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Many homeowners in the Fort Worth area are now upside-down on their home mortgage. It’s a losing situation, and they want a way out of it. Some homeowners have seen the value of their home drop as much as 50% and are contemplating walking away from their home. If that is your situation, this article might help you reconsider.
What if you could save your home, you only had one mortgage payment, and you could wipe out your second loan debt? When the housing market turns around, you could build equity back into your home. That second mortgage tends to reduce your home equity to a very small margin, and when real estate prices go down, this can become a burden on any homeowner. If you have a second mortgage and the value of the property has fallen below the loan amount, you can potentially reduce the balance of the loan to equal the current value of the property. How do you do this? Lien Stripping.
Lien stripping is a seldom-used bankruptcy technique that may be picking up steam in the Fort Worth, Texas area due to the decline in housing values. So what exactly is lien stripping in bankruptcy?
A lien is the right to take another's property if an obligation is not met under the terms of the loan. Many debts have liens on property such as homes and cars. Lien stripping is the ability to remove the lien if certain requirements are met. In both Chapter 11 and Chapter 13 bankruptcy, liens can be removed if the equity in the asset (after subtracting any older liens from the property's current market worth) is less than the amount of the unsecured part of the lien. One exception to this rule is for a mortgage on a principal residence. Liens on a home like this can only be stripped if there is no equity in the property at all. This unfortunate situation seems to be the case for many homeowners in the Ft Worth area.
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