Can I get Rid of my Second Mortgage in a Fort Lauderdale Chapter 13 Bankruptcy?

Getting Rid of a Second Mortgage in a Fort Lauderdale Bankruptcy

One of the options available in a Weston Chapter 13 bankruptcy is “lien stripping.” When we went through the real estate recession a few years back, many people owed more on their homes than they were worth. Many also held second mortgages on their homes because they bought it using the popular 80/20 mortgages to avoid PMI insurance. Although they were stressed out over the financial situation, they soon discovered relief by getting rid of the second mortgage in a Ft. Lauderdale Chapter 13 bankruptcy.

If you are upside-down on your first mortgage, then you have an opening to strip your second and even third mortgage in a Pembroke Pines Chapter 13 bankruptcy. Conversely, if you have any equity in your home, you will not be able to get rid of your second mortgage. This option is only available if you owe more on the first mortgage of your home than what it is worth. For this reason, when the real estate markets are flat or losing value, the power to strip a second mortgage or equity line presents itself.

Lien Stripping a Second Mortgage or Equity Line is Available in a Chapter 13 if Your Hollywood or Coral Springs House is Upside-Down on First Mortgage

In a Ft. Lauderdale Chapter 13, your debt is classified into two buckets: secured debt and unsecured debt. Any debt that is for the purchase of a home or a car is secured debt because the property that you bought is collateral for the loan. So, simply stated, any loan that has collateral is secured debt. Therefore, any credit that does not have collateral is unsecured debt. When you owe more on your first mortgage than what the house is worth, there is no collateral securing the second mortgage or equity credit line. When a Weston second mortgage or a Davie equity line of credit is stripped, it is reclassified from a secured debt to an unsecured debt. Once we obtain a bankruptcy court order stripping your second mortgage, it transfers to the unsecured category and will be discharged along with your other unsecured debt such as credit cards and medical bills.

When Will My Second Mortgage or Equity Line Officially be Eliminated?

Although, we file the legal documents to value your home and strip the Miramar second mortgage early on in your Chapter 13 bankruptcy, the judge’s order stripping your second mortgage will contain language that it is not effective unless you finish paying your Weston Chapter 13 bankruptcy plan payments. In other words, you do not get the benefit of eliminating your second mortgage until you complete all of your Chapter 13 plan payments. Chapter 13 plans run between 36 and 60 months (most of them are 60 month plans). If you stop paying on your payment plan or otherwise fail to complete the plan payments, your second mortgage is not eliminated.

Every financial situation is unique and there are many things to consider and do correctly in order to get rid of a second mortgage in a Ft. Lauderdale Chapter 13 bankruptcy. Our Pembroke Pines bankruptcy lawyer has eliminated second mortgages for many Ft. Lauderdale residents through Chapter 13 and you can trust that Weston bankruptcy lawyer, Orfelia Mayor, will tell you if you qualify to get rid of that equity line or second mortgage through a Chapter 13 bankruptcy. Our office is conveniently located near Weston, Hollywood, Davie, Coral Springs and Sunrise. We are located in Cooper City near all major highways. Call us today for a free bankruptcy consultation.