Lien stripping · Beverly Hills

Second Mortgage Lien Stripping in Chapter 13 for Beverly Hills Homeowners

Second mortgage lien stripping in Chapter 13 can remove a second mortgage or HELOC from your Beverly Hills area home when the house is worth less than you owe on the first loan. If an underwater second loan is the payment you cannot carry, call (310) 362-9071 for a free consultation.

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Available in Chapter 13, not Chapter 7
The second loan must be fully underwater
Requires a home valuation
Becomes permanent when you finish the plan

When lien stripping is possible

Lien stripping works only when there is no equity at all behind the second loan. The test is simple to state: if your home's value is less than or equal to what you owe on the first mortgage, the second mortgage is wholly unsecured.

Example: a home worth $800,000 with a $820,000 first mortgage and a $150,000 HELOC. The HELOC has nothing behind it, so it may be stripped. If the home were worth $830,000, even $10,000 of equity behind the HELOC would usually prevent it.

You have a second mortgage or HELOC on the home you live in
Your first mortgage balance is higher than the home's current value
You can afford a Chapter 13 plan and your first mortgage payment

How we strip a second mortgage, step by step

Check the numbers. We compare your first mortgage payoff to a realistic value for your home.
Get an appraisal. A licensed appraiser values the home as of the filing date. The value is the heart of the motion.
File Chapter 13. We file your case with a plan that treats the second loan as unsecured.
File the motion to value. We ask the court to find the second mortgage wholly unsecured. If the lender disputes the value, it can present its own appraisal.
Complete the plan. You make plan payments and your first mortgage payments.
Release the lien. After your discharge, the lien is removed and should be released on the county records.

Cost and timeline

Lien stripping adds an appraisal and a motion to a Chapter 13 case. You get our fee in writing at the consultation. The appraisal is a separate cost paid to the appraiser.

The court usually decides the motion within the first few months. The lien is removed for good only when you finish your 3 to 5 year plan and receive your discharge.

Lien stripping in the Central District of California

Chapter 13 cases from Beverly Hills and most of Los Angeles County are filed in the Los Angeles Division of the U.S. Bankruptcy Court, Central District of California, at 255 East Temple Street. The court has local procedures and forms for motions to value real property, and we follow them so the motion is not delayed.

Home values across Los Angeles move with the market. A loan that was underwater a few years ago may not be today, which is why a current appraisal matters.

Mistakes to avoid

Relying on an online estimate. The court needs a real appraisal as of the filing date.
Expecting Chapter 7 to strip the lien. The Supreme Court has ruled it cannot.
Letting the case be dismissed. If the case is dismissed before discharge, the second mortgage comes back.
Forgetting the first mortgage. Your first loan payment must stay current.

Lien stripping is part of Chapter 13 bankruptcy in Beverly Hills. If you are also behind on your first mortgage, read about a mortgage arrears cure plan.

Lien stripping questions

Can I strip a second mortgage in Chapter 7?

No, you cannot strip a second mortgage in Chapter 7. The Supreme Court held in 2015 that Chapter 7 does not allow it. Chapter 13 is the chapter that does.

What happens to the second mortgage balance after it is stripped?

After a second mortgage is stripped, its balance is treated like other unsecured debt, such as credit cards. It usually receives only part of what is owed through the plan, and the rest is discharged when the plan ends.

Can I strip the lien on a rental property?

Rental properties follow different rules than your home. In Chapter 13, the loans on a rental can sometimes be modified, including reducing the secured part to the property's value. We review each property separately.

What if my home value goes up during the plan?

The value used is the value when the court decides the motion, usually as of filing. If the motion is granted, a later rise in value does not bring the lien back, as long as you finish the plan.

Free consultation

Find out if your second loan can be removed

Call (310) 362-9071 or send the form. Have your latest first and second mortgage statements ready.

Law Offices of John Asuncion
9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.

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