lien stripping

lien stripping
USA
Splitting a lender's claim into secured and unsecured segments and reducing the claim to the value of the debtor's residence. This lets the debtor benefit from an increase in the value of collateral after a bankruptcy case begins by modifying the mortgage's terms and reducing the debt amount. Lien stripping is not permitted in Chapter 7 cases or in cases under Chapter 11 or Chapter 13 that involve a debtor's principal residence.
See also

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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