mortgages & bankruptcy
Chapter 13 - stop foreclosure & catch-up
If you are facing foreclosure, a bankruptcy filing will stop a creditor from selling your house as late as the day before a foreclosure sale. A Chapter 13 repayment plan will allow you to catch up on missed payments and spread out the arrearage over a period of up to six years without additional late fees after filing. You must also have a steady income and meet other requirements prior to filing. All of your debts will be included in the plan, which will be set up based on your ability to pay.
chapter 7 - walk away & start over
If your mortgage is "underwater" and you meet certain filing requirements, it might make financial sense for you to file a Chapter 7 bankruptcy. Surrendering your home in Chapter 7 will, in most cases, remove your liability for all mortgages and other liens secured by your home.
get rid of 2nd mortgage or judgment lien
Not only can your mortgage be brought current in a Chapter 13, you can also get "strip off" a second and/or third mortgage (and/or judgment lien on the home) if there is no equity in your home to secure it. This "strip off" will remove the lien on the property, and the stripped mortgage will be treated like any other credit card debt or medical bill. This means that it will be discharged after completion of your Chapter 13 plan after being paid only what you are able to afford.