official Supreme Court Transcript — file page 6, lines 27-33 — Transcript, file page 6, lines 27-33
- Official Supreme Court Transcript — file page 6, lines 45-5 — Transcript, file page 6, lines 45-5
- Official Supreme Court Transcript — file page 7, lines 25-27 — Transcript, file page 7, lines 25-27
- Official Supreme Court Transcript — file page 7, lines 31-35 — Transcript, file page 7, lines 31-35
- Official Supreme Court Transcript — file page 7, lines 41-43 — Transcript, file page 7, lines 41-43
- Official Supreme Court Transcript — file page 8, lines 27-43 — Transcript, file page 8, lines 27-43
- Official Supreme Court Transcript — file page 9, lines 27-33 — Transcript, file page 9, lines 27-33
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
- Official Supreme Court Transcript — file page 23, lines 41-35 — Transcript, file page 23, lines 41-35
- Official Supreme Court Transcript — file page 3, lines 19-7 — Transcript, file page 3, lines 19-7
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.