Chapter 13 and Second Mortgage Lien – It Takes Two To Strip

Chapter 13 and Second Mortgage Lien - It Takes Two To Strip

A Chapter 13 and second mortgage lien can be a great combintation.  If the balance of the first mortgage is higher than the fair market value of the home, the homeowner can “strip” the second mortgage lien.  This means that after the homeowner successfully completes a chapter 13 bankruptcy plan, the second mortgage lien will be stripped, or entirely removed from the property.  The debt that is secured by the second mortgage lien is paid as an unsecured debt (like credit card debt) during the chapter 13 bankruptcy plan.  At the end of  plan, any remaining unpaid balance is completely discharged, or eliminated.  The result of this is that a homeowner is able to completely eliminate a seccond mortgage lien on thier home by completing a chapter 13 bankruptcy.  Owners of investment property may also get this relief.        Continue Reading

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