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Founded in 1999, Sabatini Law Firm, LLC, provides exemplary services for clients who are struggling to make ends meet and pay off debt.
We can help you take full advantage of the U.S. Bankruptcy Code, which may allow you to:
All prospective clients can begin with a complimentary case evaluation. Call or contact us online today.
“Attorney Sabatini listened to my concerns and helped me to understand how it worked and explained everything to help me make my decision. He was very kind and was understanding of the way I felt and he really put me at ease.”
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If your house is worth less than you owe on a first mortgage, and if you qualify for Chapter 13 bankruptcy, then you can use bankruptcy to completely cancel your second mortgage. Why? Because the U.S. Bankruptcy Code recognizes the reality of the financial situation.
If you were to surrender your home in a foreclosure, it would not sell for more than its worth. In other words, it would sell for less than what you owe on the first mortgage, and the second mortgage would be wiped out in the foreclosure sale.
The holder of the second mortgage company would receive nothing. And, because you filed bankruptcy, that second mortgage company would not be permitted to pursue you personally for the money.
For example, consider a homeowner with a house that is worth $80,000, but $85,000 is owed on the first mortgage (the older mortgage). If there is a second mortgage, then that mortgage can be canceled in a Chapter 13 bankruptcy case.
The amount that is owed on the second mortgage won’t matter. All that matters is that the value of the house ($80,000) is less than the amount that is owed on the first mortgage ($85,000).
This works the same way for third mortgages. If the sum of the first two mortgages is more than the value of the house, then the third mortgage can be canceled.
Only Chapter 13 offers this option. Chapter 7 will not allow you to eliminate a second and/or third mortgage. Keep in mind that you can only remove a second and/or third mortgage if you are upside down, meaning you owe more than what your home is worth.
Lien-stripping is simply another term for the above process (canceling a second or third mortgage through bankruptcy).
A lien is an entity’s legal claim to your property. It can be either:
During the lien-stripping process, the bankruptcy court orders the second or third mortgage lender to remove the lien they have on your property.
This process essentially converts the mortgage from secured debt (i.e. debt that is backed by collateral) to unsecured debt (i.e. debt that is NOT backed by collateral). The mortgage can then be discharged along with other unsecured debt once you complete your Chapter 13 plan.
Learn more from our attorneys at Sabatini Law Firm, LLC during a complimentary consultation. Call or contact us online to schedule yours today!
Your first conversation with an attorney to understand and evaluate your case is 100% complimentary.
With the combined experience of over 50 years between the attorneys of Sabatini Law Firm, LLC we leverage our knowledge and experience with the local trustees to get you optimal results.
You should never be left in the dark when it comes to your legal matter. From start to finish, we will keep you updated on the status of your case.
Board Certified in Consumer Bankruptcy Law, Attorney Sabatini is the only attorney with this certification with an office within 50 miles of Wilkes-Barre or Scranton.
216 North Blakely St.Dunmore, PA 18512
67 Public Square, Suite 1001Wilkes-Barre, PA 18701