Lien Stripping – Remove Your Second Mortgage by Filing a Chapter 13 Bankruptcy
One of the major advantages to filing a Chapter 13 Bankruptcy is that you may be able to “strip” your second mortgage. This means that in your Chapter 13 Bankruptcy you may be able to convert your second mortgage to unsecured debt and when you complete your Chapter 13 Bankruptcy and receive your discharge your second mortgage will be complete eliminated! This could save you tens of thousands of dollars!
To be able to strip your second mortgage, the current value of your home must be less than the outstanding balance on your first mortgage. For example, your home is worth $100,000.00. You owed $105,000.00 on your first mortgage and $20,000.00 on your second mortgage. Once your Chapter 13 Bankruptcy is filed, you can initiate an adversary proceeding with the Bankruptcy Court and have your second mortgage declared completely unsecured. Upon completion of the Chapter 13 Bankruptcy the second mortgage will be removed and you have saved $20,000.00!
To successfully strip a second mortgage it is imperative that you meet with an experienced bankruptcy attorney. Filing an adversary proceeding to strip a second mortgage is a complicated process and each step of the process must be done correctly or the Bankruptcy Judge will not allow the second mortgage to be stripped.
As the housing market continues to improve the ability to strip a second mortgage decreases. If you are considering filing bankruptcy and would like to strip a second mortgage you should meet with one of our experienced bankruptcy attorneys today.