Both Denver and Littleton Chapter 7 and Chapter 13 bankruptcy filings have many benefits when it comes to setting you free from debt. In fact, one of the less commonly known benefits of Chapter 13 bankruptcy is what’s called lien stripping.
What is Lien Stripping in Lone Tree?
Lien stripping in Lone Tree means you are able to remove junior liens, otherwise known as second or third mortgages. Lien stripping is made available to debtors in a Lone Tree and Aurora Chapter 13 bankruptcy. It is not available in a Lone Tree Chapter 7 bankruptcy. A second mortgage is considered a secured debt, which means your property could be foreclosed on if you miss mortgage payments. The benefit of lien stripping in Colorado is that your second mortgage becomes an unsecured debt and the lien is removed. After it becomes unsecured, you will make payments of a certain amount for the second mortgage over the course of your Chapter 13 repayment plan. Some examples of second mortgages include home equity lines of credit (HELOCs) and home equity loans.
When is Centennial Lien Stripping Possible?
In Centennial and Highlands Ranch, you are able to strip a second mortgage if the first mortgage is greater than the property value. For example, if your home is valued at $200,000 and you owe $210,000 on the first mortgage, you will be able to strip the second mortgage. Knowing the market value of your home is essential to determining whether or not you can strip the second mortgage. A lien strip only applies when you’ve completed your Chapter 13 repayment plan. Once you complete the repayment plan and receive your bankruptcy discharge, nothing will be owed any longer on the second mortgage. You should always consult a Chapter 13 bankruptcy lawyer to be sure of whether lien stripping is possible for you. If your second mortgage isn’t high, a Chapter 7 bankruptcy is a better option. If you have any more questions about lien stripping or filing Chapter 13 bankruptcy in Colorado, don’t hesitate to contact me. I would be happy to schedule a free initial consultation with you to discuss your unique situation / needs in greater detail.
If you would like more information about Chapter 13 or Chapter 7 bankruptcy in Englewood, Parker or Aurora, contact experienced Aurora bankruptcy attorney Barry Arrington today for a free consultation at 303-205-7870, or submit the “Get Bankruptcy Help Now” form. He will fight to give you the best, fresh start possible.