
Discharging a Deed of Trust in bankruptcy! A second or third mortgage can be stripped off the title of your home, and discharged as unsecured debt in a chapter 13 bankruptcy. Imagine, your house is worth less than you owe, and now you can strip part of what you owe and still keep the property. Yes, it’s true. Liens can be stripped off of the debtor’s assets in Chapter 13 when the property is upside down, and the fair market value does not cover secondary liens. Section 506 of the Bankruptcy Code acknowledges that a lien is only a secured claim 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. This is really great news. We are stripping liens every day, and returning property value to our clients. Liens secured by vehicles: The most common application of lien stripping is the reduction of car loan liens to the present value of the car. Thus a lender holding a $12,000 claim secured by a car now worth $10,000 has a secured claim of $10,000 and a unsecured claim for $2,000. Two thousand dollars of the lien may be stripped off the asset (the car) in a reorganization. The plan must provide for payment in full of the secured portion of the debt; the unsecured portion can be paid little or nothing along with other unsecured claims. Recent changes Read More …





