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What if my house is worth less than I owe on my first mortgage? Can I eliminate the second mortgage or HELOC?
in VIDEOS
If your house is worth less than you owe on your first mortgage and you otherwise qualify for a chapter 13 bankruptcy, the second mortgage, if you have one, can be “stripped.”
Eliminate second mortgages and HELOCs
The bankruptcy court recognizes that in a theoretical foreclosure, the sale price would be less than is owed on the first mortgage and the second mortgage would get nothing.
No equity available for the second mortgage- So strip it
So, when the second mortgage is wholly “undersecured” it can be “stripped.” That means you can keep the house and get rid of the second mortgage. Once stripped and at plan is completion the lien on your home and the personal obligation to pay money are both gone forever.
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