Debt Relief and your Property
Property Lawyer in Paradise, Nevada
Do you still own property? The poor economy affected Nevada like the rest of the nation, and the housing market was hit particularly hard. Bankruptcy filings due to underwater homes are more and more common. A house is considered to be underwater or upside down if the mortgage is greater than the fair market value of the house. Possibly one distinction between Chapter 7 and Chapter 13 bankruptcy filings is the lien stripping.
What is lien stripping concerning debt relief?
A lien is a kind of interest in a piece of property a lender issues in order to enforce payment. For example, when obtaining a mortgage, the lender can place a lien on the home in exchange for the loan. Then, once the loan is entirely paid off, the lender will release the lien. It is the lien on the mortgage that gives the lender the power legally to foreclose on a house if there is no payment.
What is lien stripping in Chapter 13 Bankruptcy?
Lien stripping in Chapter 13 bankruptcy refers to the process of eliminating your junior liens (such as second or third mortgages) from your real estate.
So, lien stripping is a legal order per a bankruptcy that makes the lien null and void. In almost all cases in Nevada, you can only use lien stripping by filing a Chapter 13 bankruptcy. Lien stripping in Chapter 13 bankruptcy is the process of getting rid of any junior liens (like second or third mortgages) from your home.
What happens is the stripped liens get the same treatment in bankruptcy as other unsecured debt (unsecured debt is like credit cards or medical bills). Typically after completing the Chapter 13 bankruptcy it erases and discharges these types of debts. Upon grant of a discharge, the lender must remove or “strip” the lien from your home.
A lien stripping in a Chapter 13 can be complex, depending on the asset and value. Consult with a Paradise Debt Relief Attorney if you want more information or further explanation about lien stripping and bankruptcy.
It is an advantage of the Chapter 13 bankruptcy filing that a debtor can strip an underwater mortgage lien. Our attorneys know the bankruptcy code well, and for this reason, you can count on our experience and knowledge in the law to help you get out of debt.