Monday, June 22, 2009

Can I Get a Principal Reduction on My Mortgage?

I get this question from many of my clients. And the answer, of course, is - it depends. (Remember you are talking to a lawyer here.) It is extremely difficult to get a reduction in the principal balance of your mortgage in a loan modification. Sometimes it happens with a second mortgage but rarely with a first mortgage. In cases where a first mortgage is reduced - it usually involves litigation, a very expensive proposition. One way to eliminate a second (or third) lien on your home or investment property is to strip the lien through a Chapter 13 Bankruptcy. If your home (or investment property) is worth less than the first mortgage, then there is a good chance you can eliminate your second mortgage in bankruptcy. Chapter 13 bankruptcies are more complicated than a Chapter 7 (a complete forgiveness of your unsecured debt). If you think you might be eligible to get rid of your second mortgage, you should call a trustworthy bankruptcy attorney to discuss your particular options.

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