Equity Stripping

AAA

DEFINITION of 'Equity Stripping'

The process of reducing the overall equity in a property in order to avoid creditors. The theory behind equity stripping is simply that by reducing your interest in a given property, thereby reducing any equity, creditors will not go to great lengths to include the property in any claims.

INVESTOPEDIA EXPLAINS 'Equity Stripping'

Equity stripping is one of the simplest asset protection methods and can also be one of the most successful. By giving another party a claim against a property, owners can retain control over the cash flows and use of the asset while making the property unattractive to creditors attempting to administer some type of legal judgment. The most common forms of equity stripping are spousal stripping and home equity lines of credit (HELOC).

RELATED TERMS
  1. Spousal Stripping

    An equity-stripping technique used to reduce the equity in a ...
  2. Equity

    1. A stock or any other security representing an ownership interest. ...
  3. Line Of Credit - LOC

    An arrangement between a financial institution, usually a bank, ...
  4. Home-Equity Loan

    A consumer loan secured by a second mortgage, allowing home owners ...
  5. Home Equity Line Of Credit - HELOC

    A line of credit extended to a homeowner that uses the borrower's ...
  6. Mortgage Equity Withdrawal

    The amount of equity that consumers withdraw from their homes ...
Related Articles
  1. Credit & Loans

    4 Steps To Attaining A Mortgage

    It starts with knowing your choices as well as your price range. We show you how to get there.
  2. Home & Auto

    When (And When Not) To Refinance Your Mortgage

    There are both good and bad reasons to refinance. Learn more about both here.
  3. Options & Futures

    Home-Equity Loans: What You Need To Know

    We shed light on why consumers decide to use this form of debt and whether it is a good alternative.
  4. Options & Futures

    Home-Equity Loans: The Costs

    Learn the factors to consider when comparing the different programs offered by various lenders.
  5. Home & Auto

    Equity Stripping Leaves Creditors Empty-Handed

    Add additional debt to your real estate assets to keep the creditors at bay.
  6. Home & Auto

    Universal Design Improvements That Increase Your Home's Value

    Universal design improvements yield great returns for homeowners, either through increased future comfort, or broader market appeal for their home.
  7. Make a second property more affordable by taking advantage of low mortgage rates to refinance it.
    Investing

    Learn How To Lower Your Second Mortgage Rate

    Make a second property more affordable by taking advantage of low mortgage rates to refinance it.
  8. An article explaining the reader when it makes sense to buy home with cash vs taking a mortgage loan. Most time people would think that having the money to purchase the house is better than a mortgage loan but is it always the case?
    Credit & Loans

    Buying A Home: Cash Vs. Mortgage

    If you have the funds, should you buy your home with all cash? Here's how to decide which option – cash or mortgage – makes the most sense for you.
  9. Basic steps for a buyer to purchase a home
    Home & Auto

    Steps To Buy A Home

    When you're ready to purchase a home, take these steps to make sure you get a good deal at a price you can afford.
  10. Home & Auto

    What are the differences between revolving credit and a line of credit?

    Understand how to differentiate between a line of credit and a revolving credit account, and find out why business owners open revolving credit accounts.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center