Orlando Stripping Second Mortgage Attorney
A few years ago, the job and housing market were both booming. Lenders started encouraging homeowners to take out second mortgages and home equity loans to cover their other pressing financial matters. Today, the housing market is not as good as it once was, and the job market is also struggling. Homeowners that took out a second mortgage when times were good are now finding it difficult, if not impossible, to repay the debt.
If you have found yourself in this same situation, there is legal help available. Filing Chapter 13 bankruptcy can help you remove a second mortgage and make your overall debt easier to repay. Below, our Orlando stripping second mortgage attorney explains which homeowners are eligible and more about the process.
What is Chapter 13 Bankruptcy?
Unlike a Chapter 7 bankruptcy, Chapter 13 does not discharge, or eliminate, your debt. Instead, Chapter 13 reorganizes your debt into a repayment plan. These repayment plans typically extend between three and five years, which allows you to spread your payments over time, making them more affordable. If, at the end of the repayment plan, you still have remaining debt, it can be discharged.
When filing Chapter 13 bankruptcy, you can reorganize your past due mortgage debt into the repayment plan. If you have a second mortgage on your home, you may be able to discharge that debt entirely.
Stripping Second Mortgages in Chapter 13 Bankruptcy
Secured and unsecured debts are treated differently in Chapter 13 bankruptcy. Secured debt has property connected to it and that property is collateral. If a borrower does not repay the debt, such as a home or auto loan, the lender can repossess the property. Unsecured debt, such as medical bills and credit card debt, does not have the same type of collateral.
During a Chapter 13 bankruptcy, the court has the authority to strip, or remove, a second mortgage or home equity line of credit if the loan is greater than the current value of the home. For example, a home may be currently valued at $200,000 and have a first mortgage on it for that amount. If there is a second mortgage on the property for $50,000, the court can treat it as unsecured debt and strip it from the borrower’s mortgage obligation. The court can also eliminate tax debt on the property if it exceeds the value of the property.
Still, there are certain rules that apply to removing liens on the primary residences of borrowers. If you have a second mortgage, the loan can only be stripped if the value of the home is less than the amount you owe on the first mortgage.
Call Our Stripping Second Mortgage Attorney in Orlando Today
Stripping second mortgages is possible through bankruptcy, but the process can quickly become complex. At Florida Law Advisers, P.A., our Orlando stripping second mortgage attorney can guide you through it so you have the best chance of obtaining a successful outcome. Call us today at 1 (800) 990-7763 or contact us online to schedule a consultation and to learn more.