The clients were in my office considering bankruptcy because of nasty litigation approaching trial. While they would undoubtedly win, the expense was enormous.
Even victory in court would ruin them.
As we talked about their financial situation and their eligibility for bankruptcy, it came out that there were two liens on their house . On their numbers, perhaps the second lien was totally unsecured.
I sent them out to get a broker’s opinion of value. Turns out the house is worth less than they thought, the $43K second loan can be stripped off the house and discharged, but only in a Chapter 13.
If they had gone with the Chapter 7 case they came to explore, they would have missed out on lien stripping.
For the clients, that opportunity turned the decision to file bankruptcy from a sour concession of economic defeat to a more positive chance to end the litigation and improve their chances of keeping their home.