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Lien stripping in Massachusetts bankruptcy?

Additional  Information:

My house in Plymouth county is currently worth about $355,000 and I have a first mortgage of over $400k. I also have a secured home equity line of credit in the amount of $36,000. Can I strip the second mortgage lien off my house and so reduce the amount I will have to pay back?

ATTORNEY ANSWER:

“Stripping a lien” is a mechanism that the Bankruptcy Code provides to remove liens that are attached to your residence.  In Chapter 7, the Bankruptcy Code allows you to strip off most judgment liens (the liens a creditor attaches to your house after getting a judgment against you in court).  In Chapter 13, you can strip off judgment liens, but you can also strip off a second (or third) mortgage if the value of the property is less than the amount of the first mortgage.  This is only allowable in Chapter 13 and involves treating the second mortgage as “unsecured” because there is no equity to which the debt can attach. This can also be applied to car loans and other collateralized loans, depending on the circumstances under which the loans were created.

In any event, speaking with a competent Massachusetts bankruptcy attorney will help you evaluate your situation and take the next step to improving your financial outlook.

The Plymouth County Bankruptcy Lawyers  at Esher-Rossi concentrate their practice in bankruptcy and insolvency matters.  Our lawyers serve consumers and businesses throughout the state of Massachusetts with offices located in downtown Boston, the Boston Metrowest town of Framingham, and  Provincetown, Cape Cod.

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