Under a 1992 decision by the U.S. Supreme Court called Dewsnup v. Timm, a second mortgage or lien stripping can only be accomplished in a Chapter 13 bankruptcy. Chapter 13 is intended for people with regular income or earnings to pay back a portion of their debts over time approved by the bankruptcy court.
In the Northern District of Texas, the process begins by filing a petition for Chapter 13 bankruptcy. You must also file a plan with the court to repay creditors all or part of the money that is owed to them using your future income. Depending on your income a repayment plan can take three or five years. In order to remove an unsecured second mortgage, the fair market value of the home must be less than the balance owed on the first mortgage.
The plan must be approved before it can take effect. If the bankruptcy court grants the motion, it will issue an order directing the holder of the second deed of trust to remove the lien from the home. The type of loan you hold does not matter during this process.
For a free consultation to see if you qualify for the removal of a second mortgage on your home, contact bankruptcy law firm, Fears | Nachawati, toll free at 1.866.705.7584 or e-mail us at info@fnlawfirm.com.