What is “Lien Stripping”?
Lien stripping is an action that may occur in Chapter 13 bankruptcy. Through lien stripping, a secured second mortgage might be transferred into an unsecured debt, making it more likely that this monthly payment will be eliminated and possibly reducing overall debt by a large percentage. When a home is no longer valued at more than a debtor owes on it, the homeowner may want to “strip” the second mortgage balance owed on the home, because the home’s initial mortgage is higher than the value of the home. This process can help debtors control their monthly payments on their home during the bankruptcy process.
If your home is currently worth less than is owed on the first mortgage, you may wish to consider speaking with a skilled and experienced bankruptcy about the potential for having a subsequent loan’s lien stripped. Contact the Chicago Chapter 13 bankruptcy lawyers at the Law Offices of Stuart B. Handelman by calling 312-360-0500 to discuss your situation.
Will it Work for Me?
Lien stripping is not available in every case, and having a lien stripped may not always be in one’s best interest. To qualify for lien stripping, the minimum requirements include:
- Filing for Chapter 13 bankruptcy
- Having a home that is worth less than the balance on your initial mortgage
- Having a second mortgage or home equity loan on the property
Only the subsequent debts may be classified as unsecured, so it is important to note that your first mortgage cannot be reduced or eliminated in this manner.
Contact Us
As a homeowner who is underwater and carrying other house-related debt, there can be no delay in contacting a knowledgeable Chicago Chapter 13 bankruptcy lawyer. Call the Law Offices of Stuart B. Handelman at 312-360-0500 today.
