If the real property is the debtor’s principal residence, you can lien strip only under the following circumstances:

  • The debtor filed a Chapter 13.
  • Your lien is a junior, non-purchase money debt.
  • The value of the real property is LESS than the sum of all senior liens.

If the real property is not the debtor’s principal residence the lien can be partially or fully avoided depending on the value of the property. (Again, only in ch. 13).

If you have a judgment lien (rather than a consensual trust deed based on a loan) against the debtor that has attached to her property prior to the filing of the bankruptcy case, the debtor may be able to avoid your lien even in a chapter 7 if it impairs the debtor’s homestead exemption as that term is defined in the bankruptcy code, based on the value of the property and amount of senior liens and encumbrances on the date the bankruptcy case is filed..

Obviously this is a tricky area of law and you should consult with an attorney if you are faced with any of these scenarios.