Arlington Heights Mortgage Lien Stripping Attorneys

If you own real estate and have a second mortgage on the property, you may be able to “strip” that lien in a Chapter 13 bankruptcy case. This option is becoming more common among homeowners due to the real estate crisis and falling real estate values.

With the decline in real estate values, many second mortgages beyond the first mortgage are often wholly unsecured. This means that the value of the real estate is less than what is owed for the first mortgage and therefore the second mortgage lien is not attached to any equity.

For example: If you purchased a home at the top of the market for $300,000 by obtaining a first mortgage loan for $240,000 and a second mortgage loan for $60,000. (A very common scenario referred to as an 80/20 loan) and now the house has dropped to $235,000, since the second mortgage of $60,000 is not secured by the real estate anymore in a Chapter 13, you can “avoid” the “wholly secured” lien on your real estate provided it is your personal residence. If you were to avoid the lien, then you would now have a house valued at $235,000 with only a first mortgage for $240,000. The $60,000 second was “stripped” from the property and is treated as an unsecured creditor in the Chapter 13 case no different than an unsecured credit card. When you then emerge from bankruptcy after your discharge you then have only one mortgage lien on you house and you owe nothing to the second mortgage.

Experienced Lake County Lien Stripping Lawyers

At the law firm of Newland & Newland, LLP we have successfully stripped second mortgage liens for clients. Not all attorneys are experienced in the proper handling of lien stripping. Please contact Stephen S. Newland to discuss your lien stripping options. We serve clients in Arlington Heights, Schaumburg, Itasca, Waukegan, Libertyville, Cook County, Lake County, DuPage County and throughout the northwest suburbs of Chicago.

  • Newland & Newland LLP, Attorneys, Arlington Heights, IL