You may be able to use a Chapter 13 bankruptcy case to eliminate your second mortgage, home equity line of credit, or judgment lien. If your house is worth less at the time you file your Chapter 13 bankruptcy case than you owe against your first mortgage, you may be able to include a provision in your Chapter 13 reorganization plan to treat the second mortgage as an unsecured debt. As an unsecured debt, the second mortgage gets paid at the same rate as the other unsecured debts such as credit cards and medical debts. Unsecured creditors in Chapter 13 cases can be paid between 0% and 100%, depending on what you can afford. At the end of the Chapter 13 case after you have made all of your plan payments and complied with the other requirements of the Chapter 13 plan, unpaid unsecured debts that are eligible for discharge will be eliminated and you will no longer be responsible for paying those debts. In order to find out whether you can use Chapter 13 to relieve you of your obligation on your second mortgage, home equity line of credit, or judgment lien, it is important to consult a bankruptcy lawyer. Before your consultation with the lawyer it is a good idea to do some research to try to determine the value of your house. You might consider asking a real estate agent to prepare a comparative market analysis or using one of the tools available online that provide property value estimates based on the sale price of similar houses in the area.
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