Some people have second mortgages because they attempted to consolidate or pay off their other debts, and took out a second mortgage on their home in order to be able to pay those debts. Other people have second mortgages because they don’t want to have to pay PMI. If you don’t have enough equity, you can avoid PMI, if you get two loans from the beginning, one for 80% and one for 20%, so the PMI charge is avoided each month.
Although not a second mortgage, there can be second liens or third liens that can be brought on by judgments, and those are considered involuntary. If someone filed a lawsuit against you and they were successful, they can put a lien on your house, and if they don’t get paid by you, then they can eventually take your house or get their money when your house is sold.
Under the bankruptcy code, Chapter 13 does allow for the removal of the second mortgage, if the appraised value of the house is less than the amount owed on the first mortgage.
Lien stripping is a process by which we ask the court to remove the lien and treat the second mortgage or the judgment lien as if it was an unsecured debt, which would be similar to a credit card or a medical bill, as opposed to a lien, which is attached to secure the property.
If the court determines that the second mortgage can be stripped, then it remains until the Chapter 13 is completed and a discharge is rendered.
The actual second mortgage can only be stripped in a Chapter 13. If it is a non-consensual or involuntary lien, like a judgment, then it can be done in either Chapter 7 or Chapter 13.
For more information on Getting Rid Of Second Mortgage In Ohio, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (937) 247-6447 today.