How is stripping a lien beneficial for me?
Lien stripping comes with the obvious benefit of discharging additional mortgages beyond your first. If the balance on any secondary mortgages is higher or about equal to your unsecured debts, it will be worth your time to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy.
What liens can you strip in a Chapter 13?
Stripping a Lien in a chapter 13 bankruptcy is one of the many benefits that you can be advised from our Phoenix debt relief team
. Therefore, you can strip liens resulting from secondary mortgages on your home. Additionally, you can strip liens on a third, fourth, etc. mortgage. Hypothetically, as long as the balance on the secondary mortgages is higher than your first mortgage, and you owe more on the house than it is worth.
What happens to liens that are stripped?
Once a lien has been stripped, it changes from a secured debt to an unsecured debt. This means it can be discharged along with your credit cards, medical debts, etc. You must complete your payment plan for this to occur.
Can I get rid of a second mortgage in a Chapter 7 bankruptcy?
No. Lien stripping is not usually available in a Chapter 7 bankruptcy. A better plan would be to file a Chapter 13 bankruptcy if you have an eligible junior lien you’d like to discharge.