San Jose Attorney Talks About Lien Stripping
San Jose Attorney Talks About Lien Stripping
Debtors that are in serious financial trouble may have or will soon have several liens placed on them. A lien is a recorded document that states that the Debtor owes the creditor a certain amount of money. Once recorded, the lien will attach to any real property owned by the Debtor in the County it was recorded. By recording this obligation, the creditor reserves the right to collect their money if the Debtors ever sells the property before the Debtor gets the money. This lien is very similar to a First Deed of Trust or Second Deed of Trust that a traditional mortgage lender might file before they loan out money.
The creation of a lien is a very powerful tool for the creditors. Specifically, this lien may survive the Debtor’s bankruptcy. This means that the Debtor may discharge the debt during bankruptcy but if the Debtor ever sells property, the lien will still be paid because it is attached to the property and not to the Debtor.
However, all is not lost to the Debtor if a lien is created. The Debtor may be able to eliminate the lien all together if they file a bankruptcy as quickly as possible. There is a small window of opportunity to remove a lien completely if certain timing conditions are met.
If the window is missed, the Debtor may be able to remove the lien from a specific piece of property through a process called Lien Stripping. Basically, to strip a lien, the Debtor will have to show the court that the real property has no equity to repay the lien after valid claims are paid. An example of a valid claim is the first mortgage which is tied directly to the property. If the property has no equity at all after the first is paid then the lien can never be paid by the Debtor and should be stripped from the property.
It may be even possible, under the right conditions, that a second mortgage can be stripped from the property. If this is possible then the Debtors may be able to absolve themselves of over $100,000.00 of debt.
If you have a question regarding lien stripping please contact Sagaria Law at 1-800-941-6730 for a free consultation or visit us at www.sagarialaw.com. Our team of Bankruptcy Attorneys can assist you with all aspects of your case. We have attorneys in San Mateo, Monterey, Fremont, Salinas, Sacramento and San Jose.
