If you are considering bankruptcy, you have a second mortgage on your home, and you live in New York, you need to ask your bankruptcy lawyer about lien stripping.
Lien stripping is part of a process that transitions your second mortgage from a secured loan to an unsecured loan. This option is only available under certain circumstances:
As part of the debt restructuring process (Chapters 11 and 13), your second mortgage can be turned into an unsecured loan (like your credit card debt). When working with your bankruptcy attorney to create a repayment plan, you should be able to determine if you qualify for lien stripping. If you do, your bankruptcy lawyer should be able to calculate a reduced percentage of payment based on whichever is larger – your actual income or the equity you have in any assets you own. This may allow your bankruptcy attorney to negotiate down the money you own on unsecured debt (including the second mortgage) to pennies on the dollar.
You will be responsible for paying down these negotiated payments during the bankruptcy process (which usually takes around five years). If you successfully complete your bankruptcy plan, your second mortgage may be considered completely discharged.
Nothing is ever easy when it comes to the law which is why you’ll need the right bankruptcy attorney by your side. Here are some challenges you may face:
If your case is dismissed before your bankruptcy plan is completed, your second mortgage, as well as the rest of your original debt, will now be due. The court treats dismissal as if your bankruptcy case never happened.
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 Ronald Weiss. He can work with you to find the best way to get you back on track and help you get your case started. Call 631-271-3737 and take the first step to a fresh start.
* To learn more about why liens cannot be stripped in Chapter 7 bankruptcies, review Dewsnup v. Timm, 502 U.S. 410 (1992).