Stripping Second Mortgages in Chapter 13 Bankruptcy

For many people, buying a home is the largest financial investment they will ever make. And at times, taking a loan out of your home’s equity is the best option when you need relatively quick access to a large sum of cash.

But can anything be done if you find yourself struggling financially, unable to keep up with your mortgage or other payments? The answer is yes. Stripping the second mortgage on your home may be a viable way to clear your debt, giving you the financial breathing room you deserve. And at Todd Cushner & Associates, P.C., our bankruptcy litigation experts can help accomplish this to get you on the road toward financial stability.

Getting Rid of Your Second Mortgage

Second mortgages, also known as junior mortgages or Home Equity Lines of Credit (HELOCs), are commonly acquired due to a variety of life scenarios. Maybe you needed the money for home improvements or repairs. Or perhaps your child was accepted into a prestigious college with high tuition costs. Whatever the case, it is not always possible to be financially prepared for unexpected events making it difficult to afford your second mortgage payments later in life. Fortunately, you may be able to get rid of your second mortgage payments in Chapter 13 bankruptcy.

Home mortgage calculation representation

Can I Get Rid of My Second Mortgage Payments?

Over the years, home property values tend to fluctuate due to a number of factors out of your control. And when it comes to filing for Chapter 13 bankruptcy, a lower home appraisal value can actually be a good thing. If that’s the case for you, Cushner & Associates will prepare what is known as a “Pond motion” which will allow us to eliminate your second mortgage.

If your home has been appraised at a value less than the balance of your first mortgage, you can most likely benefit from stripping your second mortgage in Chapter 13 bankruptcy. Also referred to as lien stripping, clearing your second mortgage payments can potentially save you tens of thousands of dollars. When filing for Chapter 13 bankruptcy, your second mortgage is considered a nonpriority unsecured debt. This debt classification gives you the ability to pay off your mortgage using an affordable Chapter 13 payment plan.

What If I Have a Third Mortgage?

It may also be possible to clear your third mortgage debts in Chapter 13 bankruptcy. As long as the value of your first and second mortgage balances are more than your home’s market worth, you can strip your third mortgage in Chapter 13 bankruptcy.

Home mortgage weighed against money

A Trusted Name in Debt Relief

With more than 18 years of experience, the bankruptcy attorneys of Todd Cushner & Associates have helped many individuals and families in and around Westchester County successfully get rid of their junior mortgage payments. Our team of bankruptcy experts has the knowledge needed to effectively navigate you through the Chapter 13 bankruptcy litigation process. Contact us today to schedule a free consultation and take the first steps toward financial freedom.

 
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