Chapter 13: Lien Stripping a Second Mortgage
One of the reasons individuals and families decide to use Chapter 13 for their mortgage is because they want to save their family home. Chapter 13 allows for that possibility. There are a number of different methods that can be used to assist you in that process. Our lawyers will help you to look at all of your options and make an educated decision that is right for your situation.
At Atlas Consumer Law, we work hard for our clients. Our experienced lawyers know how to use the law for your benefit. We handle bankruptcies day-in and day-out, and will work with you to identify the best strategies for your family. Located in Lombard, Illinois, our law firm serves Chicago and the surrounding areas.
Contact a Chapter 13 bankruptcy attorney by calling us at (312) 313-1613.
Stripping Off a Second Mortgage
By filing a Chapter 13 bankruptcy, under certain circumstances you may be able to get rid of a second mortgage on your home. In order to understand how it works, you must remember that there are two types of debt, secured and unsecured.
- The differences are as follows:
- Secured debt: This is generally attached to a tangible item, like a house or a car.
- Unsecured debt: This type of debt is not attached to a tangible item, like credit card debt.
How Does It Work?
Let's say that Blake and Crystal* own a house worth $400,000. The couple owes $405,000 for the first mortgage and $100,000 on the second mortgage. So, clearly, they owe a total of $505,000 on the home. Therefore, the home is upside down; they owe more on the home than it is worth.
Because the house is only worth $400,000 and the first mortgage exceeds the value of the property, the second loan of $100,000 is no longer considered secured debt because it is not backed by the home. It is akin to credit card debt (which is unsecured). And, as unsecured debt, it is possible under Chapter 13 bankruptcy to strip the second mortgage off of the home.
Contact a Chapter 13 Bankruptcy Lawyer
If you are looking for creative, legal solutions to answer your debt situation, you need to speak with the Chicago bankruptcy lawyers at our law firm. We understand bankruptcy and other debt relief options and will help you find the solution that fits your problem.
*Blake and Crystal are fictitious characters created for the purposes of explaining and illustrating various bankruptcy situations.
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