Can I get rid of my second mortgage under chapter 13?
Due to the downturn in the economy and the drop in real estate values many homeowners do not have any equity in their homes. Chapter 13 bankruptcy has increasingly been used as a tool to remove the second or third mortgage in the recent past. If the value of your house is less or equal to the loan balance of the first mortgage you can remove the second mortgage based on the fact that there is no equity in the second mortgage. Consult with a bankruptcy attorney to see if you can remove the second mortgage and save hundreds of dollars in monthly payments.
Other than the bankruptcy code there is no law that forces the banks to reduce your principal balance of your loan which is why most people who ask their banks for a principal reduction are being denied. Typically banks only grant a temporary interest rate reduction and only if you qualify under the bank’s terms.Therefore more and more people are using the bankruptcy law to help them force the banks to reduce their principal and to be protected by the bankruptcy court.