Removing a second mortgage in bankruptcy can be difficult, but it is possible in certain circumstances. This process is known as “lien stripping.” Here are the steps to remove a second mortgage in bankruptcy:
- File for bankruptcy: You must first file for either Chapter 7 or Chapter 13 bankruptcy.
- Determine the value of your property: The value of your property must be less than the amount owed on the first mortgage in order to strip the second mortgage.
- Motion to strip the lien: If the value of your property is less than the amount owed on the first mortgage, you can file a motion to strip the second mortgage. This motion asks the court to declare the second mortgage unenforceable and to remove the lien from your property.
- Court hearing: A hearing will be scheduled in front of a bankruptcy judge to determine if the lien can be stripped. The judge will consider the value of your property, the amount owed on the first mortgage, and any other relevant factors in making their decision.
- Confirmation of the Chapter 13 plan: If you filed for Chapter 13 bankruptcy, the lien stripping will be included in your repayment plan, which must be confirmed by the court.
It’s important to keep in mind that the laws regarding lien stripping can vary depending on the jurisdiction, and the process can be complex. It’s important to consult with a bankruptcy attorney to determine the best course of action for your specific financial situation and to ensure that the process is carried out correctly.