Stripping Junior Liens in a Bankruptcy
Stripping Junior Liens in a Bankruptcy can be done depending on the situation. Here is some information you need to know about lien stripping.
A Chapter 13 Bankruptcy does not allow a debtor to do what is called a cram down on the mortgage balance on a primary residence; however, sometimes there is the option of doing a lien stripping for junior liens. Sometimes people have a second or even third mortgage or home equity line of credit on their property, these secondary liens also called junior liens may qualify to be stripped away from the primary loan on the property. When the value of the home is worth less then what is owed from the first mortgage you may qualify to have the junior liens stripped. If you qualify to have the junior liens stripped then the courts will treat those junior loans as an unsecured debt and upon successful completion of your Chapter 13 case and upon receipt of your discharge that debt is in fact discharged. In order to have this completed, the appropriate motion must be filed and order entered. This is not something that is done automatically.
Previously, some debtors were able to strip junior liens in a Chapter 7; however, the law has since changed and a person can no longer do so in a Chapter 7.
We never recommend someone file a bankruptcy on there own. If you have more questions regarding bankruptcy or lien stripping in Orlando, Florida you may contact Michael Ferrin, Esquire or Victoria Anderson, Esquire of Anderson & Ferrin, Attorneys at Law, P.A. at 407-412-7041 to set an initial consultation.
This article is for informational purposes only and does not form an attorney client privilege.