Modification of Mortgages in Bankruptcy and “Stripping of Liens”
Modifications of mortgages and home equity loans in bankruptcy is often easier and more effective than in any state court proceeding. Bankruptcy judges cannot make a mortgage company modify a mortgage but they can require that the mortgage company engage in “good faith” mediation. This often results in a modification of the mortgage in Chapter 13.
Mortgage Liens can also be “stripped” in both Chapter 7 and Chapter 13 if the value of the home is less than the value of the first mortgage.