Do you owe more on your mortgage than your home is worth? If so, a bankruptcy attorney may be exactly what you need. When you work with The Law Offices of Paul Y. Lee, we can help with a wide array of debt issues, including underwater mortgages. Read on to learn more about the possibilities of lien stripping and then reach out to us at 951-755-1000 for your free consultation.
Lien stripping may be possible through a Chapter 13 bankruptcy
Chapter 13 bankruptcy may allow you to strip a second mortgage, a junior lien, or a home equity line of credit. This is a great news for borrowers who’ve gotten in over their head with debt, seen their home lose value, and felt as though there was nothing to do. You don’t have to lose your home and we may be able to help you stay in your home and get rid of the debt.
The bankruptcy must approve your lien stripping
If the bankruptcy court approves your request for lien stripping, your secured second mortgage is no longer secured by your home. That lien doesn’t disappear but it’s now similar to any other unsecured debt, such as credit cards. That debt may be discharged when you’re complete with your Chapter 13. In some cases, you may be able to pay just a few hundred dollars to get rid of that lien. This prevents some people from paying as much as hundreds of thousands of dollars.
Not everyone qualifies for lien stripping
The courts won’t approve everyone who applies for lien stripping. You must meet several conditions to qualify. First, your first mortgage must be for more than the value of your home. This is not taking into consideration any second mortgage, third mortgages – even fourth mortgages. It’s also not taking into account any home equity lines of credit. Your first mortgage in and of itself must be for more than your home is worth.
Basically, you must be what’s known as upside down or underwater on your mortgage: You must owe more than your home is worth. If you do, then it may be possible to strip those secondary lines of credit or mortgages from security against your home.
Lien stripping doesn’t rid you of debt
It’s important to understand that lied stripping doesn’t have a direct effect on how much money you owe. The amount of those debts doesn’t disappear – it’s just changed to unsecured debt because you don’t have any equity in your home. If the court approves it, then you can pay just a portion of what’s now unsecured debt.
Depending on many factors (including your income, where you file bankruptcy, and your monthly expenses) you may pay just a few hundred dollars per month for as little as three years and your debt could be discharged for good.
Is lien striping a good idea for you? It all depends on your situation. The best way to find out what your options really are is to contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free consultation.
