Tag Archives: lien strip

Can I File a Chapter 13 Bankruptcy if I Am Not Eligible for a Discharge?

A Chapter 13 bankruptcy filing can still be useful even if you are not eligible for a discharge of the unpaid balance of debt remaining at the end of the Chapter 13 payment plan due to a prior bankruptcy filing in order to force creditors into a Federal court-enforced payment plan at 0% interest. This is particularly useful when it comes to student loan and other non-dischargeable debt.

Click here to read more about filing Chapter 13 bankruptcy even if not eligible for discharge on the new Michigan Bankruptcy Blog of Michigan Bankruptcy Attorneys The Hilla Law Firm, PLLC.

If you are a southeast Michigan resident interested in filing for bankruptcy, please feel free to contact us at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

What Is the Benefit of a Chapter 13 Bankruptcy?

There are a few key mechanisms available in a Chapter 13 bankruptcy that are not available in a Chapter 7 bankruptcy. These mechanisms are largely, in addition to the lack of an income eligibility standard, what make a Chapter 13 very attractive to some debtors. These mechanisms are:

  •  The Lien Strip: A lien-strip is a process by which a 2nd or 3rd mortgage on a primary residence is “stripped off,” which is to say, converted from a classification within the Chapter 13 Plan as “secured” debt to “unsecured” debt, at the bottom of the priority of payment. A lien-strip is possible where the property in question, in fair market value terms, is worth less than the 1st mortgage on the property. If that is the case, 2nd or 3rd or other inferior mortgages are considered to be unsecured by the value of that collateral and may be stripped.

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