What is Lienstripping and How Can it Help Make My Mortgage Payment More Affordable? by Jeffrey D. Larkin

What is Lienstripping and How Can it Help Make My Mortgage Payment More Affordable?
by: Jeffrey D. Larkin

Lienstripping is a process in bankruptcy whereby junior lienholders are stripped, or removed from being a secured debt against the property. It applies only in Chapter 13 bankruptcy cases and only to the debtor’s primary residence. Lienstripping does not apply to rental properties or second homes.

In order to qualify for a lien strip in Chapter 13, debtors must show that the current value of their property is worth less than what is owed on the first, such that the junior lien is essentially unsecured debt. For example, a debtor who has a home worth $500k with a first mortgage of $510k and a second mortgage or equity line of $90k would meet the requirements to have the lien stripped. On the contrary, the same debtor would not be eligible for lienstripping if he owed $499k on his first, because there is still $1k of security to which the second or equity line attaches to. The current real estate climate being what it is, most individuals who purchased a home between late 2003 and 2007 would be eligible for a lien strip.

Once it is determined that a debtor is a candidate for lienstripping, a motion is prepared and filed with the court. Creditors have an opportunity to object if they feel there is some security to the loan to be stripped, so it is important to come to the table with solid evidence. It is recommended that a formal appraisal be done on the property because that is the best evidence of value. Once the judge enters an order allowing the lien to be stripped, the debtors no longer have to make monthly payments to their second mortgage and the debt is treated as an unsecured debt that is ultimately eliminated in the bankruptcy upon entry of discharge.

For more information regarding lienstripping, affordable mortgage payments, or for any other bankruptcy law questions, contact The Larkin Law Firm at http://www.live-debt-free-now.com

About The Author

Jeffrey D. Larkin is one of the most productive debt-relief attorneys in the region. His innovative law firm is committed to providing intelligent debt solutions custom fitted to his clients' individual needs. Whether you need to file bankruptcy, re-organize your debt or re-build your financial structure, Mr. Larkin provides a full range of legal services designed to restore financial order to your life.

Mr. Larkin is a California licensed attorney offering services throughout San Diego, Orange, Riverside and San Bernardino Counties. A 1998 graduate of California State University, San Bernardino, Mr. Larkin earned his Juris Doctorate from Thomas Jefferson School of Law in 2002. Since that time, Mr. Larkin has focused exclusively on bankruptcy and insolvency related matters, and has authored dozens of articles regarding bankruptcy and other debt solutions.

From 2002 through 2009, Mr. Larkin served as an associate attorney for the two largest bankruptcy filing firms in San Diego County. During that time, Mr. Larkin handled thousands of cases, and gained invaluable experience serving a broad and diversified client base. In 2008, Mr. Larkin was one of the top five bankruptcy filers in all of San Diego County, according to the United States Bankruptcy Court, Southern District of California.

You can reach Mr. Larkin by e-mail at Jeff@larkinfirm.com or by phone at (760) 692-2269. For more information about The Larkin Law Firm, go to http://live-debt-free-now.com

Visit the author's web site at:
http://live-debt-free-now.com