Chapter 13 bankruptcy helps consumers prevent foreclosure. It also helps them become debt-free after a period of 3 to 5 years. The entire process helps them rearrange their debts into easier payments. This could help them achieve a debt-free lifestyle and allow them to keep their home.
How to Get Rid of Second Mortgages
The first rule of thumb to help you get rid of second mortgages is to review the actual value of your property. To eliminate the second mortgage, if the property value is less than the original mortgage value, you can claim the debt through chapter 13 bankruptcy. The second mortgage is classified as an unsecured debt in the bankruptcy case.
How Does This Work?
You’ll pay the monthly requirements for the bankruptcy case. The second mortgage is reduced, to allow you to pay a small portion only. Any outstanding balance is discharged at the end of the Chapter 13 bankruptcy claim. Mortgages are considered non-priority debts. The lender cannot file a claim to acquire payments after the bankruptcy case is closed. The debt is stripped off completely. It won’t appear on your credit report after the bankruptcy claim is completed. However, you must make all scheduled payments on time, without fail.
Do you have a Third Mortgage?
The process to eliminate a third mortgage is the same as the one used to get rid of second mortgages. However, if the value of the home exceeds the original mortgage value, you have an additional opportunity. The court reviews the total value of the first and second mortgages. If the combination of these values is more than the total market value for the property, you can eliminate the second and third mortgages through bankruptcy.
Lien stripping is a process that allows consumers to eliminate second or third mortgages. This could help them achieve a debt-free lifestyle through Chapter 13 bankruptcy. It requires them to have a mortgage that exceeds the value of their property to qualify. Additionally, they must be eligible for Chapter 13 bankruptcy by possessing an income higher than the median. To learn more about lien stripping, schedule a consultation today.
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