Debt is an almost unavoidable part of life. Whether it be from unforeseen medical expenses, student loans, or some other cause, debt can be overwhelming. In many cases, first mortgages and primary loans are not enough, borrowers are forced to take out subordinate or junior loans. Junior loans include second or third mortgages, home equity lines of credit, etc. Typically, in these situations, a lien is granted to secure the loan but has a lower priority than first or more senior liens. Priority affects the way funds are distributed to creditors in the event the property is foreclosed and sold. Thus, it is possible to remove 2nd mortgage from home in bankruptcy. However, this area of bankruptcy law may be complex, it is best to consult with a Tampa bankruptcy attorney for assistance about your specific case.
Remove 2nd Mortgage from Home in Bankruptcy With Lien Stripping
Lien stripping is a very powerful tool for borrowers seeking to remove 2nd mortgage from home in bankruptcy. Lien stripping is a process that removes junior loans and changes the debt from a secured loan to unsecured. Unsecured debt is debt that does not use property as collateral, like credit card and medical bills. See Bankruptcy law 11 US 506. Once the debt is unsecured, filing for bankruptcy under Chapter 13 can protect the property and discharge the debt if they successfully remove 2nd mortgage from home in bankruptcy. Under Chapter 13 bankruptcy, a debtor creates a payment plan. Through the payment plan, debt is combined, then a monthly payment is made over 3-5 years. At the end of the designated time, all debt is either repaid or discharged. Click here for more information on discharge.
Under bankruptcy law, lien stripping can permit a borrower to eliminate a 2nd or 3rd mortgage on a home and reduce a car loan to the car’s current market value. If the lien is stripped down to the market value, the remaining loan balance will be treated as an unsecured. For example, if you owe $10,000 on your car but the vehicle is only worth $5,000 then $5,000 would be classified as a secured debt and the remaining $5,000 would be treated as an unsecured debt. Stripped liens will receive the same treatment as all your other unsecured debts, such as credit cards and medical bills. Unsecured claims typically receive nothing or only a small amount of the balance before being discharged.
Qualifications to Remove 2nd Mortgage from Home in Bankruptcy
While lien stripping can be a helpful tool, it is important to remember there are limitations. It is important to seek the advice of a qualified Tampa bankruptcy attorney before taking legal action. There are many potential disadvantages to bankruptcy that you should be aware of. Additionally, a bankruptcy lawyer in Tampa can help you maximize the relief that is available under current bankruptcy law and get a fresh start
Bankruptcy Law Firm in Tampa
If you are having a difficult time meeting your financial obligations Florida Law Advisers, P.A. may be able to help. We are a customer service oriented bankruptcy law firm committed to providing personalized attention and dedicated legal counsel. We provide trusted legal advice and work hard to provide our clients with the fresh start they need and deserve. All of our initial consultations are free and convenient payment plans are available. To speak with a bankruptcy lawyer in Tampa now or schedule a free consultation call us today at 800 990 7763.