What Will Happen to My Second Mortgage During Bankruptcy?

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What Will Happen to My Second Mortgage During Bankruptcy?

If you are considering financial ruin, you've got a 2nd mortgage on your private home, and you live in New York, you want to invite your financial ruin lawyer approximately lien stripping.

 What is Lien Stripping? 

Lien stripping is part of a technique that transitions your 2d mortgage from a secured loan to an unsecured loan. This choice is best available under sure circumstances:

  • You are affirming Chapter 11 or 13 Bankruptcy. Lien stripping is not allowed beneath Chapter 7.*
  • The total assessed cost of your house is LESS than the cost of your first loan. For example, if your house is presently well worth $four hundred.000.00, and you owe $450.000.00 on your number one loan and $50,000.00 for your 2d, you will be capable of have your 2nd loan stripped.

 How Does This Process Work?

As part of the debt restructuring method (Chapters eleven and 13), your 2d loan may be changed into an unsecured mortgage (like your credit score card debt).  When operating with your bankruptcy legal professional to create a reimbursement plan, you should be able to determine in case you qualify for lien stripping. If you do, your bankruptcy legal professional should be able to calculate a discounted percentage of payment based totally on whichever is greater – your actual earnings or the fairness you've got in any belongings you personal. This may additionally permit your bankruptcy lawyer to negotiate down the cash you very own on unsecured debt (inclusive of the second loan) to pennies at the greenback.

You may be responsible for paying down these negotiated payments throughout the financial disaster system (which normally takes around five years). If you successfully whole your financial ruin plan, your 2d loan can be taken into consideration completely discharged.

Learn more about Chapter 13 Bankruptcy Basics here

Learn more about Chapter 11 Bankruptcy Basics here 

 What Could Go Wrong?

Nothing is ever easy in relation to the law which is why you’ll need the proper bankruptcy legal professional with the aid of your side. Here are some demanding situations you may face:

  • The court docket will send an appraiser to your property to decide its present day cost. That appraisal may be higher than you anticipated. Using the instance above, your own home may be appraised at $455,000.00. This could make lien stripping your 2d mortgage impossible.
  • The holder of your second mortgage may additionally reject your financial ruin plan. Any lender you owe money to has the right to provide an explanation for to the court why their loans should be paid in full. This is why having a bankruptcy attorney who is an experienced negotiator is so critical. And if the court docket feels that your reorganization plan is fair, they can pressure a lender to simply accept the plan in what’s referred to as a cramdown.    
  • Your financial ruin case may be brushed off before the of entirety of your plan. Your case could be dismissed for some of motives which include:
    • You have been proven to have dedicated fraud
    • You stopped paying in line with your plan
    • You didn’t report the right files and didn’t pay your fees
    • You didn’t attend the necessary training courses

If your case is disregarded earlier than your financial ruin plan is finished, your second loan, in addition to the rest of your authentic debt, will now be due. The court docket treats dismissal as though your financial ruin case never happened.

What to Do Next

Thousands of Americans just like you are struggling with debt. Choosing to restructure your debt via Chapter 11 or 13 bankruptcy may be a way to reclaim control of your life. For a free consultation, reach out to New York bankruptcy lawyer Thousands of Americans just like you're struggling with debt. Choosing to restructure your debt through Chapter 11 or thirteen financial ruin can be a manner to reclaim manipulate of your existence. For a free session, attain out to New York bankruptcy lawyer Ronald D. Weiss, P.C. He can paintings with you to discover the satisfactory way to get you again on target and assist you get your case started out. Call 631-271-3737 and take step one to a clean begin.

* To examine greater approximately why liens can't be stripped in Chapter 7 bankruptcies, evaluation Dewsnup v. Timm, 502 U.S. 410 (1992).



Contact the Law Office of Ronald D. Weiss, P.C.

EMAIL OR CALL FOR A FREE CONSULTATION:

📞 : (631) 271-3737

📧 : Weiss@Ny-Bankruptcy.Com

🌎 : https://www.ny-bankruptcy.com/

MELVILLE MAIN OFFICE LOCATION

📍 : 734 Walt Whitman Rd #203, Melville, NY 11747

Location: 150 Motor Pkwy Suite 401, Rm 424, Hauppauge, NY 11788, USA

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