Stripping a Second Mortgage

In Florida and across the nation, many homeowners have seen the value of their properties plummet below what is owed on their mortgages. This is especially true in the case of homes with second mortgages where the second lien exceeds the current value of the home. If you are in this position in Tampa, St. Petersburg, or Clearwater, you may be in default on home loan payments or facing a pending foreclosure. If you are facing overwhelming debt, part of which includes a second mortgage which you cannot now afford, you may be able to get the debt relief you need through a Chapter 13 bankruptcy filing which could result in the negation of your second mortgage.

To find out if your situation qualifies you for a second mortgage stripping by a bankruptcy court, you should consult with a bankruptcy attorney at Leavengood & Nash at your earliest opportunity. Our firm is devoted exclusively to the practice of debt relief, bankruptcy, and foreclosure defense, which makes us highly qualified to assist you.

Chapter 13 Bankruptcy and Second Mortgage Stripping

Many bankruptcy courts follow a rule set forth in the U.S. Bankruptcy Code which turns a lien which exceeds the value of the collateral to which it is attached into an unsecured debt. According to Section 506 of the Bankruptcy Code, any lien can only be deemed a secured claim if the asset on which it is based has a value sufficient to satisfy that lien. If your property has been devalued to a level less than what is owed on your second mortgage, through a Chapter 13 personal bankruptcy filing you may be able to legally have that lien stripped as a debt. In this scenario, the second mortgage lien holder becomes an unsecured creditor who can only seek payment of the debt through the bankruptcy court.

Chapter 13 is a useful tool for those in overwhelming debt who are facing foreclosure. Stripping a second mortgage through a Chapter 13 filing may make the difference between losing your home and saving it. By discussing your debt situation with a St. Petersburg bankruptcy lawyer at the firm, you can learn all of the available options you may have, including second mortgage stripping, which could put you back into financial control.