With Chapter 13 an individual can “Strip” a lien on property. Meaning that this can actually get rid of a second or third mortgage on a house.

 

In order to “Strip” a lien on a home, the house has to be worth less than what is owed on the first mortgage. For example, lets assume the following facts:

 

 

1. The House is worth $200,000.00

2. The first mortgage on thehouse is $250,000.00

3. The second mortgage on the house is $50,000.00

 

 

Assuming these facts, the second mortgage may be “Stripped” in a Chapter 13 plan. What that means is that the debtor will no longer have to make payments on the second mortgage and once they receive a discharge in their chapter 13 then the second mortgage is discharged and they no longer have to pay for it.

 

 

Therefore, after you completing a chapter 13 plan, the debtor won’t have to pay anything to the second mortgage!

 

However, a second mortgage cannot be “Stripped” if:

 

 

1. The house is worth $200,000.00

2. The first mortgage is $75,000.00

3. The second mortgage is $50,000.00

 

 

The second mortgage cannot be  "Stripped" because the house is worth more than what is owed on the first mortgage.

 

"Lien Stripping is only available for chapter 13 debtors. In order to strip a mortgage we will need documentation from you about your house and the mortgages on your house. In addition, we will need to have a certified appraiser appraise your house so that we can prove the value of your house."