Getting Rid of Your Second Mortgage in a St. Louis Chapter 13


It is possible to strip a second mortgage (or any junior lien) off of your house in a St. Louis Chapter 13 bankruptcy.  This is, of course, one the major advantages of filing a Missouri Chapter 13.  Assuming that certain conditions are met, reducing your debt in this way can be achieved.

Let’s assume for the sake of example that you have a home which is secured by two separate loans (a first and second mortgage).  If the fair market value of the home is less than the amount owed on the first mortgage (in other words, the house is considered ‘upside down’), then there is no equitable support for the second mortgage.  Why is there no equitable support for the second mortgage in such a situation?  Because if you sold the house in which the FMV is less than what is owed on the first mortgage, then the junior lien holder would receive no proceeds from the sale.  When this type of condition exists, the court allows you to strip (or get rid of) the second mortgage in a St. Louis bankruptcy.

To give this example even further clarity, let us assume that you owe $85,000 on your first mortgage, and another $15,000 on your second mortgage.  But the fair market value of your home is only $70,000.  In this scenario, the value of the home is less than what is still owed on the first mortgage.  So if the house were to sell at $70,000, the first mortgage company would receive the entire amount, leaving the second mortgage company with nothing.  It is because this type of situation would exist that the court allows for a junior lien to be stripped off the house in a Chapter 13.

Of course, getting rid of a second mortgage requires a great deal of knowledge and experience.  And choosing the right lawyer to achieve this goal is very important.  The St. Louis bankruptcy attorneys at The Law Office of Jennifer Alter-Rieken have stripped many liens and mortgages over the years.  This has reduced the level of debt for people we have helped by tens of thousands of dollars.  Our staff is prepared to assist you in this process, and get you back on solid financial ground.  

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