Stripping Your Second or Third Mortgage in Chaptr 13

For most individuals throughout the country their home values have dropped so dramatically that any equity that might have once existed has been wiped out. Additionally, many of the second and third mortgages that were taken out during the housing boom have become fully unsecured instruments which remain "secured in name only". For individuals who have seen a sudden drop in income, loss of a job, medical issues, or other unforeseen circumstances that have lead to financial trouble, this decline in housing value may actually be a good thing.

For individuals who own a home and are considering bankruptcy it is very important that you hire an attorney that is experienced with a specialized field in bankruptcy known as adversarial proceedings. It is through this process that an individual who has a "secured in name only" mortgage can strip this debt off their home and pay it back for pennies on the dollar while also discharging most of their other unsecured debts.

The process is simply but must be handled by someone who knows the ins and outs of the bankruptcy courts and the adversarial proceeding. For a lien strip to occur the attorney must first have sufficient evidence that the home is worth less than what is owed on the first mortgage. If the first mortgage "eats up" the total value of the home, then an adversary case can be brought within the Chapter 13 Bankruptcy to strip the second or third mortgage. A well drafted adversary case often leads to a default by the second or third mortgage company who does not feel the need to fight a lean strip they know they will lose. Once the adversary has been successful and the lien is stripped, the individual MUST COMPLETE THEIR CHAPTER 13 PLAN. Failure to complete your Chapter 13 Plan will lead to the mortgage springing back into existence, at which point you will be significantly behind on your mortgage.

For more information on stripping your second or third mortgage please contact me at (248) 629-6367.