Law Offices of Buddy D. Ford, P.A

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What is lien stripping and do I qualify?

If you are staggering under a mountain of debt and have a second mortgage on your home, you may wonder if you could benefit from lien stripping under a Chapter 13 bankruptcy filing.

Lien stripping is a process that denies creditors holding a second mortgage from foreclosing on a property owned by an individual who has filed bankruptcy under Chapter 13. These protections are not available to those filing for Chapter 7 bankruptcy.

It works because in most cases where debtors have a second mortgage and file for Chapter 13, the second mortgage is unsecured and little or no equity remains in the home.

But that doesn’t mean that your unsecured lien will immediately be discharged. On the contrary, if you file under Chapter 13, you will be put on either a three- or five-year repayment schedule during which the lien on your property remains in force.

Then, upon the successful completion of your agreed-upon financial reparations, your Tampa bankruptcy law attorney can petition to have your lien wiped out.

When you have successfully stripped away the lien, you can then request your creditor give back the promissory note or deed of trust. This can all be handled by your attorney at the close of your bankruptcy case by discharge.

Filing for bankruptcy is a complex process that can help you hit the reset button on your financial affairs. While filing for Chapter 13 is a far lengthier process than the clean slate offered in just months under Chapter 7, there is no asset seizure and sale to worry about. That alone makes it a popular choice for many debtors.