When you use your house as collateral for a loan, the lender will place a lien on the property. If you do not repay the loan, your lender can seek to force the sale of your home in order to collect the amount you owe. In a down real estate market, however, you may owe more on the house than it is worth. In this case, that could be good news for you.
Leaders Among Arizona Mortgage Debt Attorneys
As part of a Chapter 13 bankruptcy, you may be able to have second, third and subsequent mortgages removed from your house if the value of the property is less than the amount you owe on the primary mortgage. The process of removing second home mortgages is known as lien stripping. At the Law Offices of Farnsworth Mortensen, PLLC, we have handled more lien stripping cases than any other firm in the state.
Understanding the Lien Stripping Process
The following example illustrates how lien stripping can work for you:
Let's say you currently owe $270,000 on your primary mortgage. Since the time you bought your house, you have taken out a second mortgage of $45,000 for home improvements and a third mortgage of $20,000 to consolidate some bills. If the fair market value of your home goes below $270,000, there is clearly not enough value in the property to secure the $45,000 and $20,000 loans. By filing a Chapter 13 bankruptcy, it is possible that these loans can be reclassified as unsecured debt and the liens removed from your home.
Our lawyers have been at the forefront of lien stripping since the new bankruptcy laws went into effect in 2005. We worked with local judges to understand the best approach to helping clients through this process, established best practices, and conducted seminars for other attorneys in order to improve understanding about the lien stripping option and increase the services available to those facing financial hardship.
Committed to Your Fresh Start
Our firm focuses exclusively on helping Arizona clients find the debt relief they need and helping them get the fresh financial start they need to move on with their lives. Contact our office today to schedule a free initial consultation with one of our Phoenix lien stripping attorneys. We will provide a thorough review of your case and explain your debt relief options.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
