How To Get Rid Of A Second Mortgage In Chapter 13 Bankruptcy
Are you struggling to pay your mortgage payments? Have you been served with a foreclosure complaint? If so, you are probably worried about how you can keep your home and stop a foreclosure. Filing a Chapter 13 bankruptcy petition immediately stops the foreclosure process so you can save your home and solve your debt problems. In some cases, you may be able to get rid of your second mortgage in addition to stopping or preventing a foreclosure.
To learn more about eliminating a second mortgage in chapter 13 bankruptcy call bankruptcy lawyer Adam Garcia at (916) 596-1018 or send an email using the contact form to the right. Consultations are always free and there is never an expectation that you will hire the attorney by making this call.
Saving Your Home By Filing Chapter 13
For many people, a second mortgage is a way to finance repairs on their home, purchase a new vehicle, consolidate debts, or pay for an emergency. Unfortunately, the payments on a second mortgage can create a financial hardship that is difficult to overcome, especially if the person loses his or her job, experiences a medical emergency, or loses his or her spouse. As the person tries to keep the first and second mortgage current, other bills become overdue. Creditors begin collection actions. As matters become worse, the person begins missing mortgage payments. Before long, the mortgage company is threatening foreclosure.
If you are in this situation, filing a Chapter 13 bankruptcy case may be the only option you have to save your home. You can repay the past due mortgage payments over a 60-month bankruptcy plan; however, you must be in a financial position to resume regular monthly mortgage payments. For many people, this is possible because they no longer need to pay their credit card bills, medical bills, personal loans, and other unsecured debts. Reorganizing their debts through a Chapter 13 bankruptcy case gives them the debt relief they need to save their home.
Filing Chapter 13 to Get Rid of a Second Mortgage
Another advantage of filing a Chapter 13 bankruptcy is the ability to get rid of a second mortgage. This is a very valuable tool that is available to some debtors who file under Chapter 13 because it greatly reduces the debt that must be paid back in full. In order to get rid of a second mortgage in Chapter 13, you must meet certain requirements and you may be required to obtain a written appraisal for your home. The appraisal is necessary to determine the current market value of your home to use in the motion to value the second mortgage at zero.
Your motion to get rid of the second mortgage will only be granted if the value of your home is less than the payoff on your first mortgage. For example, if the
appraisal states that the market value of your home is $100,000 and the payoff of your first mortgage is $102,000, you will probably be successful on your motion to value the second mortgage at zero. Once the court grants your motion to value, the amount owed on your second mortgage is added to your other unsecured debts. The lender receives the same percentage as your other unsecured creditors (i.e. credit cards). Once you complete your bankruptcy plan, the second mortgage lien is released. However, if the payoff of your first mortgage is less than the value of your home by even one dollar, you will not be able to get rid of your second mortgage.