Am I Required To Pay My First and Second Mortgages in Full?
In a Chapter 13 bankruptcy, you may be able to file a LAM motion an Adversary Proceeding against your second lender (depending on your judge) to remove the second mortgage from title. Under this scenario, you would own your home free and clear of the second mortgage.
Chapter 13 and 11 debtors have the ability to "lien strip" certain secured debts down to the value of the collateral securing the debt. As a result, a debtor can eliminate liens by paying secured creditors only the value of the collateral, even if the amounts owed are far greater than the value of their collateral. In this way, the value of your indebtedness may be brought closer to the Fair Market Value of the property.
For example, if you own and live in a home with a fair market value of $250,000, and you have a first mortgage with a balance of $300,000, and a second mortgage with a balance of $100,000, you can strip the second mortgage from title in a Chapter 13 bankruptcy. You will no longer be personally liable for the second mortgage, no longer have to pay anything to the second mortgage company, and the lien will be removed from title upon completion of the Chapter 13 plan.
Vokshori Law Group provides Bankruptcy assistance to individuals and businesses serving the entire Los Angeles County.
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