In Florida, the practice of lien stripping is permissible in bankruptcy. In lien stripping, you can remove the entirely unsecured liens from your homestead property. In bankruptcy, entirely unsecured liens are known as ‘wholly unsecured liens’. A wholly unsecured lien is that lien on the filer’s property which does not receive any money from a foreclosure sale, as there will not be any money left after the payment made to the first lien holder. This means that if your first mortgage debt is more than your property’s worth, and you also have other mortgage debts, those other mortgages will be wholly unsecured debts. The date of recording of each of your mortgage, in the public record, will decide your first mortgage holder.
If you will request the court to strip your wholly unsecured mortgage in a Chapter 13 filing, the wholly unsecured mortgage will become an unsecured debt. Unsecured debts are those which are not secured by any asset like a home or a car. Such debts include medical bills, credit cards, utility bills, etc. Your Chapter 13 repayment plan will provide little or no money to your stripped liens and other unsecured debts. As soon as you will receive your Chapter 13 bankruptcy discharge, your stripped lien will be discharged. The lienholder will have to remove his lien from your homestead property.
Unfortunately, the Supreme Court of the United States has ruled out the availability of lien stripping in a Chapter 7 bankruptcy filing.
To learn more about lien stripping of an entirely unsecured mortgage and home equity line of credit in bankruptcy, consult the experienced and competent bankruptcy lawyers of Los Angeles & Dallas, TX, today. You can reach the Recovery Law Group at Recovery Law Group or call on 888-297-6203. They will help you decide whether bankruptcy is the right option for you or not.