What is “Lien Stripping”?

Santa Rosa and Napa Bankruptcy Lawyer Ellyn M. Lazar Helps Homeowners

Photo of chapter 13 bankruptcy
Residential property values in California have been declining for several years. If you have more than one deed of trust or mortgage secured against your home, you might be wondering how to break free from the debt secured against your residence without losing your home. A Chapter 13 bankruptcy may be the answer. Santa Rosa and Napa bankruptcy lawyer Ellyn M. Lazar helps her clients find relief from second deeds of trust or mortgages.

What is “Lien Stripping” in a Chapter 13 Bankruptcy?

Lien stripping is available in a Chapter 13. If your home is worth less than the balance owing on your first deed of trust (or mortgage) in a Chapter 13 you may “strip off” (eliminate) a second deed of trust (or mortgage or home equity line of credit). The second loan is treated as an unsecured debt such as a credit card debt. You may be required to pay little, if anything, to the second deed of trust (or mortgage or home equity line of credit) through your Chapter 13 plan.

Lien Stripping Example

Your house is appraised at $300,000.00. The balance owing on your first deed of trust (or mortgage) is $350,000.00 and the balance owing on your second deed of trust (or mortgage or home equity line of credit) is $100,000.00. In a Chapter 13 bankruptcy, this second deed of trust (or mortgage or home equity line of credit) may be treated as an unsecured debt, like a credit card, because there is no equity in the home for it to attach. Through your Chapter 13 payment plan, your second deed of trust (or mortgage or home equity line of credit) will be paid at the same rate as your credit card debt, which in some cases may be zero percent.

Contact Napa and Santa Rosa Bankruptcy Attorney Ellyn M. Lazar Today

If your house is worth less than what you owe on your first deed of trust (or mortgage), and your house is secured by more than one deed of trust (or mortgage), contact Napa and Santa Rosa bankruptcy attorney Ellyn M. Lazar. She will answer your bankruptcy questions, including whether “lien stripping” will help you achieve your freedom from debt.

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