Individuals who are struggling to make payments on a second or third mortgage may find relief through lien stripping, which occurs only in Chapter 13 bankruptcy. Chapter 13 bankruptcy allow a debtor to strip a second mortgage from the home’s title. The court essentially reclassifies the secured second mortgage, giving it the same status as a credit card. In certain instances this allows the debtor to repay the second mortgage for “pennies on the dollar.” The result of lien stripping is a debtor can often repay all their unsecured credit and their second mortgage for a payment lower than the original second mortgage payment.
Lien stripping is especially popular today because of the housing crisis and its effect on property values. At Thinking Outside the Box, Inc., we can help you decide if lien stripping can help you save your home and reduce your debt. To learn more about stripping a second mortgage, contact a Warrenville attorney today.