Jon Alan Enochs

Lien Stripping (Asking the courts to eliminate your liens)

Liens can be stripped off of the debtor’s assets when there is not enough equity in the asset and where the lien exceeds the value of the debtor’s property.

What is lien stripping?

The term “Lien Stripping” refers to a debtor’s ability to reduce an under-secured, creditor’s claim to the present value of its collateral through claim valuation. Lien Stripping has the effect of dividing an under-secured creditor’s claim into two components – a secured and unsecured claim:

The unsecured portion of the lien is “stripped” from the collateral and the deficiency between the total debt owed and the collateral’s present value becomes an unsecured claim. The lien on the collateral remains only in the amount of the secured claim.

Difference between “stripping-off” and “stripping-down” liens:

Stripping-off a lien occurs when the entire lien is removed from the collateral;
Stripping-down occurs when the unsecured portion is removed from the collateral.

What about my home? What can be done with my mortgage debt?

In a Chapter 13 Bankruptcy where a junior mortgage is completely unsecured then the debtor may be able to strip-off this junior lien. However, a debtor’s senior lien holder (the Lender in the 1st position) cannot have their lien stripped-off the property.

Lien Avoidance

By contrast, lien avoidance refers to an individual debtor’s ability to eliminate liens on a property that impairs the debtor’s exemptions. Subject to important exceptions, individual debtors are entitled to use all avoiding powers, to avoid certain liens, to the extent that they impair exemptions to which the debtors would otherwise be entitled.


Lien stripping and Lien Avoidance are COMPLICATED areas of Bankruptcy and will affect the debtor’s ability to eliminate all liens. I will be able to assist you in examining your individual ability to utilize either the Lien stripping or Lien Avoidance possibility by examining: (1) the type of debtor (individual and/or business); (2) the value of the property; (3) the total amount of the debt; and (4) the type of the debt, as well as the security.

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