Lien Strips
Eliminating Second Mortgage - Lien Strip & How It’s Done
Lien strips (eliminating second and third mortgages completely, including the debt) are, in my opinion, the best part of the existing law for consumers. This is available only in Chapter 13, not Chapter 7, so be sure your attorney is putting you in the right chapter. With a Chapter 7, you lose the right to lien strip!
Where the value of the real estate has fallen below the amount of the first mortgage debt, you can, after a court hearing regarding value, eliminate the second mortgage. This requires a confirmed Chapter 13 plan (and another court hearing), but is basic practice for attorneys who have the technical expertise to file these types of cases. Our office files and gets approval on 20-40 lien strip cases per month. It is a focus of our practice and gives our clients a chance to save their homes by partially eliminating or lowering house payments. This is particularly helpful in Yuba, Sutter, and Solano counties where virtually everyone qualifies for the lien strip process because of falling home values.