For example, let’s say you purchased your home for $400,000, and obtained two mortgage loans. Today your home is worth $300,000 and you owe $305,000 on the first mortgage and $70,000 on the second. During a Chapter 13 bankruptcy case a bankruptcy court can strip away the second mortgage lien on your home because it is entirely unsecured by your home (i.e. the value of your home is not more than the first mortgage debt). The above example is only possible when the second mortgage is not secured at all by the value of the home. If the home is merely under-secured, lien stripping is not authorized. For instance, if the value of the home in our example is $305,001, then the loan is partially secured (by one dollar) and its second mortgage lien cannot be stripped.

By stripping the lien from your home, the second mortgage loan becomes an unsecured, non-mortgage debt. Unsecured debts receive the lowest payment priority during a Chapter 13 bankruptcy and typically receive pennies on the dollar, if anything. If you believe that Chapter 13 bankruptcy lien stripping could benefit you and your family, call me at 339-0222 so that I can advise as to whether you can strip off your second mortgage.

If you are currently in bankruptcy OR if you are just thinking about filing for bankruptcy relief, and are worried that you may have liens on your property, go to your local property room and do a check to see if any Judgment Liens are recorded.  More than likely, these Judgment Liens are going to be recorded in the “Miscellaneous Book” and will have a stamped book and page number, just like your recorded mortgage and deed.   

 You are probably asking yourself this question: “What if they aren’t recorded?  How can I find out if I’ve ever had a Judgment entered against me?”  Well, I have an answer for you!  Go to the county courthouse in which your property is located and do a search for Judgments against you.  Don’t forget to provide the Clerk with any other name you may have been known by in the past or nicknames you may use.  The clerk will then run a report and will be able to determine if any Judgment have been entered against you.  If there are Judgments, have that clerk print out a copy of these Judgments and bring them to your attorney’s office.  It can then be determined if the Judgment Lien can be avoided and ensure that the Lien is removed once your bankruptcy is discharged.    

 You would be surprised the amount of people that have Liens against their property and never realize it.  When they do discover those liens, it’s too late and it causes additional time, stress and more importantly…more money to have them removed and paid off. 

Remember…Judgment Liens don’t have to be recorded, so if you have ever had any kind of Judgment entered against you, that Judgment becomes on automatic lien on your property.  This is especially important to check out for clients already in bankruptcy and even more important for those thinking about filing.  Do your research and check everything out.  For those of you that have already filed, don’t worry.  The Judgment Liens can be added to your bankruptcy and taken care of in your case.