How does bankruptcy affect judgments attached to property
This article is about “How does bankruptcy affect judgments attached to property”, we hope to bring more articles about “How does bankruptcy affect judgments attached to property” in the near future:
In the present economic times many individuals are living with financial decisions causing them to hold assets, such as houses, automobiles and boats, whose values have plummeted. Individuals are living in properties whose values have dropped far below the mortgages or driving cars, which are valued at a third of the loans. Those individuals with financial difficulties are looking for assistance through the bankruptcy courts in an attempt to get out from underneath all of the debts and liens acquired, which now vastly exceed their current assets.
There are two types of liens, which can be attached to an individual’s property or assets. The first is a voluntary lien, which is basically a situation where you have agreed to use the asset as collateral for a debt, i.e. mortgages and auto loans. A non-voluntary lien is one that a creditor imposes on you and that gives them the right to force you to sell the asset so that they can be paid, for example: judgments against you or tax liens. These liens are either secured or unsecured as to the asset they are attached to.
The most common issue for an individual nowadays is the situation where a homeowner who has a first and second mortgage on a primary residence is facing bankruptcy and wondering if they have the ability to save the family home. As real estate markets fall and the fair market values of the homes fall, homeowners are left with mortgages that far exceed the current fair market value of their homes. There is a process which could be of help to many in this situation and it is called “lien stripping”.
“Lien stripping” refers to the process of reducing a secured claim to the value of the underlying collateral. It uses the combined effect of 11 U.S.C.A. § 506(a) and 11 U.S.C.A. § 506(d) to bifurcate the lien into secured and unsecured. The secured lien is allowed in the amount up to the fair market value of the property at the time of the stripping. The balance of the lien, which exceeds the fair market value of the property, is now deemed unsecured.
Liens can be stripped off of the debtor’s assets in Chapter 11 or Chapter 13 when there is not enough equity in the assets. Section 506(a) and 506(d) of the Bankruptcy Code acknowledges that a lien is only a secured claim to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the lien is now unsecured. The most common application of lien stripping is the reduction of car loan liens to the present value of the vehicle however it is currently used more often with home mortgages in bankruptcy situations. Lien stripping with car loans has been limited to vehicles purchased over 910 days.
The Bankruptcy Code does permit a bankruptcy plan to “modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence”. Section 1322 (b)(2). This section provides protection to the holder of a claim secured only by a lien on the debtor’s principal residence by prohibiting any modification of the terms, however the issue arose as to if this section precluded “lien stripping” of undersecured residential mortgages in the face of Bankruptcy Code section 506 which appears to permit bifurcation of undersecured mortgages and voiding of unsecured portions of the mortgage lien. At least two bankruptcy court judges sitting in Massachusetts have permitted such bifurcations.
In any event, there is an exception as to the lien on a principal residence lien and that is if there is a second or third lien on the same property. In this instance those liens, lien stripping is available to render them totally unsecured if the first mortgage balance equals or exceeds the value of the personal residence. The exception is only if there are two distinct mortgages on the property, not a refinancing situation. It should also be noted that the limitation of lien stripping of first mortgages only apply to personal residences, it will be allowed for a mortgage on a building used for business or renting.
As always, all situations relative to a strategy for bankruptcy and lien stripping should be discussed in detail with a bankruptcy attorney to understand all your avenues open to you.
|
The forgoing article on lien stripping as a chapter 13 bankruptcy tool was written by the Law Office of Goldstein and Clegg, LLC. Article Source: |
|
More info about How does bankruptcy affect judgments attached to property:
How much does it cost to file for bankruptcy? At this writing, the court filing fees for … What is the Bankruptcy Discharge and how will the discharge affect me? …
How Does a Court Judgment Affect my Real Estate and What can I Do …
Upon filing of the bankruptcy petition, a debtor’s attorney will usually file a motion to avoid the execution lien. The Bankruptcy Court will grant this motion so long as the debtor can exempt the value of the attached property. …
North Carolina Bankruptcy Chapter 7, 13 (919)342-6509
North Carolina Bankruptcy Maximize your Privacy, Fast, Affordable Call Now! 1(919)342 … to avoid a real estate lien, you will need to have an appraisal of the property done. …
… of bankruptcy filing does not liquidate all of a debtor’s non-exempt property and … owed to secured creditors unless they are judgment liens on exempt property or …
How will bankruptcy affect my spouse? Your spouse will be responsible for any debt for … Civil judgments and wage attachments are halted by bankruptcy filings. …
Find information on the bankruptcy laws in your state here. Offers resources on all aspects from filing to alternatives.
Financial Statement Audit for Fiscal Year 2006 Follow Up of Prior …
processes, auditors often detect deficiencies in internal controls that do not rise to a level of seriousness to be reported in the auditor’s opinion. These findings are communicated to the auditee in a management letter. Attached is a copy of the FY ….. documents for the judgment totals BCP provides to FMO quarterly and at year-end for inclusion on the financial statements. RAO relies on five different information sources to ensure the accuracy and completeness of the …
FEDERAL TRADE COMMISSION OFFICE OF INSPECTOR GENERAL Financial …
conditions (that is, they do not rise to a level of seriousness to be reported in the auditor’s opinion) such findings are communicated to the auditee in a management letter. Attached, for your information, is a copy of the FY 2005 ….. uses the service to scan for all judgments involving the agency; and 5) Review of cash receipts by the agency. When FMO compared its FY 2005 cash receipt records for FTC cases with RAO’s list of FY. 2005 judgment activity, FMO noted a …
This post was mainly about How does bankruptcy affect judgments attached to property, you are welcomed to comment here about How does bankruptcy affect judgments attached to property.
Related Blogs
- Related Blogs on How does bankruptcy affect judgments attached to property
- Friends, relations – fellow patriots all « The Betrayed
- Bankruptcy Help Resources » Medical bill – What happens if i just …
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
People got here while searching: bankruptcy judgements - judgements on unsecured mortgage georgia - can you learn to be an entrepreneur ?? - can a lien be attached to primary residence in ban.If you feel this post didn't give you new/important information about: bankruptcy judgements - judgements on unsecured mortgage georgia - can you learn to be an entrepreneur ?? - can a lien be attached to primary residence in ban, please leave us a comment and write what information would you add about bankruptcy judgements - judgements on unsecured mortgage georgia - can you learn to be an entrepreneur ?? - can a lien be attached to primary residence in ban.
What if you get audited and you don’t have all the receipts for expenses you declared in that year?
I got $5000 for christmas!
Thank you for the great post – I had fun reading it! I always enjoy this blog.
The blog was absolutely fantastic! Lots of great information and inspiration, both of which we all need!
Thank you for sharing the info. I found the details very helpful.
Would the forum owner be liable for comments made by the posters in this instance? I’d guess that the posters are the ones who are responsible, not the site/owner, as the site is acting as a common carrier.
What you do is great – but more frequent updates, please?
I really like following your blog as the articles are so simple to read and follow. Excellent. Please keep up the good work. Thanks.
Thumbs up for that meaning yes. It gives the whole information.
Thanks for taking the time to discuss this,would you mind updating your blog with more information? It is extremely helpful for me.
Hello there everyone
Just catching up on this.
You made some good points there. I did a search on the topic and some related sub topics and I have found a lot of corresponding views.
Meanwhile I’m the exact opposite to most people at commenting and will comment if I have the tiniest little thing to say, probably cos I started commenting with TwentyMajor’s blog that almost instantly goes off topic.
Meanwhile I’m the exact opposite to most people at commenting and will comment if I have the tiniest little thing to say, probably cos I started commenting with TwentyMajor’s blog that almost instantly goes off topic.