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Chapter 13 Bankruptcy and Your Second Mortgage

Hello again Sacramento,

Hope it’s going well for you out there.  Today, we’re talking about how it is possible to get rid of that second mortgage on your home.  Most of the time in Bankruptcy, you are hoping for your debts to evaporate when you receive your discharge.  In a Chapter 7 case, it is very likely that your credit cards, medical bills, and a bunch of other kind of debt will evaporate at the end of your case.

This will not happen with your second mortgage in a Chapter 7.  In a Chapter 13 Bankruptcy, however, it is possible.  If you can prove that the value of your home is less than what you owe on the first mortgage, then the second mortgage can be removed.   For example, if you owe $250,000 on your first mortgage and $90,000 on your second mortgage, it might be worth your time to ponder whether a Chapter 13 can help you get rid of that lien.

If the value of your home at the time of filing is less than $250,000 you will have the opportunity to file a motion with the court and avoid that lien.  Now you have to complete your Chapter 13 plan in full to actually get the court to remove the lien, but it may well be worth it to fight through a Chapter 13 Bankruptcy if you’re going to eliminate $90,000 in debt.

There are many secret benefits to using bankruptcy as a way to climb out of debt.  Your bank sure doesn’t want you to know this as they continue to reap huge rewards by keeping this information secret.  Know your rights so that you can do as much for your family as possible.  Give us a call today at (916) 419-1111.

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