Page:United States Reports 502 OCT. TERM 1991.pdf/571

 502us2$27F 01-22-99 08:37:00 PAGES OPINPGT

Cite as: 502 U. S. 410 (1992)

413

Opinion of the Court

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 these bankruptcy proceedings, respondents were not able to proceed to the foreclosure sale. See 11 U. S. C. § 362 (1988 ed. and Supp. II). In 1987, petitioner filed the present adversary proceeding in the Bankruptcy Court for the District of Utah seeking, pursuant to § 506, to “avoid” a portion of respondents’ lien. App. 3. Petitioner represented that the debt of approximately $120,000 then owed to respondents exceeded the fair market value of the land and that, therefore, the Bankruptcy Court should reduce the lien to that value. According to petitioner, this was compelled by the interrelationship of the security-reducing provision of § 506(a) and the lien-voiding provision of § 506(d). Under § 506(a) (“An allowed claim of a creditor secured by a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property”), respondents would have an “allowed secured claim” only to the extent of the judicially determined value of their collateral. And under § 506(d) (“To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void”), the court would be required to void the lien as to the remaining portion of respondents’ claim, because the remaining portion was not an “allowed secured claim” within the meaning of § 506(a). The Bankruptcy Court refused to grant this relief. In re Dewsnup, 87 B. R. 676 (1988). After a trial, it determined that the then value of the land subject to the Deed of Trust was $39,000. It indulged in the assumption that the property had been abandoned by the trustee pursuant to § 554,