In the current real estate market, many people may be
able to keep their homes while eliminating their
second mortgages entirely. This process is commonly
 called "lien stripping" and is available when the value
of your house is less than what you owe on your first
mortgage. In such cases, the second mortgage is wholly
unsecured because there is no equity in the house to
cover any portion of the second mortgage.Permanent
mortgage modifications virtually never happen.
Don't rely on empty promisses from your mortgage
company. More on this from
CNN Money (click here).
The only realistic way to save your house
when foreclosure has already been initiated is through
Chapter 13 bankruptcy. Even if you don't qualify
to strip your second mortgage, mortgage arrearages can
be paid over five years in a bankruptcy reorganization
plan. The bankruptcy must be filed with the court
prior to the sale date set by the public trustee in the county where
your home is located. Filing the bankruptcy stops the sale and
allows you to include the past due payments in a bankruptcy
reorganization plan.
Mortgage
stripping is only available in a Chapter 13 case.
In the 1980s, this was accomplished in Chapter 7 until
the U.S. Supreme Court ruled otherwise so now Chapter 13
is the only option.
However, if you have a large second mortgage, it is
often well-worth filing a Chapter 13 plan and in most cases making relatively
small payments in exchange for the elimination of your
second mortgage. One of the common misconceptions
people hold about filing Chapter 13 is that creditors
must be repaid in full. In the vast majority of cases,
creditors only receive pennies on the dollar in Chapter
13.
In summary, whether or not you can eliminate
your second mortgage, a Chapter 13 bankruptcy will enable you to
forget about all past due payments and start fresh making your
regular monthly payment starting on the month after your case is
filed. Contact us for an office visit and all the details.
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