Chapter 13 Mortgage Lien Strips.

[cynmaxine]

I hope this works, more and more courts are holding that you cannot do a lien strip in a chapter 13 that is non-dischargeable; meaning filed within 4 years of filing your chapter 7 bankruptcy.

This is exactly what my bk atty just told me this week. I did a Ch. 7 in 2008. The second was included. She says I probably won't be able to get the second mort discharged again in a Ch. 13 and that it HAS to get discharged within the Ch. 13 process again in order to be able to proceed with a lien strip. The judge where I had my Ch. 7 done just ruled that the person could not get the second discharged in the 13 b/c it was just discharged in the 7. So, it was rejected. She says it's unlikely I will be successful. 2 years ago though she told me I could do it. Things have changed now that so many people are trying to do this. So, I have to let my house go b/c there's no way I can pay both mortgages and will not be able to refinance even the first for at least 10 years because the market will take that long for my house to be worth the amount of the first mortgage.

[reluctant13]

My home is probably worth $290k. Coincidentally, that is what I currently owe on the 1st plus two HELOC's ($186k, $59k, $45k). My principle balance is dropping by $1,300 per month, so I will soon have some equity. The big problem is that I put my home up for collateral to rehab a [bad] investment property. Once it forecloses, which could be 2011, I could have a fourth lien for about $200,000. So, if I stay in this home, it will cost me an extra $200,000! But what if I move out (either sale, short sale, or foreclosure) of my current home? Will I avoid that fourth lien?

[sicbp]

This is great information. We did a 7 and are now filing a 13 for a lien strip on our 2nd. I do have a question if anyone can answer. We did have to fall a bit behind on our first to do this so now of course we have incurred late fees, attorney fees (by the mortgage) etc. Are these fees included in our plan or can these fees be tacked onto to our first? I will of course ask our attorney too but wondering if anyone knows/has any experience with this? THANKS!!

Frankies_mom: I'm looking at this similar situation, just submitted my chap 7, 341 coming up, but I'm now learning about the chap 13 option to strip the second mortgage, I believe there is no value to support the second - did you already get an appraisal on your home to help it along?

[frankies_mom]

thanks jb and hhm. we live in connecticut and the firm we are working with has done quite a few of these over the last year. they say we are a good candidate. they did our 7 without a hitch so we are really hoping they are right. we file march 1st so we will see! we have a 60 month plan to pay our arrears and if we follow everything to the letter we should get our lien strip. fingers crossed!

[HHM]

I hope this works, more and more courts are holding that you cannot do a lien strip in a chapter 13 that is non-dischargeable; meaning filed within 4 years of filing your chapter 7 bankruptcy.

[justbroke]

This is great information. We did a 7 and are now filing a 13 for a lien strip on our 2nd. I do have a question if anyone can answer. We did have to fall a bit behind on our first to do this so now of course we have incurred late fees, attorney fees (by the mortgage) etc. Are these fees included in our plan or can these fees be tacked onto to our first? I will of course ask our attorney too but wondering if anyone knows/has any experience with this? THANKS!!

These fees must be paid as "arrears" through your plan. Also, you need to be REALLY sure that your Chapter 20 lien strip is going to work. I know that it won't work in Florida, because we require a "discharge" (in the Chapter 13) in order for the lien strip to stick.

[frankies_mom]

This is great information. We did a 7 and are now filing a 13 for a lien strip on our 2nd. I do have a question if anyone can answer. We did have to fall a bit behind on our first to do this so now of course we have incurred late fees, attorney fees (by the mortgage) etc. Are these fees included in our plan or can these fees be tacked onto to our first? I will of course ask our attorney too but wondering if anyone knows/has any experience with this? THANKS!!

[justbroke]

Well I found out first hand about Lien Strips today.

Valuation is the day that you filed. I "thought" my house was worth $650K when I filed. However, it was "actually" worth less. Although I did put $650K on the tax form, and the tax assessor had it in the $500K range... I did a real appraisal to get the true value, which was MUCH MUCH less than what I wrote.

Again, when you want to do a lien strip, or even don't want to do one, I believe that it is VERY important to just get an appraisal anyhow... just in case. It's so hard to do "after the fact" appraisals, so trying to do a lien strip late in the game, without a reliable and defensible appraisal of market value, is not easy.

As you learned, and as I was suggesting earlier, getting the actual value after the fact, would be difficult. I'm sorry that this is what you discovered.

[jade73]

Thats what I was thinking.

[walkthaplank]

Well I found out first hand about Lien Strips today. Went in to talk to my attorney and we owe $68k on 1st mortgage & 23k on 2nd mortgage. They said we wouldnt be able to file a motion on this because we told them when we filed that we THOUGHT our home was worth $95k. Well that was just a THOUGHT. Wonder what would have been said if we THOUGHT the house was worth $50k?
Anyway that and the fact that the tax office says our property is worth $72k.
Won't be doing a lien strip.

You could always have the home appraised. When it comes down to it, that is really the only amount that matters.

[jade73]

Well I found out first hand about Lien Strips today. Went in to talk to my attorney and we owe $68k on 1st mortgage & 23k on 2nd mortgage. They said we wouldnt be able to file a motion on this because we told them when we filed that we THOUGHT our home was worth $95k. Well that was just a THOUGHT. Wonder what would have been said if we THOUGHT the house was worth $50k?
Anyway that and the fact that the tax office says our property is worth $72k.
Won't be doing a lien strip.

[jade73]

Wow, 15 minutes. That's not saying much for your attorney's staff.

Yeah, Like I said..they claim to be GA's largest BK filer. It almost scares me. Can I transfer to another attorney, ha!?

[justbroke]

Oh Ok, Thanks so much! I was on the phone for 15 minutes trying to explain a lien strip to the lady that answered and finally she came back and said I needed to make an appt to talk to the attorney.

Wow, 15 minutes. That's not saying much for your attorney's staff.

[jade73]

What I'm saying is that if you live in Georgia, Alabama or Florida, stripping a 2nd, 3rd mortgage is common practice and is quite simple... due to some landmark cases resolved at the appellate level.

Oh Ok, Thanks so much! I was on the phone for 15 minutes trying to explain a lien strip to the lady that answered and finally she came back and said I needed to make an appt to talk to the attorney.

[justbroke]

Can you explain what you mean by that? I'm not understanding

What I'm saying is that if you live in Georgia, Alabama or Florida, stripping a 2nd, 3rd mortgage is common practice and is quite simple... due to some landmark cases resolved at the appellate level.