Lien stripping a second mortgage is another reason why Chapter 13 bankruptcies are so popular these days. During the boom when home prices skyrocketed, many homeowners took out a second loan. Now that homeowner is completely upside on the second loan and would love to stay in the home if that second mortgage was gone completely.
Many of our clients ask if they can get rid of (lien strip) a second mortgage in a bankruptcy, and if so, how? The answer is yes, a second mortgage can be eliminated (stripped) by filing for a Chapter 13 bankruptcy. Here are the basic guidelines:
- Homeowner must be upside down on the first mortgage, meaning that the value of the home must be lower than the amount of the first mortgage; and
- Homeowner must qualify for a Chapter 13 bankruptcy and successfully complete the plan and receive a discharge.
There are many other factors in a Chapter 13 bankruptcy that is specific to each homeowner. For more information about this process, please call or email Atlantis Law LLP and schedule a consultation with one of our expert bankruptcy attorneys.