A 2nd MortgageSecond mortgage
Elimination of second mortgages in Chapter 13 Insolvency
When your home has depreciated in value since you purchased it, a 13 month mortgage petition can help you get your second mortgage off. To do this, a procedure named "lien stripping" is used. "Continue reading to find out how you can use mortgage striping to strip your second mortgage from your home.
How is the removal of pledges? It is a 13 chapters insolvency wrangling utility that allows there to be individuals who are standing on their head (meaning that your mortgage will exceed the value of your home) on their home to get rid off their junior loans like second or third mortgage. By means of a pledge stripe, the insolvency tribunal substantially repossesses your second mortgage (which is a collateralized mortgage where the lender can exclude on your belongings if you miss your payments) and transforms it into an unsecured mortgage (just like a credit card mortgage ) by ordering the lender in order to take its pledge off the property. 2.
What does Lien striping do? The only time you can cancel your second mortgage or other security right is if the amount of the security right on the land exceed the fair value of the home. So for example, if you have a first and a second mortgage on your home, your first mortgage must be more than what your home is worth before you can get your second mortgage out.
When you have three mortgage types, you can take out both your second and third mortgage if your first mortgage is greater than the value of your home. But if your home is more valuable than your first mortgage alone, but not more than the combination of your first and second mortgage, then you can only take out your third mortgage.
Suppose your home is $200,000 and you have a first mortgage of $250,000 and a second mortgage of $50,000. If this is the case, since your first mortgage is larger than your home value, you can deduct your second mortgage. Similarly, if you had a third mortgage of $30,000 in the above example, you could get rid of that third mortgage.
But if your home was $275,000 valuable, then you have equities above and beyond your first mortgage, so you cannot remove your second mortgage. However, since the cumulative total of your first and second mortgage ($300,000) is greater than $275,000, you can still wipe off your third mortgage. When' s my second mortgage due?
A second mortgage (or other junior lien) that you acquire will be considered a non-priority unsecured indebtedness when you enter your insolvency. Straight as medicine or approval cardboard indebtedness in section 13, you don't person to kind commerce on this indebtedness region your proceeding. Instead, you are paying a part of this unfunded debt through your Chapters 13 schedule (usually a very small amount).
When you finalize the schedule, everything that remains on the mortgage is unloaded (erased). All this means that when you submit for your 13th mortgage, you immediately get the advantage of not having to repay your second mortgage. But the second mortgage will not be taken out of your home until you finalize your schedule and get a relief.
When your case is discharged before you finalize your insolvency schedule, your second mortgage will not be pulled out. For most counties, you can only use the pledge removal in section 13 of the Insolvency Act. If, however, you are living in Alabama, Florida or Georgia, you may be able to take away Junior Mortgages in Section 7 of the Insolvency.
For more information, read our information on the elimination of junior mortgage and lien in section 7.