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Underwater home, bankruptcy

#1 User is offline   Modern Muse 

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Posted 03 September 2011 - 09:01 PM

We've been told by a lawyer we could file chapter 7 or chapter 13. We have huge student loan debt, a 2nd mortgage a small car loan, a few outstanding medical expenses and one credit card with a balance. (we have other cards with 0 balances).

We were told by a lawyer that we could declare bankruptcy, have the Lien on our home "stripped" and we could then start making payments on the first mortgage again and stay in the home. The 2nd mortgage could not pursue us because the 2nd mortgage would be dismissed in bankruptcy. The first mortgage company could not sue us because of the lien stripping... And if we made timely payments they could not foreclose on us.

I guess a law was just passed that "lien stripping" is now acceptable.

Has anyone else heard of this?

We are not sure if we still want to stay on our home because of the costs... However, "lien stripping" would make the house affordable... And we could still walk away and let mortgage company 1 foreclose on us...

This seems to be a huge change... Before we were told that you could not declare bankruptcy and stay in the house. Now apparently you can.
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