You Can Get Relief From Your Second Mortgage

Image courtesy of renjith krishnan / freedigitalphotos.net

Homes need maintenance and often homeowners don’t have the money to do expensive upgrades like adding a new cooling system or fixing a leaky roof.  Home maintenance can be costly and taxing.  You have to hire a contractor, check on permits and then live through the hassle of living in a home that is under repair.  Many will be forced to take out a second mortgage or get a home equity line of credit to meet their financial needs. 

Sadly, some homeowners not only face a home that needs repairs (and the headaches that go with it) but they also owe more on the home than it is worth.  Loan modifications may be out of the homeowner’s reach due to their credit problems.  Short sales can take months and leave the homeowner searching for a new place to live.  Many homeowners don’t want to leave and invest in the repairs in anticipation of living in their homes for the rest of their lives.  But circumstances such as a lost job, health crisis, divorce or other crisis may have impacted their ability to pay their bills. 

A faster option than a short sale or lengthy bank negotiation for a loan modification is available to homeowners that may seem like a miracle.  A homeowner can get out of the second mortgage or home equity line of credit and still keep their home.  It’s called “stripping the lien” and it’s one of the benefits of a Chapter 13 Bankruptcy that may be possible for your situation. 

Here’s how it works: Once you file a Chapter 13 Bankruptcy, the trustee overseeing the plan can eliminate the second mortgage or home equity line of credit if your home is worth less than your first mortgage.  But that’s not the only benefit.  If you are behind on your first mortgage, the bankruptcy trustee can give you up to 60 months to catch up on your payments—without paying any interest!  Here’s another benefit—this can also apply to third mortgages.  However, it does not apply to first mortgages.

In addition, a Chapter 13 Bankruptcy can eliminate other debts you may owe such as credit cards.  This will give you additional money to help catch up your mortgage payments.

You don’t have to lose your home because of a crisis or credit problems.  Our firm has helped hundreds of clients work through their financial challenges and keep their home with options that are right for them.