The Mysterious Case of the “Lili Lin” Lien

Posted on March 5, 2014. Filed under: Chapter 7 Bankruptcy, Consumer Alerts, Consumer Bankruptcy Attorney | Tags: , , |

united states supreme court building

In distinguishing Marrama , the USSC, in a decision authored by Justice Scalia, again limits the power of the bankruptcy courts in a decision announced yesterday in Law v. Seigel

This case involves alleged debtor fraud in the form of a purported sham mortgage held by a mysterious woman in China who litigates from afar with the trustee the validity of her lien.

From the opinion (note: Siegel is the trustee, Law is the debtor):

“We acknowledge that our ruling forces Siegel to shoulder
a heavy financial burden resulting from Law’s egregious
misconduct, and that it may produce inequitableresults for trustees and creditors in other cases. We have recognized, however, that in crafting the provisions of§522, “Congress balanced the difficult choices that exemption
limits impose on debtors with the economic harm that exemptions visit on creditors.” Schwab v. Reilly, 560 U. S. 770, 791 (2010). The same can be said of the limits imposed
on recovery of administrative expenses by trustees. For the reasons we have explained, it is not for courts toalter the balance struck by the statute. Cf. Guidry v. Sheet Metal Workers Nat. Pension Fund, 493 U. S. 365, 376–377 (1990).”

photo credit: wallyg via photopin cc

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