Helping California Homeowners Save Their Property
A knowledgeable and experienced bankruptcy law practice, the Fishback Law Corp helps clients in Orange County and throughout Southern California save their homes with the help of Chapter 13 bankruptcy protection and the ability to strip away judicial liens and mortgages as part of the Chapter 13 process, leaving the homeowner with an affordable mortgage payment that more accurately reflects the property’s market value.
Lien Stripping Basics
A home, especially a southern California home, is an expensive and valuable asset. Once that home is purchased, many people seek to capitalize on the value of their home by securing a second mortgage in order to generate disposable income. Like the first mortgage, the second mortgage is “secured” by the property itself, meaning that if you do not keep up with your mortgage payments, the mortgage holder may foreclose on the property and sell it in order to receive payment for what you owe.
Even though a second mortgage holder is a secured creditor, it stands in an inferior position to the first mortgage holder, who always gets paid first. This would happen even if the second mortgage holder was the one who was foreclosing; the junior mortgage holder has to wait in line and get paid after the debt to the senior mortgage holder has been satisfied.
If you are upside down or under water on your first mortgage, meaning that you owe more than the house is currently worth on the market, then the result of any foreclosure will be that the first mortgage holder receives all the proceeds of the foreclosure sale, and the second mortgage holder will get nothing. For all intents and purposes, the second mortgage holder might as well be an unsecured creditor.
A bankruptcy judge recognizes this fact, and as part of a Chapter 13 proceeding, the court may strip away the second mortgage lien, leaving you only responsible for the first mortgage. And even if you are in default on the first mortgage, you can roll those missed payments into your Chapter 13 wage earner’s plan, getting you current and saving your home from foreclosure while moving forward with a more affordable monthly payment.
Cram Down, Bifurcation and More
Other similar options are available for your home and other types of property, such as a Chapter 13 cram down of debt owed on your vehicle, or a bifurcation of your loan or mortgage.
Contact our skilled legal team in Irvine, CA today
For professional advice and effective assistance in Orange County and throughout Southern California regarding a lien stripping or other vital Chapter 13 proceeding, contact the Fishback Law Corporation in Irvine for a free initial consultation.