A lien is a security interest in property. Essentially, this means it is a claim to property. Liens may be placed on property to ensure repayment of a debt. For example, when a property is sold, the lien holder will be paid from the proceeds of the sale first, before the property owner gets the funds.
Mortgage lenders have a lien on property because the lenders maintain an interest and have a right to sell the property if the bills don’t get paid.  Because lenders have a lien on property, you cannot generally get rid of mortgage debt in a bankruptcy filing while still keeping your home.
However, there is an exception to this in cases where you have second mortgage debt and your home is worth less than the balance due on your first mortgage.   An experienced attorney can help you to understand when lien stripping in Long Island is possible for non-primary mortgages, so call Ronald D. Weiss, PC today to speak with a member of our legal team and learn more.

Lien Stripping in Bankruptcy

Lien stripping in Long Island allows you to reclassify second mortgage debt (or other debt on a non-primary mortgage) as unsecured debt.
A second mortgage holder has a lien, or security interest, according to the terms of your mortgage agreement. If you stop paying your second mortgage, the lender could begin foreclosure proceedings to take the home.
However, there is a catch: the first mortgage holder has the first claim to any proceeds from the home’s sale. If your house turns out to be worth less than the amount owed on the first mortgage, it would do the second mortgage holder no good to foreclose. The entire proceeds from the sale would go to the lender holding the first mortgage note, leaving the second mortgage lender with nothing.
In these situations, the second mortgage holder has a security interest only on paper, not in reality. Lien stripping is the process of having this “imaginary” security interest eliminated. The second mortgage debt will be reclassified as unsecured, which it actually is in real life despite what the mortgage documents say.
Once the lien is stripped and the second mortgage debt is unsecured, it can be included in a Chapter 13 repayment agreement and you may end up paying less than the full balance due.
Ronald D. Weiss, PC has extensive experience representing clients who are facing debt problems and difficulty paying their mortgages. Call today to speak with a member of our legal team and to learn how we can assist with your bankruptcy and with your mortgage problems.