Legal Question in Bankruptcy in Georgia
i understand that i can discharge a second and 3rd mortgage in a chapter 13 bankruptcy as long as the value of my first is less than what i owe on it. my question is do i have to be current on the second and 3rd mortgages in? i am current in my payments on the 1st mortgage.
1 Answer from Attorneys
Your understanding is somewhat incorrect.
In this circuit, courts have allowed lien stripping where a debtor establishes to court satisfaction that there is no equity whatsoever in the 2nd or 3rd mortgages. (That must be proven and is not a slam dunk where the numbers are close).
But doing that does not necessarily discharge the debt. It renders the lien unenforeceable. In most chapter 13s there are payments to unsecured creditors so some of the debt will be paid and not discharged. Even if it is, that discharge requires successful completion of the case.
Being current on the 2nd and 3rd would not affect whether lien stripping would work.
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