Lien Stripping – Getting Rid of Mortgages

With Chapter 13 you can “Strip” a lien on real property. What this means is that you can actually get rid of a second or third mortgage on your home!

In order to “Strip” a lien on your home your house has to be worth less than you owe on your first mortgage. For example, lets assume the following facts:

1. Your House is worth $200,000.00
2. The first mortgage on your house is $250,000.00
3. The second mortgage on your house is $50,000.00

Assuming these facts, your second mortgage may be “Stripped” in a chapter 13. What that means is that you no longer have to make payments on the second mortgage and once you receive a discharge in your chapter 13 then the second mortgage is discharged and you no longer have to pay it. Therefore, after you complete your chapter 13 plan, you don’t have to pay anything to the second mortgage!

Here’s an example of a case where a second mortgage cannot be “Stripped:”

1. Your house is worth $200,000.00
2. Your first mortgage is $75,000.00
3. Your second mortgage is $50,000.00

Assuming these facts, you cannot “Strip” the second mortgage. This is because the house is worth more than what is owed on the first mortgage.

Lien Stripping is only available for chapter 13 debtors. In order to strip a mortgage we will need documentation from you about your house and the mortgages on your house. In addition, we will need to have a certified appraiser appraise your house so that we can prove the value of your house.