Second Mortgage Lien Avoidance and Home Equity Lines of Credit (HELOC’s) in Chapter 13 Bankruptcy
Are you “upside-down” on your home? Do you have a second mortgage or HELOC and owe more on your first mortgage than your home is currently worth? If the present market value of your home is less than or equal to what you owe on your first mortgage, the second mortgage/HELOC is no longer considered a secured debt and can often be removed in a Chapter 13 bankruptcy.
With property values dropping, many homeowners are now “upside-down” on their home mortgage loans and are looking for a way out. Many homeowners are unable to make the payments on their mortgages and are making the decision to walk away without ever exploring ways to save their home. Wouldn’t it be much easier to save your home if you only had a first mortgage? What if you could effectively wipe out $10,000, $50,000 or $100,000 of what you owe and essentially start over?
If your home has significantly decreased in value and you have a second mortgage or HELOC, we may be able to remove that lien by filing a Chapter 13 reorganization bankruptcy.
For the first time in a very long time you, the homeowner, can turn the tables on the banks and MERS (Mortgage Electronic Record System) and undo the damage done with their reckless lending practices that have laid ruin to the value of your home.
THE PROCESS: We convert your second mortgage or HELOC to an unsecured debt while you are in the Chapter 13 bankruptcy. You discharge this unsecured debt by paying pennies on the dollar over the next 3 to 5 years. The remainder of the debt on the second mortgage or HELOC is discharged at the completion of your chapter 13 bankruptcy plan.
EXAMPLE: You owe $200,000 on your first mortgage and $50,000 on your second mortgage or HELOC. The present market value of your home is only $150,000. Lenders are only secured up to the value of the property. Here, the first mortgage is secured by the property value. However, the property has declined in value and is worth less than the amount secured by the first mortgage, so the second lender has nothing securing their lien. In a Chapter 13 bankruptcy, you may be able to “strip” the second lender. The second mortgage holder would be treated as an unsecured creditor, and would not be able to collect on the second mortgage or HELOC after the bankruptcy discharge. You complete your Chapter 13 bankruptcy plan, keep your first mortgage, and keep your house.
Call us today to have your FREE consultation and start moving to ELIMINATE your 2nd Mortgage!
Call 253-631-6484 and ask for either attorney Margaret Galbraith or Mark McClure.