| |
| | Lien Stripping or Bifurcation |
 | | Under the bankruptcy code, a lien, other than a lien secured solely by a personal residence, is deemed secured only to the extent of the value of the property, at the time of the bankruptcy filing. |
 | | The real value of bifurcation is that John, in all likelihood, will only have to pay back $20,000 of the loan, as unsecured debts are typically discharged in bankruptcy. |
 | | When bifurcation is applied, the choice will be to pay back the secured portion in one lump sum in a Chapter 7 bankruptcy, or over three to five years in a Chapter 13 bankruptcy. |
| www.uschamber.com /sb/business/P12/P12_1355.asp (701 words) |
|