Lien Stripping Through a Chapter 13 Bankruptcy

Lien stripping is the process by which a second mortgage may be eliminated for certain homeowners through the Chapter 13 bankruptcy process. In cases where home values have plummeted, many homeowners have become "upside down" or "under water." This means their home is now worth less than the mortgage. Where a home's value is considered to be less than the primary (first) mortgage and the homeowner has an additional mortgage beyond that, he may be able to strip off second and third liens through a Chapter 13.

For example, if you paid $400,000 for your home with a first mortgage of $320,000 and later took out a second mortgage or home equity line for another $50,000, your total liability is $370,000. If your home's value has now been reduced to $300,000, which is less than your first mortgage, you may be eligible to eliminate the second mortgage through the lien stripping process.

Through the Chapter 13 bankruptcy process, the second mortgage will be turned into an unsecured debt, similar to credit card or medical debts. This means that you will not have to make payments on it; payment will only be done through the court. Only a portion of the debt will be paid which is usually quite minimal. Once your repayment plan through the court is completed, whatever remains on the debt will be discharged.

Bankruptcy Firm Serving Chicago, Illinois

Understanding all the rules, procedures, and options available to you under state and federal bankruptcy law can be daunting. If you are struggling with overwhelming debt, it is best to get proper information about how bankruptcy and other alternatives can impact your life and future. Having the knowledge you need will help you make an informed decision about how best to handle your financial situation.

Glanzer & Associates is a bankruptcy and debt relief firm serving clients in and around Chicago with professional legal service. The legal team is committed to helping you find the answers you need to resolve your financial problems. Whether you are looking to eliminate a second or third mortgage or have other financial concerns which need to be addressed, this is a legal team that can provide the guidance and assistance you need. They have discharged millions of dollars of debts for clients throughout their history. Contact the firm to schedule a free case consultation to learn more about the options available to you for regaining financial stability and making a fresh start.