Have you taken out a second or third mortgage on your home? Are you now struggling to keep up with the payments or have stopped making payments altogether? If so, according to the laws of New York, the lien holders would be well within their rights to initiate the foreclosure process even if you pay your primary mortgage in full each month. How can you save your home?
Did you know that you may have the ability to have second and third mortgages discharged? This probably sounds too good to be true, but it may be possible through a process call lien stripping.
How does lien stripping work?
If your home's value is lacking and you have little to no equity built up, the bankruptcy court may consider a second or third mortgage an unsecured debt. Such debts are eligible for discharge through bankruptcy. In order to keep your home, the type of bankruptcy you would have to pursue is a Chapter 13. If approved, you will not immediately receive a discharge for the debt. First, you will have to successfully complete your repayment plan. This can take three to five years.
Do I qualify?
There are never any guarantees that a bankruptcy petition will receive court approval. You will have to provide your financial information as proof that you cannot meet your debt obligations as they currently stand. The court will then get to decide if you qualify. An experienced bankruptcy attorney can review your situation before you file in order to help you determine if taking this step really is your best option.
What happens after the lien is stripped?
Creditors can no longer hound you for payment. This can provide you with some relief. You may also request to have the debt removed from your credit history. This may be something that a lender is reluctant to do, but it is your right to make the request. You also have the right to request that the lender send you the promissory note or deed of trust, whichever applies to your situation.
Is the lien stripping process easy?
Not necessarily. When you file for bankruptcy, creditors have the right to contest the filing. Going up against creditors alone is never easy. However, with help you can do what is necessary to save your home from foreclosure and improve your economic circumstances.