Can I wipe out my second or third mortgage or my home equity line?
In some cases today we can wipe out a second or third mortgage or a home equity line through a Chapter 13 bankruptcy. In these cases, there cannot be one penny of interest in the second mortgage, third mortgage or equity line. For example: A home was purchased back in 2002 for $200,000 and the mortgage is for $200,000. Then 2004 the value increased to $250.000. The owner took out a home equity line or another mortgage for $40,000 since there was equity to cover that loan. Now, because of the property market crash, that home is worth $180,000. That means that the first mortgage is taking up all of the equity and there is not one penny of secured equity for the second loan. There was at one time but not today. In this type of case, we can file a motion to stip down this second loan in a Chapter 13 which means you would be wiping it out and still be able to keep your home. We cannot reduce the price of your first mortgage or second mortgage, but we may be able to strip down your second. Since this is a complex issue, call us for more information to see if you qualify for this type of cram down.
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