Filing Chapter 13 Bankruptcy Can Remove Second Mortgages
In today's real estate market, it is not unusual for a house to be "under water" financially, especially if the mortgagee has taken out a second mortgage. However, many homeowners don't realize that a second mortgage can in some cases be stripped from the deed so that it is no longer considered a secured debt.
At the law firm of Michael M. Malinowski PLC in Grand Rapids, Michigan, I offer a free initial consultation to answer your questions about stripping second mortgages. I am a lawyer with 25 years of experience representing homeowners in western Michigan.
What Does It Mean to Strip a Second Mortgage?
When a bank lends you money, it retains a security interest in your home. If you stop making payments, the bank has a right to take your property.
A second mortgage is also secured in the form of a lien. However, if your home has declined in value, you may be able to strip the lien by filing Chapter 13 bankruptcy. If the lien is stripped, then the bank that gave you the second mortgage no longer has a secured interest in your home.
Here's an example of how lien stripping works:
| Fair market value of your home | First mortgage | Second mortgage |
| $350,000 | $360,000 | $75,000 |
In this example, the $75,000 second mortgage could be stripped from your deed and treated as an unsecured debt in your Chapter 13 repayment plan. As an unsecured debt, you may only have to repay a small percentage of the amount you owe.
Free Bankruptcy Attorney Consultation
You may not have to live with the stress of making second mortgage payments. For a free consultation about lien stripping, call me, lawyer Mike Malinowski, at 888-339-6017 or fill out our contact form on this Web site. My law office is in Grand Rapids, Michigan.
