Second Mortgages and Bankruptcy

It is not uncommon for people who have fallen into financial troubles to take out a second mortgage on their home. Taking out a second mortgage on the home is not uncommon for people who find themselves in financial difficulty. This typically lowers their monthly payments or free up additional credit within the loan to make modifications to the home they cannot afford out of pocket. If financial hardship is involved, this does not provide any relief and simply delays the process of filing for bankruptcy.

Second Chance In Second Mortgages

As part of a bankruptcy proceeding, homeowners may be able to get rid of a second mortgage or home equity line of credit. This is called lien stripping. In order to have the mortgage discharged, there are a number of requirements that must be met. One of them must be that the value of the home has decreased to the point that any equity must now be repaid.an appraisal must show that the house’s fair market value is so low that if you sold it, you wouldn’t be able to pay off the second mortgage.However, you will not be able to discharge this debt if it turns out that even a small part of your equity is sufficient for the security of a second mortgage.

There’s a lot more headache involved with foreclosure on a single or double mortgage than many people realize. Whether you’re seeking financial help through Chapter 13 or Chapter 7, the process can be complicated.It is always advised to seek the counsel of a Dallas bankruptcy lawyer to assist you in making the best informed decision for you and the protection of your home.