Aletha Dewsnup v. Louis L. Timm, et al. (502 U.S. 410)
U.S. Supreme Court · decided January 15, 1992 · Supreme Court Database (Spaeth)
- Citation
- 502 U.S. 410 · 112 S. Ct. 773
- Decided
- January 15, 1992
- Term
- October Term 1991
- Vote
- 6–2
- Majority author
- Justice Blackmun
- Issue area
- Economic Activity
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Conservative
Opinion excerpt
Justice Blackmun delivered the opinion of the Court. We are confronted in this case with an issue concerning § 506(d) of the Bankruptcy Code, 11 U. S. C. § 506(d). May a debtor “strip down” a creditor’s lien on real property to the value of the collateral, as judicially determined, when that value is less than the amount of the claim secured by the lien? I On June 1, 1978, respondents loaned $119,000 to petitioner Aletha Dewsnup and her husband, T. LaMar Dewsnup, since deceased. The loan was accompanied by a Deed of Trust granting a lien on two parcels of Utah farmland owned by the Dewsnups. Petitioner defaulted the following year. Under the terms of the Deed of Trust, respondents at that point could have proceeded against the real property collateral by accelerating the maturity of the loan, issuing a notice of default, and selling the land at a public foreclosure sale to satisfy the debt. See also Utah Code Ann. §§57-1-20 to 57-1-37 (1990 and Supp. 1991). Respondents did issue a notice of default in 1981. Before the foreclosure sale took place, however, petitioner sought reorganization under Chapter 11 of the Bankruptcy Code, 11 U. S. C. § 1101 et seq. That bankruptcy petition was dismissed, as was a subsequent Chapter 11 petition. In June 1984, petitioner filed a petition seeking liquidation under Chapter 7 of the Code, 11 U. S. C. §701 et seq. Because of the pendency of…
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