Is it possible to strip a second mortgage in Chapter 13 Bankruptcy?
Yes, it is possible to strip a second mortgage in Chapter 13 Bankruptcy in California. When a person files for Chapter 13 Bankruptcy, they are able to reorganize their debts in order to pay them off in a more manageable way. This includes eliminating second mortgages on a property. When a debtor files for Chapter 13 Bankruptcy, they are able to create a repayment plan which will outline how they will pay off all of their outstanding debts. This repayment plan will usually last for three to five years. During this time, the debtor can propose to eliminate a second mortgage on their property. It is important to note that if the debtor’s property is worth less than the amount of their secured debt, then the second mortgage can be stripped in Chapter 13 Bankruptcy. For a second mortgage to be stripped in Chapter 13 Bankruptcy, the debtor must show that the amount of their secured debt is greater than the value of their property. Once this is shown, the lender must then approve the debtor’s repayment plan, which will include the stripping of the second mortgage. If the repayment plan is approved, the second mortgage will be eliminated. Therefore, it is possible to strip a second mortgage in Chapter 13 Bankruptcy in California. The debtor must show that their secured debt is greater than the value of their property and the repayment plan must be approved by the lender in order for the second mortgage to be stripped. Once this is done, the second mortgage will be eliminated.
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