Current bankruptcy law allows judges to approve the loan modifications of the terms of certain debts. But is it possible to remove your second mortgage in bankruptcy?
As most of us know, your first mortgage is not allowed to be claimed. But not everyone knows that in the case of second mortgages, if the value of the property falls below the loan amount, homeowners potentially could reduce the balance of their loan amount to equal the current value of their property.
If the courts remove this 2nd mortgage, this is known as “stripping” the lien, “cram down” or “strip down.”
Within Chapter 13 Bankruptcy law, section 11 USC 1322 can potentially allow you to forgo your second mortgage, under certain circumstances. If your second lien on the whole is unsecured, then when the value of your home drops belong the first mortgage deed of trust, the second becomes wholly under secure, which can be negated through a Chapter 13 filing.
The lien stripping program is available for individuals desiring to reorganize their debt using Federal Laws under Title 11 of the United States Code. The mortgage removal program can only be used in the context of a reorganization, often referred to as Chapter 13.
Chapter 13 of the federal bankruptcy code allows bankruptcy court judges to reorganize an individual’s debt, but it does not give them authority to fundamentally alter a person’s primary home mortgage.
Section 506 of the Bankruptcy Code acknowledges that a lien is only a secured claim to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the claim is unsecured. In Chapter 11 or Chapter 13, even voluntary liens, such as mortgages and security interests, can be stripped down to the value of the collateral, with the exception of voluntary liens secured only by the debtor’s residence.
If you’re struggling with your mortgage on your primary home, it looks like you may now have some real home saving tools coming soon in the form of a B and K.
If you are in the state of California, please call the Law Offices of Fransen and Molinaro at (888) 756-2652 for a free bankruptcy consultation.
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WE JUST GOT A CHAPTER 13 DISCHARGE A FEW MONTHS AGO,I SENT FOR A CREDIT REPORT AND I SAYS THE SECOND MORTGAGE IT IS DISCHARGED THROUGH THE BANKRUPTCY WE OWE 0 BALANCE I CALLED THE CREDIT BUREAU AND ASKED THE AND THEY TOLD ME IT WAS DISCHARGED WITH THE BANKRUPTCY AND WE DID NOT OWE IT I CALLED THE KEY BANK AND THEY SAID WE DID OWE IT . OUR LAWYER DIED ABOUT 4 YEARS AGO.I CALLED KEY AND THEY WANTED TO GIVE ME A LOWER PAYMENT AND WAS TO CALL BACK AND NEVER HEARD FROM THEMI AM TRYING TO FIND OUT WHAT IS GOING ON NO CALL BACK I NEED HELP.
Email me in regards to your bankruptcy. I am a mortgage broker and in a round about way credit counselor. Email me if you are still having an issue, I will try to help you answer your question.
Yourbroker4life@hotmail.com
I’m about ready to file a joint bankruptcy with my wife.
I ‘m on unemployment right now, can I file a chapter 13 bankruptcy ? or will the courts not allow unemployment income as a form of revenue to be able to distribute to any creditors.
I think a chapter 13 would be best for us so we might be able to remove our second home loan.
We owe (first,second) 178,000+120,000=298,000. present value at best 160,000
thank you, Gary.
I am geting divorced. We have two mortgages on the house. I pay the first one and husband pays the second one. The second one I am afraid I will also get stuck with because I am keeping the house. Is there anyway to get that out of my name and he can declare bankruptcy on that. It was credit card debt that he consolidated into a home equity loan.
I was the victim of Identity Theft going back to 2006. I was notified by Bank of America, TJ Maxx and Courts of Mass. I knew it, but it is a long story but after going through everything, and receiving packages at my home with jewelry inside, I made a big mistake in order to avoid APR’s and returned the ‘crap’. Evidentity someone got my numbers and used every credit card I had, and I had a lot of available credit because for 30 years, I was never late. My credit tanked but that is another lawsuit because the banks where I called them and gave them fraud documentation, police reports, etc. debited, credited, debited, credited, so many times, I couldn’t figure it out. I just know in 4/2007 I drove to Knoxville, TN with 14,000.00 worth of jewelry and gave it to them. They made up a database with every order, the date ordered, and received back, the amount, it was unreal. They also gave me the last 4 digits of cards used and there were about 20. Long story short, I had money put away, I am on disability however I sell on ebay and do rather well. I am so tired of working, listening to these loan mod vultures, I have no time at all to myself and I am not upside down on my mortgage so I am sure the bank would want this house. In my situation, where I can fudge my income from ebay and my social seciruity income is direct deposited, I am just burnt out, and I just need someone who isn’t out for a buck and maybe would tell me truthfully if I should hire someone or not.
Thanks
Pam Bonds
Pam- You are an idiot. Publicly posting to commit fraud. You do not deserve a modification.
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