Stripping a Second Mortgage

In some cases, filing bankruptcy may eliminate a second mortgage that is no longer supported by the market value of the home.  Your eligibility depends on whether your first mortgage is more than the fair market value of your home.  This option has the can substantially reduce overall debt. For example, if you have a second mortgage or a home equity loan that can be “stripped” or eliminated if there is no longer equity in your home. Stripping a second mortgage thru bankruptcy can eliminate secondary mortgage debt on your home as long as no equity exists in the home. As we all very well know, the actual value of homes in the state of Florida have fallen significantly in the last several years. Many homeowners owe more on their homes that they are currently worth. A bankruptcy can be of significant value if you have no equity in your home and have a second mortgage. For example, if you have a home that has a 1st mortgage of $100,000 dollars and a second mortgage of $50,000 and the home is worth $90,000 you would potentially be able to strip off the entire second mortgage debt of $50,000. You would still owe the balance of the 1st mortgage. Lien stripping is dependent on each individual situation so it is best to consult with a bankruptcy attorney regarding your financial situation and the value of your home.