Dewsnup v. Timm

Summary

The Court held that § 506(d) does not permit a Chapter 7 debtor to strip down a real-property lien to the judicially determined value of the collateral when the creditor's claim is secured by a lien and fully allowed under § 502. Finding statutory ambiguity, the Court relied on the pre-Code rule that liens survive bankruptcy and concluded that subsequent appreciation should benefit the lienholder. Justice Blackmun wrote for Chief Justice Rehnquist and Justices White, Stevens, O'Connor, and Kennedy. Justice Scalia, joined by Justice Souter, dissented, arguing that the statutory text unambiguously incorporates § 506(a)'s valuation-based definition of a secured claim and therefore voids the lien's unsecured portion. Justice Thomas did not participate.