In just 2 years from 2012 to 2014, home prices has risen in Sacramento California by about 40%.  Putting it in another perspective, in 2012, about half of homeowners in Sacramento could not sell their home because they owe more than what it was worth (their homes are "underwater").  In 2014, 17% of Sacramento homeowners were "underwater" on their mortgage.  (Source: Sacramento Bee)

The rise in home prices and low interest rates allow homeowners to refinance their mortgage providing that they have adequate credit scores.  This also reduces the foreclosure rates in Sacramento because more people want to and can afford to keep their homes.

However, rising prices means that removing and eliminating junior liens on homes becomes difficult under Bankruptcy Law.  Bankruptcy Law only allows you to remove junior liens if the value of your house is less than the senior lien, which is the first deed of trust on your home.  Junior liens are, for example, home equity line of credit, second mortgage, judicial liens or judgment liens.  Judicial or judgment liens are recorded in the county of your real estate in the form of "abstract of judgment" usually after a creditors obtain a judgment in their favor after filing a lawsuit to collect on debts you owe.  Other government entities like Unemployment Development Department do not have to go through the process of a lawsuit in order to record a lien against your home.  However, if the creditor like Unemployment Development Department alleged that the debt arose from fraudulent acts and succeeds, the debt cannot be eliminated or "discharged" in Bankruptcy.  If you try to remove such lien, the lien can be reattached to your home because it was not eliminated or discharged in bankruptcy.  You still owe the debt.  Call Muoi Chea, an experienced and knowledgeable Bankruptcy Attorney for more information.

Chapter 13 Bankruptcy can remove or eliminate home equity line of credit or second mortgage.  This is call lienstripping.  Chapter 7 Bankruptcy cannot lienstrip home equity line of credit or second mortgage.  The issue was recently raised in the United States Supreme Court but was denied.  Chapter 7 Bankruptcy and Chapter 13 Bankruptcy can remove and eliminate judicial liens or judgment liens if the equity in your house is not in excess of the California homestead exemption under CCP 703 or 704.

If you have a junior lien recorded against your home and home prices are rising, it is to your detriment to delay consultation with a Bankruptcy Attorney to determine if you qualify for lienstripping under Chapter 13 Bankruptcy or removal of judicial or judgment liens under Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.