R&B singer Toni Braxton is facing the possibility that her mortgage lender will win relief from the automatic stay in her bankruptcy case.
US Bank, which represents the holder of Braxton's mortgage debt, recently filed court papers in the R&B and pop singer's bankruptcy proceeding seeking relief from the automatic stay with respect to Braxton's Duluth, Ga., home. If granted, the request would allow the mortgage holder to take such potential actions as launching foreclosure proceedings or demanding immediate repayment.
When Braxton initially filed bankruptcy, she notified the court that she wanted to remain in her home. But the home currently has no equity with the outstanding mortgage at $1.5 million and the value of the actual property at $1.2 million. The mortgage lender has insisted that Braxton owes them the full amount of the loan; but Braxton and her bankruptcy attorney point out the fact that the entire amount of the loan is not secured by the property due to its significantly reduced value. If Braxton and her bankruptcy attorney can prove to the court that a portion of the mortgage is unsecured, the unsecured part of the mortgage loan could be discharged. However, Braxton would still need to create a plan for repaying the secured portion of the mortgage if she wants to remain in the home after bankruptcy.
Sometimes creditors take action to be exempted from the automatic stay in bankruptcy; but they must prove that an exemption is justified. The bankruptcy court won't exempt the creditor from the automatic stay if they believe that the debtor has some plan of keeping the asset in question.