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 Georgia .
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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