Stripping Off Mortgages in Chapter 13 Bankruptcy
Mortgages are often one of a person’s largest debts, making them vital parts of their repayment plan when filing for Chapter 13 bankruptcy. Fortunately, if a person has more than one mortgage and is filing for Chapter 13 bankruptcy, they may be able to apply for mortgage modification, which may potentially save them a substantial amount of money in the long run. Mortgage modification allows a person to “strip off” secondary mortgages under certain circumstances, allowing them to value that mortgage at zero.
If you’re thinking about filing for Chapter 13 bankruptcy, you may want to discuss your full range of options with a knowledgeable legal advisor before moving forward. For additional information about how you may be able to save money in your case, contact our Joliet Chapter 13 bankruptcy lawyers at the Law Offices of Stuart B. Handelman today at 815-722-2201.
How Does Stripping Off Mortgages Work?
A person who wants to strip off a mortgage first needs to qualify in order to be able to do so. For a person to qualify, they must:
- Have a second, or even third, mortgage
- Possibly have a home equity line of credit
- Have mortgages that completely exceed the value of the property
If any part of these second or third mortgages is covered by the home’s equity, the mortgages that cover that portion cannot be stripped off. However, when a person does strip off a mortgage, these loans shift from being considered secured debts to being unsecured debts. As a result, these loans may be handled differently and save you time, effort, and money.
Chapter 13 bankruptcy can offer a variety of solutions to someone looking to get a fresh financial start. If you believe bankruptcy may be right for you or want to explore your options, contact our Joliet Chapter 13 bankruptcy attorneys at the Law Offices of Stuart B. Handelman today by calling 815-722-2201.