Lien Stripping in Bankruptcy
Liens can be stripped off of the assets in Chapter 13 when there is not enough equity in the asset, after deducting senior liens from the property's current market value, to secure the lien
Lien stripping can be used to make judgment liens and tax liens unsecured in whole or in part, where the lien exceeds the value of the debtor's property.
Section 506 of the Bankruptcy Code acknowledges that a lien is only secured to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the claim is unsecured.
Even mortgages can be stripped down to the value of the collateral, with the exception of the first mortgage of the debtor's residence. Unfortunately Congress has thus far failed to change to bankruptcy law to allowing the modification of first mortgage of the Debtor’s home. If the
real estate is rental property or commercial property, which is worth less than the mortgage balance,
CHAPTER 13 BANKRUPTCY CAN...
REDUCE THE PRINCIPAL BALANCE & REDUCE THE INTEREST RATE.
STRIP THE 2ND MORTGAGE OR HOME EQUITY LOAN ON YOUR HOME, IF THE VALUE OF THE HOME IS LESS THAN THE FIRST MORTGAGE.
This is a beneficial to people who have suffered from having
their property go down in value in the current Michigan real
estate market. This will eliminate the 2nd mortgage and home
equity loans on your home taken when the real estate market
was better than it is now.This option can be used when the property
is worth less than the amount owed (commonly referred to as
"being upside down").
Call John and Jeffrey Kallabat at the Bankruptcy Legal Center
Today
F or a free consultation call 1-800-657-2228.
Tax liens
Tax liens can be stripped off in reorganization proceedings
(Chapters 11 and 13) to the extent that the lien does not attach
to equity in property. Tax liens can't be avoided in Chapter
7 on the grounds that they impair exemptions; if the tax is
dischargeable in the Chapter 7, the bankruptcy court can determine
the amount of the lien that is secured at the time of the filing.
Payment of that sum entitles the debtor to the release of the
lien.
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To find out what the Bankruptcy
Legal Center, P.C. can do to help you stop foreclosure and
get a fresh financial start, please call or e-mail
us today for a free consultation.
"We are a debt relief agency. We help people file for
bankruptcy relief under the Bankruptcy Code."
From offices in Bingham Farms, Michigan, our law firm represents
clients in Detroit and neighboring southeast Michigan cities
including Livonia, Dearborn, Plymouth, Southfield, Pontiac,
Troy, Novi, Royal Oak, Mount Clemens, Warren, Sterling Heights,
Auburn Hills, Center Line, St. Clair Shores, Howell, Taylor,
Utica, Brighton, Redford, Farmington and Waterford; throughout
Oakland County, Wayne County, Genesse County, Macomb County,
Livingston County, Washtenaw County; Genesee County and in Michigan
statewide.
