What Is Lien Stripping?
Lien stripping works within bankruptcy and refers to the process of eliminating your second or third mortgages from your primary residence.
Which Liens Can I Remove?
Lien stripping allows you to get rid of the “unsecured” liens on your home. When a mortgage or lien is put on your house, its priority against other liens is determined by when the lien was recorded with your county. For the most part, the earlier recorded lien has priority over any subsequent liens.
Here is an example of how lien stripping works in
Say you own a house worth $100,000 and
you have a $150,000 first mortgage. You
also have a second mortgage of $50,000. In
this situation, you can strip the second mortgage, eliminating it forever,
presuming you meet other qualifications of being able to file bankruptcy.
What Happens To Stripped Liens?
Stripped liens in Georgia will receive the same treatment as other unsecured debts, such as credit cards, in your bankruptcy. These debts usually receive nothing or a small amount and get wiped clean at the completion of your bankruptcy. After discharge, your lender for the stripped lien will be required to remove its lien from your house.
Lien stripping is complicated. It’s important to work with an experienced attorney who understands the complexity of bankruptcy law. Call King and King today for a free consultation at 404-524-6400.
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