Using Chapter 13 Bankruptcy to Strip a Second Mortgage
Is your primary debt burden the second or third mortgage on your house? Do you find yourself wishing you had never taken out a second mortgage, realizing that if without the second mortgage your debt burden would be manageable?
You may be able to use Chapter 13 bankruptcy to strip, or eliminate, a second mortgage on your home. Learn more about stripping a second mortgage from experienced Southfield bankruptcy lawyer Sheryl A. Shoebottom. To schedule a free initial consultation, call toll free 888-343-9145 or send an e-mail.
How Does Second Mortgage Lien Stripping Work?
In addition to its other advantages, Chapter 13 bankruptcy can, in some cases, be used to eliminate a second or third mortgage. Chapter 13 bankruptcy is primarily a debt reorganization plan, in which the filer submits a plan showing how he or she intends to repay all or most secured debt over a three- to five-year period. Depending on the filer's financial assets, some or most of the filer's unsecured debt will be discharged, or eliminated, after the Chapter 13 repayment plan is complete.
The bankruptcy court has the jurisdiction to decide that a second mortgage is unsecured debt. If the bankruptcy court makes that decision, then the second mortgage may be discharged as part of the debt in a Chapter 13 bankruptcy plan.
For example, let's say your home is worth $100,000. You owe $200,000 on your first mortgage, $50,000 on your second mortgage because of a refinance and $30,000 in credit card bills. Your unsecured debt is $80,000, meaning there is no actual property attached to the debt. In Chapter 13 bankruptcy, unsecured debt can be discharged. The banks cannot collect on the deficient second mortgage. This is because the junior deed of trust is not backed by property.
Get Answers to Your Questions About Second Mortgage Debt
Answers to your questions about second mortgage debt or 80/20 home loans debt are no farther away than a consultation with experienced bankruptcy attorney Sheryl A. Shoebottom. Practicing law since 1995, Ms. Shoebottom is a capable and knowledgeable advocate who can answer your questions and start you down the path toward regaining financial stability.
To schedule a free initial consultation, call toll free 888-343-9145 or send an e-mail.
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