Can I wipe out my mortgage and still keep my house?

Posted On : June 15, 2010   By : RobG

You’re not serious are you?! Of course not. Your house serves as collateral to secure payment of your mortgage loan. If you don’t pay, the mortgage company can foreclose. If you have more than one mortgage and there is not enough equity in the house to secure full repayment of the first mortgage, then the second mortgage would in fact be wholly unsecured. In that case, the loan is really unsecured. However, the Bankruptcy Code does not allow stripping off of second mortgages secured by one’s primary residence in a Chapter 7 case. But, if you file for bankruptcy relief under Chapter 13, the wholly unsecured second mortgage may be stripped off. There are pros and cons to doing this, which can be better evaluated in the course of a professional Rights and Options Consultation.

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Posted in Bankruptcy FAQ