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…and avoid Foreclosure!
It’s not uncommon for a person to have a mortgage on a home that is worth only a fraction of the actual mortgage amount. Fortunately, there is a process called Lien Stripping that allows you to get rid of unsecured liens on your property.
For example, let’s say that you own a home worth $250,000 with two mortgages. A few years ago your home was worth $350,000 but its market value has dropped due to the recession. The balance of the first mortgage is $270,000 and the balance on the second mortgage is $45,000. In this case, Lien Stripping would allow the second mortgage to be stripped away because the home is worth less than the first mortgage.
In Chapter 13 bankruptcy, a lien strip is possible only if the fair market value of your property is less than the total amount of money due on the first mortgage. In this case, a second and third mortgage can be stripped off the house. By stripping off this lien, which is treated as an unsecured claim, you may be able to wipe out debt in order for you to more easily pay back your existing debt as part of your Chapter 13 payment plan. Lien stripping turns what was secured debt, which must be paid in full in order to keep your property, into unsecured debt, and it will be treated the same as a credit card or unsecured loan in your Chapter 13 case.
Lien Stripping can be tough to understand and you may not know if it is the right solution for you. If you have any questions about the process or want to find out how to avoid foreclosure and keep your home, contact Carrie Hurtik and Associates to schedule a consultation.