Chapter 13 Bankruptcy debtors have the amazing opportunity to save hundreds of thousands of dollars. See Zimmer v. PSB Lending Corporation (In RE: Zimmer) 313 F3d 1220 (9th Cir. 2002). Debtors can strip the Second and Third Mortgages (“Junior Mortgages”) on their home with a relatively straightforward motion to the Court. Stripping the Junior Mortgages means that for the purpose of the Debtors’ Chapter 13 bankruptcy plan, the Junior Mortgages are valued at zero (0) and no payments will be made!!
After completing the Plan payments, Debtors can obtain a judgment voiding the Junior Mortgages. This means that the Debtors will have absolutely no further obligation to pay the Junior Mortgages… ever!!
Generally, a mortgage is a secured debt because it is attached to real property, however, if the value of the property has declined to the point where the value is less that the amount owing on the first mortgage, the Junior Mortgages become unsecured.
In order to strip a second mortgage, several simple conditions must be met:
(1) The property must be the Debtors’ primary residence; and
(2) The current value of the Property must be less than the amount due on the First Mortgage.
If both of these conditions are met, the Debtor can make a motion to have their Junior Mortgages stripped! You may visit the Northern District Bankruptcy Court website for more information and guidelines.
Our office specializes in preparing Lien Strip Motions and a significant portion of our business in this area comes directly from other attorneys.
For more information regarding Lien Strip or other Bankruptcy Issues
or with other legal questions, please contact our office:
Law Office of Howard L. Hibbard
http://hlhibbardattorney.com/contact-us
or call (650) 347-5010 for a free consultation
Lisa K. Kehe, Esq.
