Lien Stripping

What is Lien Stripping? How Does it Work.

In Chapter 13 bankruptcy, “Lien Stripping”, a process that removes junior liens such as second or third mortgages and makes the debt “unsecured,” is available.

In Chapter 13 bankruptcy, you can remove a junior mortgage (such as a second or third loan) from your property. If the value of your house is less than that of the senior loan, you can strip the junior mortgage and the lien associated with it. This procedure is only available to Chapter 13 cases. It is not available in Chapter 7 cases.


Collateral creates a property lien Stripping.

You can use your home as collateral for a loan when you purchase a home. If you fail to pay your mortgage, the lender may foreclose the house, sell it and use the proceeds towards the debt.

By pledging collateral, you give the lender a right of ownership in your property up until the time that you pay off the debt. A lien is the legal term for this ownership right. Even if your bankruptcy wipes out the obligation to pay, the lien will still remain. The lien gives the lender the right to take the property back.

Most credit card debts, for example, are unsecured. You did not agree to give your lender a ownership interest in school supplies that you purchased for your children on credit. You can keep your school supplies if you discharge the debt through bankruptcy.

Most car and home loan lenders, however, get a lien against the property. This makes the debt secured. Secured debts require you to return the property, even if the debt is wiped out in bankruptcy.

Lien Stripping


But be Careful! 

Several credit cards are secured. Most furniture, appliances, jewelry and electronics credit cards require that you secure the debt by purchasing the property.

Learn more about the types of creditor claims in bankruptcy: Unsecured, Secured and Priority .

Eliminate Lien Stripping in Chapter 13 bankruptcy

You can remove “unsecured” liens from your property by stripping them. Priority is determined when a lien or mortgage is placed on your property. This is known as the “first-in-time” rule.

The lien that was recorded first usually has priority. If your house is foreclosed your first mortgage lender would be paid from the proceeds of the sale before your second mortgage lender.

If you owe more than the fair value of your home on your first mortgage, then your second mortgage lender will not get anything if the foreclosure occurs. There is nothing left after the first. Your second mortgage can be stripped if the lender will not get any money from a sale.


You own a $300,000 house and have a $400,000 mortgage. You can remove any junior liens to your first mortgage in this case. If you had a $100,000 second mortgage, you could remove it by stripping the lien in a Chapter 13 bankruptcy.

What will happen to stripped Liens

In your bankruptcy, the stripped liens are treated in the same way as other unsecured debts such as credit cards. These debts are usually discharged or reduced to a minimal amount at the end of your Chapter 13 bankruptcy.

If you remove a lien, the unsecured creditors will have to share a certain amount of money. This is usually your income. You can read more about the Chapter13 repayment plan for specific information.

The lender who stripped the lien will have to remove it from your home.

Also learn why it is not available for Chapter 7 bankruptcy.

Lien Stripping


Do You Think Lien Stripping  Is a Big Help?

Whether or not lien stripping is considered a significant help depends on the context in which it’s being discussed. Liens typically refers to a legal process in bankruptcy where a junior lien on a property is removed or “stripped” due to the property’s value being insufficient to cover the senior liens.

For individuals facing financial difficulties and considering bankruptcy, lien stripping can be a helpful tool for reducing debt burden and potentially keeping their property. It may allow them to eliminate junior liens, such as second mortgages or home equity lines of credit, and retain ownership of their homes.

However, the effectiveness of lien stripping can vary depending on various factors such as the type of bankruptcy, the laws governing lien stripping in the relevant jurisdiction, and the specific circumstances of the debtor. Additionally, lien stripping may not always be available or feasible in every situation.

Contact Us Today!

Discover the power of lien stripping with Bruner Wright! Learn how this legal solution can help you break free from overwhelming debt and protect your assets. Take the first step towards financial freedom today—find out what lien stripping can do for you.”


If you’re struggling with overwhelming debt and considering bankruptcy, don’t hesitate to reach out to Bruner Wright. Our experienced team of bankruptcy attorneys is here to provide expert guidance and support throughout the process. Take the first step toward financial freedom today.

Contact Bruner Wright now for a free consultation and take control of your financial future.

Bruner Wright, PA

Other Services We Offer: