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Lien stripping in Massachusetts bankruptcy?

I need to decide whether I should file for chapter 13 bankruptcy. One of the questions I have is whether I can strip the second mortgage lien off my house and so reduce the amount I will have to pay back. My house is currently worth about $355,000 and I have a first mortgage of over $400k. I also have a secured home equity line of credit in the amount of $36,000. Is lien stripping allowed in Massachusetts bankruptcy courts? Thanks.

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For those who do not know what we are talking about here, lien stripping is a practice that arises under Section 506 (a) and (b) of the U.S. Bankruptcy Code.  These sections allow Chapter 13 debtors to ask the Bankruptcy Court to convert a secured second mortgage or other secured loan into an unsecured debt.  If the court agrees, the conversion of the debt to an unsecured loan can eliminate the monthly payment and reduce the debtor's total debt.  A good thing.  In theory, the practice can also be used with other types of assets and debts, such as in a situation where the debtor has a car with two loans.  In any case, in order for loan stripping to work, the debtor must be in Chapter 13 bankruptcy (not Chapter 7, see below), and the fair market value of the house (or other asset) must be less than the first mortgage.  In other words, only debtors whose houses are "underwater" can try this tactic.

Although some court in other federal districts have refused to allow debtors to strip a lien, as far as I know, the practice is allowed in Massachusetts bankruptcy courts.  Perhaps another attorney with more bankruptcy experience can shed some light on this issue for us.  Final note:  If you file Chapter 13 Bankruptcy, strip your second loan, and then convert to Chapter 7, a Massachusetts Bankruptcy Court will likely reverse the lien strip.  See, e.g., In re McDonough 166 B.R. 9 (Bankr.D.Mass.1994).



The Editor is spot-on. Lien Stripping is alive and well in Massachusetts, in proper Chapter 13 cases. Your example is the perfect scenario for it. Your $36,000 second mortgage would be considered unsecured debt, you would be relieved of making the scheduled monthly payment on it, the bank would get a share of the pot along with all other unsecured creditors, and upon completion of your plan, you will be discharged from paying it and the lien on your real estate would be discharged. If you don't complete your Chapter 13 plan, or it is dismissed or converted, the second mortgage could come back to life. Talk to a Massachusetts bankruptcy attorney who is experienced in Chapter 13 cases and explore your options. -- Mike Tremblay, Marlborough.


What specific legal actions are required to discharge and void out old attorney liens against one's title, due to past judgments obtained folowoing negligent representation(history not mentioned here)
by attorneys more interested in collecting fees than in providing proper representation for alimony modification in the past. They then sued to target my home to pay their fees, running up many costs over several years time filing multiple motions and going to trial to obtain more payment. A ch 7 bankruptcy was filed to protect myself following pro se counterclaims, as I had been suffering multiple medical problems which the law firm representing me for alimony modification knew about. These medical problems continued to worsen. My side of the case was dismissed but I was never told the truth as to why. Apparently this would not have happened had the financials been properly filed. I learned of this from a court transcript from the Judge on the case at the time, something the probate court had lost for several years and returned to me at a time too late for me to properly defend myself in the post divorce litigation by the same attorneys to collect their fees. I feel the failure to represent might have been due to either incompetence or else collusion and a setup as they saw my home as their primary route to payment for large fees which they magnified by a lot of post trial fees litigation which went on for two and ahalf years. This was maximally stressful as I was ill with what turned out to be neurologic lyme disease, something more common in the Northeast today. This was years ago from date of filing but the bankruptcy was dischared around about four years afterward. The trustee sent me evidence of the cancelled checks whereby the attorneys were paid for their judgment liens after 2009. They could make no allegations but it looked as though the Trustee's office did not like what these attorneys had been up to. What types of attorneys are needed at this point to clean things up.? My financial position remained dim because of increasing medical problems, where pre cancer diagnoses prior to post divorce modification actions, which should have succeeded for obtaining money for medical tests and early treatment continued to progress to cancer due to the lack of resources while all the other parties in the case got paid. Where can I obtain pro bono post bankruptcy help or very low cost help as I need to expend what I have for cancer related costs and even so at this point these are insufficient. An oncologist I saw by 2008 did not want me to return to court pro se as all of this while ill had been so stressful she believed it triggered off new cancers which appeared a few years later. Post bankruptcy help and reinstatement of consumer protection counterclaims with the help of legal malpractice/consumer protection expertise about attorney negligence may be among legal services needed.


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