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Lien Stripping in Glendale, AZ

Lien Stripping Attorney in Glendale, Arizona

Are you having difficulty repaying your outstanding debts to creditors? Then, you have the option to file for bankruptcy as the last resort to solve your debt problems. It is an excellent opportunity for a bankrupt person to obtain financial freedom and have a fresh start. With guidance from an experienced lien stripping attorney in Glendale, AZ, filing for bankruptcy will help you reorganize your finances, pursue debt settlement, and pay off a creditor.

A bankruptcy filing allows you to be relieved from some of your qualified debts through a bankruptcy discharge. A bankruptcy court order frees a debtor from personal liability for specific types of debts. In this case, creditors are prohibited from calling, reporting nonpayment to credit collection agencies, file a lawsuit, send demand letters, or take any actions to pursue debtors for any outstanding debt. However, not all debts can be discharged in bankruptcy. Although the bankruptcy discharge has relieved you from paying your debts, you cannot get rid of a creditor’s lien on your property.

If you have questions regarding debt assistance or lien stripping in bankruptcy, call us today by dialing (623) 471-1377. Our reliable Glendale, AZ lawyers for bankruptcy can help you understand what lien is and how to deal with it in your bankruptcy case.

What Is a Lien?

Putting up collateral gives a creditor an ownership right or “lien” in your property until you repay the debt. A lien provides the lender with the proper claim to a property until a debt is paid off. If the debt goes unpaid, they have the right to take it back. A creditor can use a lien to repossess, sell, and liquidate your collateral in exchange for money to recover some of your unpaid debts (even after the court has discharged your debt).

A discharge in bankruptcy doesn’t automatically remove liens from your assets or property. Your creditor has a security interest on your collateral for your secured loans like car loans or mortgages. If you default on your loan, your lender has the right to demand car repossession or home foreclosure despite your bankruptcy discharge.

Liens are a common way for creditors to collect what they’re owed. When someone puts a lien on your property, that property effectively becomes collateral for the debt. The owner cannot sell the property that is the subject of a lien without the consent of the lien holder. The Arizona bankruptcy court can remove some liens even after the bankruptcy case closure. Our credible Arizona lien stripping attorney can help you avoid or eliminate liens in bankruptcy.

What Are the Different Types of Lien?

There are many types of liens and lien holders. Liens can be put in place by financial institutions, government entities, and small businesses. Keep in mind that in most cases, the creditor must perfect the lien by filing documents with the proper government entity.

Do you want to know more about liens? Call us today at (623) 471-1377 and consult our qualified Glendale lien stripping attorneys to help you better understand the different types of liens in bankruptcy. Below are some of the most common liens.

Voluntary Liens

A voluntary lien is a type of lien that is consensual. This means that the lien is created by an action taken by the debtor, such as a mortgage loan, to buy real estate. A lender wants to guarantee that the borrower will repay the loan. Lenders want to minimize the risk of making a significant loan by requiring the debtor to put up a property as collateral. If the borrower doesn’t fulfill the contract terms and conditions, the lien allows the lender to foreclose or repossess the property.

Involuntary Liens

Some creditors can file liens against your property without your consent. This type of lien is called an “involuntary lien.” In most cases, an involuntary lien exists for one of two reasons:

Property Tax Lien 

These are the taxes you owe on real estate. If you fail to pay your income taxes, the Internal Revenue Service or a state taxing authority can file a lien document in the county records. A tax lien also affects the taxpayer’s ability to sell existing assets and obtain credit. The only way to release a federal tax lien is to pay the tax owed entirely or settle with the IRS. A debtor can’t remove a statutory lie through the bankruptcy process, such as a tax lien. Only the bankruptcy trustee has the power to avoid a statutory lien, and only if the trustee meets certain conditions.

Mechanic’s Lien

A mechanic’s lien can be attached to real property if the owner fails to pay a contractor for services rendered. If the debtor fails to pay, the contractor could go to court and get a judgment against the non-paying party, whereby property or assets can be auctioned off to pay the lien holder.

Judgment Lien 

This type of lien is placed on assets by the courts, which is usually a result of a lawsuit. A judgment lien could help a defendant get paid back in a nonpayment case by liquidating the accused’s assets.

Dealing with liens in bankruptcy can often be complicated and overwhelming. Get the help of our experienced Glendale lien stripping attorneys today to help you get a fresh start.

How to Avoid Liens in Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, secured debts such as a home mortgage or car loan can be modified through the Chapter 13 repayment plan, either by cramdown or lien stripping. Seeking legal advice from a seasoned Glendale line stripping attorney regarding these bankruptcy tools are helpful to debtors who owe more than the property is worth.

There are certain conditions that you need to satisfy to eliminate an unsecured junior lien from your property through stripping of lien or reducing the balance of secured debts (car loan) with a Chapter 13 cramdown.

Lien Stripping in Chapter 13

Lien stripping allows you to get rid of the “wholly unsecured” liens on your property. When a lien is put on your house, the level of its priority is usually determined by when the lien was recorded with your county. It is also known as the “first in time” rule. If you strip a junior lien from your house or property, it will be categorized as a nonpriority unsecured debt. This can be removed when you’re granted a bankruptcy discharge.

You are only permitted to strip a junior lien if the amount of the senior lien or liens is greater than the home’s fair market value. In many cases, if you owed more on your first mortgage than the fair market value of your house, your second mortgage lender would not receive anything from the foreclosure because there would be nothing left over after paying the first. If the lender won’t get any money at a sale, your second mortgage is considered “wholly unsecured” and can be stripped through a Chapter 13 bankruptcy.

Cramming Down Liens in Chapter 13

Through a Chapter 13 cramdown, you might be able to reduce the principal balance of some liens. For instance, using a car loan cramdown, you can reduce your loan balance to the car’s value. When you cram down a secured debt (car loan), the loan is divided into secured and unsecured portions. You must pay all the secured amount in full under the terms of your repayment plan; the unsecured part is eliminated when you complete your repayment plan and acquire a bankruptcy discharge.

Consult our qualified Glendale lien stripping attorneys to help you better understand how you can avoid liens in bankruptcy. 

How to Avoid Liens in Chapter 7 Bankruptcy

Chapter 7 bankruptcy wipes out your responsibility to pay a secured debt such as a mortgage or car loan, including any deficiency balance. However, you won’t get to keep the collateral (the house, car, or other property) unless you pay what you owe. The lien must qualify for avoidance, and you must file a motion with the bankruptcy court and obtain a court order. A competent Glendale bankruptcy lawyer can help you in such filing.

Furthermore, the lien must get in the way of (impair) a bankruptcy exemption—the law that allows you to protect property in bankruptcy. For instance, if the state law will enable you to protect business tools, and a creditor placed an involuntary lien on them, you’d likely be able to avoid the lien. Keep in mind that in Chapter 7 bankruptcy, you can’t prevent statutory liens (such as a tax lien) or voluntary liens (such as a mortgage or car loan).

Schedule our lien stripping attorneys in Glendale, AZ to get help with lien stripping in Arizona.

Talk to A Lien Stripping Attorney in Glendale, AZ!

Understanding and handling liens can be a challenging part of the bankruptcy process. It is essential to have a basic knowledge of the bankruptcy laws on liens. If an involuntary lien has been placed on your home, consider talking to our experienced Glendale lien stripping attorneys at Glendale Bankruptcy Attorneys to learn more about your rights and options.

Our bankruptcy law firm in Glendale, AZ has extensive experience finding ways to settle debt or successfully fight an invalid lien. Call us today at (623) 471-1377 and schedule a consultation with our competent lien stripping attorneys today.

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