Chapter 13 Bankruptcy and Stripping Mortgages
A person filing for Chapter 13 bankruptcy may be concerned about the mortgages they have on their home. These loans are considered secured debt that is directly tied to the house itself, making any lapse in payment a serious concern. However, by filing for Chapter 13 bankruptcy protection, a person may be able to reduce the burden of these debts and move forward.
If you have been considering a bankruptcy filing, it is advisable to consult with an experienced legal advisor before making a final decision. To learn more about the possible advantages of Chapter 13 bankruptcy protection, contact Florida Chapter 13 bankruptcy lawyer Ryan J. Really, Attorney at Law, PLLC, at (239) 237-0675.
Reducing Mortgages in Chapter 13 Bankruptcy
When a person strips a mortgage in Chapter 13 bankruptcy, they are effectively having a mortgage changed from a secured debt to an unsecured debt. This means that the debt is no longer attached to the house and may be discharged when the repayment plan for Chapter 13 proceedings is complete. However, to qualify for this kind of legal action, a debtor needs the following:
- Multiple mortgages on a single property
- If not multiple mortgages, then a home equity line of credit
- Mortgages beyond the primary loan completely exceed the home’s value
Stripping a mortgage is only available for second and subsequent mortgages. A person cannot strip their primary mortgage, as the value of the loan is still technically tied to the home. Secondary mortgages that completely exceed the value of the home, on the other hand, are not actually represented by the home’s equity.
Contact Us
If your debt has become an overwhelming concern for you, bankruptcy might be a desirable option. However, you should know your options before filing. Contact Florida Chapter 13 bankruptcy attorney Ryan J. Really, Attorney at Law, PLLC, by calling (239) 237-0675 today.
