Filing Bankruptcy Under Chapter 13 May Wipe Out Your 2nd Mortgage
According to a recent story in the Orlando Sentinel, Orlando home values continue to decline. As an Orlando bankruptcy lawyer, I have witnessed this first hand. Now, I know you didn’t need the Sentinel to tell you that, but I digress.
Sadly, this is true for much of the country and just about all of Florida. These days, it appears as though everyone is upside down on their homes. Luckily there is some relief for people who are filing bankruptcy under Chapter 13. It has become common place in Orlando for me to file a motion in my client’s Chapter 13 bankruptcy case, petitioning the court to completely eliminate their 2nd mortgage balance.
In order to qualify for this “lien stripping”, you must prove that your current home value is less than the current balance of your 1st mortgage. In most cases, an appraisal from a certified appraiser is sufficient evidence. Recently, David Leibowitz, a bankruptcy lawyer practicing in Illinois and Wisconsin reviews the choices people have when eliminating a 2nd mortgage.
A bankruptcy Judge here in Orlando recently issued an opinion stating that a 2nd mortgage can only be stripped in a Chapter 13 bankruptcy filing and is not an option for those filing bankruptcy under Chapter 7. Additionally, in order to receive the benefit of stripping the 2nd mortgage and eliminating your liability on that mortgage, you must successfully make all of your payments under the Chapter 13 and receive your Discharge from the Court.
With any luck, the Orlando housing market will rebound in the near future. At which time, once my Orlando Chapter 13 bankruptcy clients have finished making their payments under the plan, they will successfully strip away their 2nd mortgages and once again have equity in their homes.
With the help of an experienced Orlando bankruptcy lawyer, my clients can achieve this goal, as well as other goals such as eliminating credit card debt and saving money on car loans, all by filing Chapter 13 bankruptcy.
Do you have questions about filing for bankruptcy? Check out K. Hunter Goff’s FREE eCourse. Hire an experienced bankruptcy lawyer to work for you.
Related posts: