Lien stripping is a process that allows bankruptcy debtors to strip off (eliminate) wholly unsecured junior liens (such as second mortgages, home equity loans, and HELOCs) from their homes. In most cases, you can only get rid of your second mortgage or other junior lien if you file for Chapter 13 bankruptcy.
How can I get rid of my second mortgage?
Filing for bankruptcy can eliminate your second mortgage debt. If an appraiser determines the value of your home is less than your first mortgage, or is upside down, Chapter 13 lien stripping may be possible. The bankruptcy court essentially converts your second mortgage into an unsecured debt.
Can you have two mortgages at once?
Carrying two mortgages at once Buyers who have enough income can carry two mortgage payments at once if they still meet the debt-to-income ratios required by their lenders. You, then, might be able to qualify for two mortgages at once, if your credit score and job status are also strong.
Can you remove a second mortgage in Chapter 13 bankruptcy?
What happens to your mortgage when you file bankruptcy?
What happens to your mortgage when you file bankruptcy? Home loans, like mortgages, home equity loans, or home equity lines of credit are secured debts. This means the bank has a sort of ownership interest in the real estate. As long as you make your monthly payments, the home is yours to keep.
Can a house be secured in Chapter 7 bankruptcy?
If you want to keep property securing a loan—such as a house or a car—your options in Chapter 7 bankruptcy will depend on whether you’re current on your payments. (You can find more information in Secured Debt & Property in Chapter 7 Bankruptcy .)
Can a secured debt be discharged in bankruptcy?
You have personal liability for a secured debt just as you would for any other debt. You’re obligated to pay the debt to the creditor. Chapter 7 bankruptcy wipes out this personal liability if it’s the type of debt that can be discharged in bankruptcy.
