Why Consider Equity Stripping? While exemption laws and protective entities can shield your assets, they may not always be sufficient. Adding an extra layer of protection through equity stripping can make your assets unappealing to potential plaintiffs by converting valuable, unencumbered assets into debt-laden ones.

What is Equity Stripping? Equity stripping involves reducing the equity in your property to make it less attractive to creditors. This is achieved by increasing the debt against your assets through mortgages or liens, effectively minimizing the equity that a litigant can target.

How Mortgages and Liens Work in Equity Stripping By applying mortgages and liens, you can transfer the economic value of your property to the mortgage holder, reducing the equity available for creditors to claim. If your home is valued higher than the existing mortgages or liens, the equity becomes a potential target for litigants. To safeguard your property, you increase the liens or mortgages, stripping the equity and protecting your assets.

Understanding Mortgages vs. Deeds of Trust A mortgage is a voluntary lien on real estate to secure a debt, while a deed of trust involves deeding the property to a third-party trustee. Both serve the purpose of securing a debt, but a deed of trust allows a trustee to sell the property at a public auction without court intervention if you default, unlike a mortgage which requires court foreclosure.

Equity Stripping for Personal Property Personal property liens function differently. A lien on personal property is secured through a security agreement. For example, pledging jewelry to a pawn shop creates a lien. Typically, the debtor retains possession of the collateral, with a public notice of lien filed to inform third parties of the encumbrance. Multiple liens can be placed on one property, with their priority determined by the filing order.

Maximizing Protection through Equity Stripping By strategically placing valid liens, you minimize the equity available to claimants. For instance, a $300,000 home with a $300,000 mortgage holds no appeal to a litigant. The goal is to ensure all your assets have little to no exposed equity, rendering them worthless to plaintiffs.

Contact Us for Expert Guidance For assistance with equity stripping and other asset protection strategies, contact Elevate Legal Services LLC. Reach out online or call (561) 770-3335 to consult with our experienced attorneys. We are here to help you safeguard your assets effectively.