The Law Office Of
Tyson Takeuchi
Bankruptcy and Debt Relief Specialist
Serving California since 1995
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800.553.4080
State Bar #177419
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Avoiding Liens

Junior Liens Arising from Second Deeds of Trusts (HELOCS & Second Mortgages):

In chapter 13 bankruptcy, you may strip a lien arising from a second mortgage, home equity line of credit. You will no longer be required to make payments for the second mortgage during the bankruptcy and, upon successful completion of your three- or five-year chapter 13 bankruptcy, the lien will be formally removed.

However, a lien must meet two conditions in order to be avoided. Simply not having any equity is not enough. Firstly, the value of your home must be less than the principal owed to the first mortgage. Secondly, the lien to be avoided must arise from a deed of trust recorded after the deed of trust of the first mortgage.

Lien strips aren't limited to second deeds of trust! Any lien arising from a subsequent deed of trust (a third, fourth, etc.) may be avoided so long as it meets the aforementioned two conditions.

Judgment Liens Arising from Lawsuits & Abstracts of Judgment:

Avoiding liens arising from lawsuit judgments works similarly, but we may avoid liens in both chapter 7 and 13 bankruptcies.

The Court is more lenient in establishing conditions to meet before stripping a judgment lien, but they can be more complicated. For instance, a judgment lien may be avoided even if a home has equity. However, there must not be enough equity to support paying trust deed holders, the value of a debtor's claimed exemptions for the home, and even a portion of the judgment lien.

Have more questions? Call us! (800) 553-4080