Can I remove a second mortgage in Chapter 7?
Unfortunately, a second mortgage cannot be removed in Chapter 7 bankruptcy. However, some liens can be removed. If you have a judgment lien against you that was recorded as a lien on your house, you can remove it under Section 522(f) of the Bankruptcy Code. Prior to filing bankruptcy, if you own a home, you should pull records from your county recorders office to determine if any liens have been placed on your home. To remove the judgment lien, the “lien must impair the exemptions” taken on the property. A lien impairs an exemption to the extent that the value of the property is less than the sum of the lien, all other liens on the property, and the amount of exemptions Debtor could claim if no liens attached to the property. Your attorney will be able to make this determination for you.
Can I remove a second mortgage in Chapter 13?
When you file Chapter 13, and have a second mortgage, you should talk to your attorney about removing the second mortgage. In some cases, the second mortgage lien can be removed from your home under Section 506 of the Bankruptcy Code if you complete the Chapter 13 case. There are certain rules to remove the second mortgage. To avoid the lien, the value of the home must be less than the balance of the first mortgage. In other words, the second mortgage must be totally unsecured.
Can I remove a HELOC in Chapter 7 or Chapter 13?
Like the second mortgage in Chapter 7, a home equity line of credit (HELOC) cannot be removed in Chapter 7. Additionally it cannot be removed in Chapter 13.
Can a first mortgage ever be removed in bankruptcy?
No. You must continue to pay your mortgage to keep your home. Additionally, if your second mortgage HELOC, or judgment liens are not specifically removed in bankruptcy, and you do not have an order from the court removing those liens, then those liens will stay on the property. You must pay or settle those liens. If you do not, those liens will stay on the property and can cause you problems in the future. They could potentially attempt to foreclose on your property as well.