Chapter 13 Mortgage Lien Strips.

[gmichael7]

I have 2 questions :

1) I've heard that lien stripping can be used for vehicle loans that are more than 910 days old. Does this apply to an RV or motorhome as well? i.e.- if the loan is for 20 K, but the blue book is only 7 K, can the 7 K be paid off in the plan, and the rest be stripped away?

2) I'm seeing a lot of questions and comments about wiping out 2nd mortgages in a Chapter 7 and still keeping the home. I went thru a Chapter 7 and never reaffirmed the 2nd mortgage. I've never heard from the bank again, and I was told that if I didn't reaffirm, that they would only get paid when the home sold because they had a lien, but that if they wanted to foreclose, they would have to pay off the 1st mortgage lender first, which I know they won't do. Any thoughts?

[davewjr]

1st and 2nd mortgage...two banks.

Out of curiosity...how does 2nd mortgage lien holder get their money from 1st mortgage holder if we're current with our first mortgage...we're awaiting confirmation on our ch 13...to this point all sources say home value is less than owed on 1st mortgage...1st 162k, 2nd 48k, value 115-120k...The reason i ask is because finally after about 6 months delinquent on 2nd...lien holder now threatens with foreclosure...I live in central FL...thanks

[overspent]

Answer my own question

Talked to my attorney today. The balance to be used is the amount owed so it's better to wait for the balance to go up with no payment and fees.

[overspent]

My balance on my 1st before I stopped paying is 253K. Assuming 6 months to loan mod it will be 268K ( original principal was 266K). CMA will put it around 268K but quick sale value is more like 220K. So what balance the appraisal need to be under and can I get by with a CMA.

Thanks.

[2muchinDebt]

I don't think it's that he doesn't want to do it. He's adamant that my attny is wrong. I told her my attorney's # and he can give him a call if he wants. From everything I have read and heard you can lien strip a 2md mortgage or HELOC on your primary residence as long as your home is worth less than what you owe on the 1st mortgage. Ultimately, it's up to her what to do and who to go with, but I bet when my HELOC gets stripped and she's stuck..she'll be pissed.

[justbroke]

I'm with HHM. There are just some attorneys who don't want to do it. The reason may be that Virginia requires lien stripping (Motion to Determine Secured Status and Avoid Lien) by complaint (Adversary Proceeding).

[HHM]

I am not aware of any district that does not allow a lien strip. Lien strip is "big picture" BK code issue, it is typically not something that varies by district.

[2muchinDebt]

I have a dilemma. Our lawyer (who we have paid already) told us if we do a Ch 13 (we also qualify for a Ch7) we can lien strip the HELOC. We owe more on the house than what it's worth on the 1st mortgage. We're currently waiting on a permanent modification.

My next door neighbor is in the same situation except she has to do a CH 13. She wants to liens trip her 2nd mortgage. The lawyer she went to for a consult has told her that last year the judges stopped doing that in Virginia. He is adamant about it.

I called my lawyer (who's out of town this week) & spoke with the paralegal. Of course, she couldn't give me 100% answer, but looked on the NACBA forums for Richmond, VA and saw where some lawyers were doing it and getting it approved as recent as Sept & Oct. Both attorneys have been practicing for 25-35 yrs. We are already paid, but my neighbor doesn't want to go with an attorney who doesn't know what he's doing.

[justbroke]

My proposed Order for the Motion to Determine Secured Status nad Avoid Lien contained the language "upon the entry of a discharge herein, the lien encompassing Claim No. X of the Creditor shall be voided...".

I would agree that it appears you can't lien strip in a Chapter 20. The specifics of 11 USC 1328 (on the Chapter 13 discharge), reads that anything in your Plan or even disallowed would not be discharged.

The consensus is, and I agree, that a Chapter 20 (Chapter 7 followed by a Chapter 13), is really only useful for dealing with taxes. One could even, possibly, deal with arrearages on a home, but it would be interesting if they could get through the Chapter 7 without the mortgage lender seeking relief.

[DecentHuman]

http://www.bankruptcyorlando.com/200...ptcy.html#more

[justbroke]

Is there any way to stop this forclosure in BK? (Cant lien strip here.) Are there any undo hardship strategies for liquidating his primary source of income? Thoughts?

If the judgment is not a judgment lien (yet), then just file for Bankruptcy.

There is no "hardship" strategy. If you owe money, you owe money. The only "hardship" strategy that I know of is to file for Bankruptcy. Since it's an investment property, you're pretty much out of luck when it comes to exemptions since even Florida (with the most gratuitous "unlimited" homestead exemption), doesn't protect non-homestead property.

The only thing that I can think of is filing Bankruptcy before the judgment gets recorded as a lien. But, before filing Bankruptcy, the person really needs to be talking with an attorney or professional that is good with asset protection.

Perhaps you should refer your client somewhere else?

[justbroke]

Very useful information! I am doing my Chapter 13 myself - does anybody aware about any examples of Motion to Remove a Lien? I did not find any on the Internet so far and looks like it's not just a standard form to fill. Thanks!

It may be that you're looking for the wrong thing. The real thing that is happening is called a Motion to Determine Secured Status and Avoid Lien.

I happen to have an example on my BLOG (look to the left under my name) and it has been there for almost a year!

[Wealth]

No Debt...just a Lien on this Property

Situation:
Potential client that has a primary residence that has 75k in equity and an investment property house that he owns with no loans. The investment property is used for his business and only source of income. He just lost a court fight with an old business partner and a monetary award of 325k has been granted against him personally. Client believes that a lien will now be placed on his investment property. He expects that the old business partner then will move to liquidate his investment property.

Question:
Is there any way to stop this forclosure in BK? (Cant lien strip here.) Are there any undo hardship strategies for liquidating his primary source of income? Thoughts?

Thanks in advance.

[UserFromCA]

Motion to Void Lien

Very useful information! I am doing my Chapter 13 myself - does anybody aware about any examples of Motion to Remove a Lien? I did not find any on the Internet so far and looks like it's not just a standard form to fill. Thanks!

[bklawn]

hhm answered this.

I would get an appraisal if you really want to lien strip. That way, you won't be in some sort of evidentiary fight (my value is better than yours). Well, that's not to say that the lender won't argue over the valuation in an appraisal. An appraisal performed by a licensed appraiser on a urar (uniform residential appraisal report), carries more weight than any of the other things you mention. The only thing that trumps an appraisal, is testimony of an expert witness... Which isn't going to be necessary.

I say avoid any fights over value. Get an appraisal done. Shop around for an appraisal. If the value of your home is under $500k, you should be able to get an appraisal done for $300. (i saw an ad for an atlanta area appraiser that had a 20% discount... $250 for an appraisal. So, shop around. I prefer to get an appraiser who has worked in your specific area before. That way, they understand what comps to use.)

Thanks justbroke, love this website... I glad i found this site before i file..excellent information..i will pass it on to others if asked about bk...