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. This process is known as lien stripping, and it can significantly reduce the amount of debt owed to creditors. In Chapter 13 Bankruptcy, a filer must submit a repayment plan to the court in order to reorganize their financial obligations. Depending on their financial situation, the creditor may reduce the amount of the loan or agree to a reduced payment plan. If your home has lost value and your first mortgage exceeds the current value of the property, a Chapter 13 Bankruptcy can strip the second mortgage. When you file for Chapter 13 bankruptcy, the court evaluates the market value of your home and the amount of your first mortgage. If the amount owed on your first mortgage is more than the home is worth, you can strip away the second mortgage. This means that the second mortgage will no longer be a part of your debt. Even if you can strip the second mortgage, you will still have to continue to pay the first mortgage. It is important to understand that stripping a second mortgage does not mean that you no longer have to pay it – you will still be responsible for the amount that was originally owed. In Washington, to strip a second mortgage, you must be able to demonstrate that your home has lost enough value so that the amount left over after the first mortgage is paid off is less than the amount of the second mortgage. This is an option that can help you get out of debt and is an important part of the Chapter 13 process.

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Is it possible to strip a second mortgage in Chapter 13 Bankruptcy?

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