Dancer allowed to Strip in Bankruptcy Court Case

/, bankruptcy definitions, cramdown, Lien Avoidance, lien stripping/Dancer allowed to Strip in Bankruptcy Court Case

Dancer allowed to Strip in Bankruptcy Court Case

If you’re reading this post, I assume my humorous Title got your attention.

Before I get the federal authorities after me, let me clarify that I did in fact represent a dancer and the court granted his (that’s right, I said his) motion to “strip” off a junior mortgage lien against his home.

Sorry for those of you disappointed now, but “stripping” in bankruptcy court has its own meaning.

Lien Stripping/Removal

Lien stripping in bankruptcy is a method by which, at the moment only in Chapter 13 or Chapter 11 cases, a debtor may entirely remove a junior mortgage on property that they own.

If the property is their primary residence, in order to do this the value of the property must be less than the amount owed to the 1st mortgage.   On non-primary residences, sometimes a lien can be partially stripped even if the value of the property is more than first mortgage.

Note that depending on one’s budget,  some or all, or perhaps none, of the stripped off lien amount might need to be repaid through the Chapter 13 or Chapter 11 plan.  In most cases it is still very worthwhile to remove the lien, but everything must get factored in, and this is one of the many reasons it is important to have a qualified and experienced bankruptcy attorney represent you in the process.

Lien Stripping is not Lien Avoidance

Lien stripping is a term of art that is not really defined in the Bankruptcy Code.   It should not be confused with lien avoidance, which allows certain liens (such as judgment liens) to be removed from property if they “impair” an exemption to which the debtor is entitled to under applicable law.  (See more on exemptions here).

Lien avoidance can be done in ANY bankruptcy chapter if the requirements are met (it all depends on the value of the property in question, the amount of all other liens against the property, and the amount of the exemption able to be taken).

Lien Stripping is not a Cramdown

Many often confuse the terms of lien avoidance and stripping with a cramdown.  In bankruptcy, a cramdown is technically what is used to force unconsenting classes of creditors to accept a Chapter 11 plan, if certain requirements are met.

Don’t Dance in Bankruptcy Court Without a Partner

Lien Stripping (as well as lien avoidance and cramdowns for that matter) are powerful and effective benefits one can reap from filing a bankruptcy case.  However, the ability to attain these results requires the knowledge and experience of a bankruptcy attorney.   See my  article on actual statistics of the poor success rates in bankruptcies filed without an attorney.

Have a consult with a bankruptcy attorney in your area to see what can be accomplished for you.

“S” is for “stripping” in my bankruptcy alphabet series.

Others playing the bankruptcy alphabet game:

__________

Image courtesy of 666ismoney

By | 2016-10-18T13:35:35+00:00 July 14th, 2012|Categories: Bankruptcy Alphabet, bankruptcy definitions, cramdown, Lien Avoidance, lien stripping|3 Comments

About the Author:

Attorney Mark Markus has been practicing exclusively bankruptcy law in Los Angeles, California since 1991. He is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization, AV-Rated by martindale.com, and A+ rated by the Better Business Bureau. Google Plus

3 Comments

  1. […] Stripping in Bankruptcy Court by Los Angeles Attorney, Mark J. Markus […]

  2. […] Angeles Bankruptcy Attorney, Mark J. Markus tells you about stripping in bankruptcy […]

  3. S Is For Chapter 13 Step Plan July 15, 2012 at 3:05 am - Reply

    […] “S”: Dancer allowed to Strip in Bankruptcy Court Case (function() {var s = document.createElement('SCRIPT'), s1 = document.getElementsByTagName('SCRIPT')[0];s.type = 'text/javascript';s.async = true;s.src = 'http://widgets.digg.com/buttons.js';s1.parentNode.insertBefore(s, s1);})(); 0printvar dd_offset_from_content = 40; var dd_top_offset_from_content = 0;AKPC_IDS += "4232,";Popularity: 3% [?] If you enjoyed this post, make sure you subscribe to my RSS feed! Related posts: […]

Leave A Comment