Getting Rid of a Second Mortgage

I thought it would be a good idea to create a post about Lien Stripping.  This option is the main reason why I personally decided to go with a Chapter 13.  You cannot lien strip in a Chapter 7.  

Red-Debt-Calculator-House1

I thought since I am going to go into BK and KILL my FICO then I might as well get rid of my worst offending debt and that’s the HUGE Second Mortgage I carry around on my back.

debt on back

Also, I dread moving AND because rents cost more than my first and my HOA combined I decided that in the long run, if I can manage a payment plan through the Chapter 13, then this is the way for me to go.

In FIVE years, (Sixty Payments) I will come out having learned to live WITHOUT ANY CREDIT CARDS and be debt free!   Now at my age, you don’t need to tell me the trick is NOT to go into debt again… and you don’t have to tell me that having no equity sucks!   I learned this the hard way.

So when I am almost 60 years old, I will finally have my housing costs at the 35% of my income where they are supposed to be!

I am not a lawyer and I am only sharing what I think I know!  So don’t take my word for anything other than a debt ridden single mom trying to find my way back from the depths! 

Here is the NOLO website that can really answer all your questions if you are considering this debt restructuring option.

http://www.nolo.com/legal-encyclopedia/rid-second-mortgage-chapter-13-bankruptcy.html

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11 thoughts on “Getting Rid of a Second Mortgage

  1. That option was never explained to us by either the first attorney we consulted, nor the one we ended up with. That would have been nice to have known to consider, as we have a $60,000 HELOC and our house is underwater after 2008.

    • Thats what my second and heloc are combined! Besides being financially unsolvent and not having much choice, I just know I would lose my condo if I dont get rid of the second because my housing costs are way over 35% of income, more like 60%! I have to do drastic measure to save it

  2. I think you’ve made the right choice. Ch 13 sounds like the better option in this particular case because you want to be owning hard assets in this uncertain economy to hedge your risk against inflation. Sorry to hear about your whole situation. Many people are in the same boat as you. But you seem like a pretty strong individual, I have a feeling things will only get better from here. 5 years will fly by very quickly. I’m sure if you keep your goals in mind you will achieve more than what you thought was possible (~_^)

    • Thank you Liquid.. I hope to be strong enough for this! I stopped by your blog and left a post, not sure if it whent thru, but I love your pics!! They are not grainy at all. You have a lot of good info and I invite everybody to go check it out! I am going to add you to my blog roll and support you as well! I sure hope it goes by fast. Not this friday but next is the appraisal and after that the wheels start turning!

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