Dealing with a second mortgage can be complicated. Determining the best way to handle a second mortgage that favors the person filing for bankruptcy can be a complex process but with the guidance of a qualified attorney, it can be done.
Like with any debt, there are certain challenges that could affect a second mortgage and your ability to pay: Health issues, job loss, etc. The good news is that you have options for dealing with mortgage debt and bankruptcy might be one of the best options available that allows you to obtain a fresh start.
Second mortgages are treated differently in bankruptcy than first mortgages. Unlike first mortgages, second mortgages, in certain circumstances, can be eliminated in bankruptcy using provisions of the bankruptcy code available in a chapter 13 bankruptcy filing. During the housing crash, this method became available for dealing with unforeseen financial circumstances and a lot of second mortgages. It helped many people filing for bankruptcy remain in their homes and eliminate the second mortgage.
A chapter 13 debtor can eliminate a second mortgage that is completely unsecured. If a debtor has a first mortgage that is more than the value of their home, the second mortgage is considered completely unsecured. In this circumstance, the second mortgage will be treated like an unsecured debt, such as a credit card. At the conclusion of the chapter 13, the obligation on any remaining balance on the second mortgage will be discharged and the lien completed eliminated from the home. That means if the homeowner decides to sell the home, this lien is no longer an encumbrance on the property. Many homeowners who were underwater on their mortgages during the housing crash were able to use these tactics. The ability to eliminate an unsecured second mortgage in a chapter 13 is a great tool that can restore financial stability.
To find out the best way to deal with your home mortgages in bankruptcy, contact our law office at 731.424.3315 or email Jerome@tennesseefirm.com. The first consultation is always free.