Bankruptcy Help for Business and Individuals

Lein Strip

by | Nov 19, 2019

Homeowners sometimes find themselves “under water.” Their home is worth less than what they owe on it. Instead of building up equity, the monthly payments put homeowners deeper in the red. The situation is made worse when the homeowner has taken out a second mortgage or a home equity line of credit. In such cases, a little known bankruptcy provision referred to as lien stripping can help homeowners completely eliminate the lien from a second mortgage or equity line while keeping their home.

Get Rid of Your Second Trust Deed

Lien stripping is done as part of a Chapter 13 bankruptcy. Indeed, this is a bid advantage of filing a Chapter 13 bankruptcy. Through lien stripping, you may be able to wipe out a junior lien on your home. However, many consumers do not know about this provision, and not all bankruptcy attorneys offer it. At Hallstrom, Klein & Ward LLP, we have considerable experience with this procedure, and can help you eliminate your junior liens if appropriate.
To remove a second mortgage, you must file a separate action in the Bankruptcy Court and show that the value of your home is below the amount you owe on your first mortgage. If the court agrees, you may be able to eliminate the security interest of your 2nd or other junior mortgages. For example: if your home is worth $800,000 but you owe $850,000 on your first mortgage and $100,000 on a home equity line, then a chapter 13 bankruptcy may enable you to eliminate the $100,000 lien from your home equity line.

Discuss Your Situation with an Experienced OC Lien Strip Attorney

While lien stripping sounds easy in theory, it can be a difficult task in real life. Papers have to be filed, house value has to be proved, and follow-up communication with the court might be necessary. To ensure that you take full advantage of this valuable consumer protection mechanism, you should discuss a possible lien strip with a skilled bankruptcy attorney. Contact us today for a FREE consultation by calling (949) 450-8500.

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