If you are considering filing bankruptcy, you may want to consider talking to a bankruptcy law firm to learn about all of debt relief the options that may be available to you. People with large amounts of debt who are in need of debt relief my file for chapter 7 bankruptcy, chapter 13 bankruptcy or try and settle their debts for a fraction of what they owe. A chapter 7 bankruptcy allows a debtor to discharge all of their unsecured debt so long as the debt is not considered a priority debt or was incurred from illegal activity. In order to qualify for a chapter 7 bankruptcy, a debtor’s income must be below the median income for their state and family size. With that said, a second mortgage may not be stripped through a chapter 7 bankruptcy.
If you are a debtor looking to strip a second mortgage, you must file a chapter 13 bankruptcy. In addition to being able to strip a second mortgage, a debtor may make up any payments that they are behind through a chapter 13 bankruptcy. A debtor will be able to strip a second mortgage on a primary residence that they live in through a chapter 13 bankruptcy if the primary residence is worth less than the first mortgage, making the second mortgage completely unsecured. After filing the chapter 13 bankruptcy case, a motion to strip the mortgage must be filed and approved by the bankruptcy court. Having a valuation done on your home will be necessary to determine the actual value of your home. If there is some discrepancy as to the value of the home, you second mortgage lender may object to the motion to strip your second mortgage and argue that the second mortgage is not completely unsecured, and therefore the second mortgage cannot be stripped. If the two sides cannot come to an agreement as to what a home is valued at, a bankruptcy judge will determine what it is worth.
If you have additional questions please contact Symmes law Group at 206-682-7975