Lien Stripping:


The lien stripping program is available for individuals desiring to reorganize their debt using Federal Laws under Title 11 of the United States Code. The mortgage removal program can only be used in the context of a reorganization, often referred to as Chapter 13(see below).  If you own a home with more than one mortgage, you may be able to completely remove, avoid, or “strip” the second and subsequent junior mortgages from your home and county records, thus leaving only the first original mortgage!   If you qualify, all mortgages except the first would no longer be secured by your home, and you would never make payments on those liens ever again. There is nothing the creditor can do, provided you qualify for a simple three part test:


1) The First Mortgage is equal to or higher than the fair market value of the home,

2) You have income, and

3) Your total unsecured debt is under 360,525 and your secured debt is under 1,081,500.


Since 2002, the Ninth Circuit Court of Appeals has ruled in In Re: Sieglinde E Zimmer, that these mortgages on residential properties can be removed if you qualify.  In today’s declining real estate market, this ruling pretty much allows junior lien removal on most properties bought or refinanced since 2004.


For instance, suppose you have a first mortgage of $500,000 and second mortgage of $150,000, and the house is worth $490,000.00. Under this program, the $150,000 mortgage is eliminated and you only need to make monthly payments on the $500,000 first mortgage.  Even if the market turns around years later and you start to accrue substantial equity in the house, the lien(s) remain eliminated.


For further information regarding or if you would like to speak to one of our Bankrupty Attorneys in San Diego, please CLICK HERE. Hablamos Espanol.



Resource Links on Foreclosure:


IRS questions and Answers on Home Foreclosures and Debt Cancellation: CLICK HERE

Sample 1099C Cancellation of Debt for issued by lenders to borrowers: Download File 1099f

Advanced Reading:

How did we get to this Subprime Mortgage mess: Download Subprime Files

Understanding Securitization: 

 Download Securitization Files
Consumer Home Mortgage Information, provide by California Department of Real Estate



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