Junior Liens Arising from Second Deeds of Trusts (HELOCS & Second Mortgages):

In chapter 13 bankruptcy, you may strip a lien arising from a second mortgage, home equity line of credit. You will no longer be required to make payments for the second mortgage during the bankruptcy and, upon successful completion of your three- or five-year chapter 13 bankruptcy, the lien will be formally removed.

However, a lien must meet two conditions in order to be avoided. Simply not having any equity is not enough. Firstly, the value of your home must be less than the principal owed to the first mortgage. Secondly, the lien to be avoided must arise from a deed of trust recorded after the deed of trust of the first mortgage.

Lien strips aren’t limited to second deeds of trust! Any lien arising from a subsequent deed of trust (a third, fourth, etc.) may be avoided so long as it meets the aforementioned two conditions.

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Judgment Liens Arising from Lawsuits & Abstracts of Judgment:

Avoiding liens arising from lawsuit judgments works similarly, but we may avoid liens in both chapter 7 and 13 bankruptcies.

The Court is more lenient in establishing conditions to meet before stripping a judgment lien, but they can be more complicated. For instance, a judgment lien may be avoided even if a home has equity. However, there must not be enough equity to support paying trust deed holders, the value of a debtor’s claimed exemptions for the home, and even a portion of the judgment lien.

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Tyson Takeuchi
Bankruptcy Attorney


The Law Office of Tyson Takeuchi is a federally designated Debt Relief Agency as defined in the 2005 amendments to the United States Bankruptcy Code. This law firm provides legal advice regarding the pros and cons of filing bankruptcy and represents people and small businesses in filing for bankruptcy relief under the United States Bankruptcy Code.
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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