QUESTION
What is the best thing to do if I have a second mortgage and my home isn't at the value I purchased it at?
Asked on Jan 09th, 2014 on Bankruptcy - California
More details to this question:
I'm currently up to date on my mortgage but, I have a second mortgage and my home isn't at the value I purchased it at. Should I file bankruptcy on the home or try to eliminate the 2nd mortgage? I don't want to mess my credit up. My financial situation isn't the same so, should I just try refinancing or let the home go into foreclosure?
11 ANSWERS
Debt Settlement Attorney serving Chicago, IL
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Law Offices of Daniel J. Winter
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You have a few options. Much depends on the value of your house. If it is worth less than what you owe on the first mortgage, you may be able to avoid the lien of the 2nd mortgage, and "strip off" the mortgage in a Chapter 13 bankruptcy, which is a 3-5 year payment plan. Or, you could file Chapter 7. It depends on your whole financial situations, and your goals. You are best served by calling and setting up a free consultation with an experienced Bankruptcy attorney to discuss your best options.
Answered on Jan 13th, 2014 at 11:02 PM
Commercial Bankruptcy Attorney serving Davie, FL
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Law Office of Jeffrey Solomon
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If the home is now worth less than the amount due on the first mortgage, there is a method in bankruptcy to eliminate the second mortgage as a lien on the home. Traditionally, this was only in chapter 13 bankruptcy, but you may be able to accomplish this goal at this time in a chapter 7. Filing bankruptcy will of course affect your credit. You should obtain a consultation with an attorney to review your entire financial situation.
Answered on Jan 13th, 2014 at 11:01 PM
What you should do is really a judgment call. If you owe more on your 1st mortgage than the home is worth, Chapter 13 could let you "lien strip" and remove the 2nd mortgage by making up to 5 years of payments on your debt. If you let your property go into foreclosure, it will really damage your credit and you can be sued by the lenders to compensate them for any losses they sustain. Because of the level of detail involved in this issue, I would recommend consulting with a local bankruptcy attorney to assess your options.
Answered on Jan 13th, 2014 at 11:01 PM
A foreclosure is the worst thing for your credit, so that should be a last resort. Bankruptcy will hurt your credit, too, so you should try refinancing first and see how much relief you can get that way. The simplest solution would be to combine your first and second into a new mortgage but that depends on the financing you can get. If that's not possible or if it does not provide you enough relief, then you should consider bankruptcy. In some circumstances, you may be able to discharge the second mortgage through a Chapter 13 but that depends on the equity in your home and the balances on the first and second mortgages. A voluntary surrender of the home in a bankruptcy would be another way of getting out from under the second mortgage.
Answered on Jan 13th, 2014 at 10:34 PM
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Filing bankruptcy will definitely affect your credit. However, in a chapter 13 bankruptcy you may be able to discharge the second mortgage. You must obtain an appraisal that shows the value of the house is less than The amount owed on your second mortgage. If so, as long as you make a monthly payment under Chapter 13 for 3-5 years you may rid yourself of the second mortgage. The amount you pay is dependent upon The amount of your disposable income.
Answered on Jan 13th, 2014 at 5:16 PM
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Usually a bankruptcy does not remove a second mortgage. You could use it to walk away, but if the value of the property is near the value of the loans there is not much you can do to remove them.
Answered on Jan 13th, 2014 at 5:06 PM
Deborah F. Bowinski
You are asking good questions but it is impossible to offer any sort of good sense answers in a vacuum. What you really should do is arrange for a personal consultation with an attorney convenient to you.
Answered on Jan 13th, 2014 at 5:04 PM
NA hordjc@yahoo.com
The second mortgage can sometimes be eliminated in a bankruptcy proceeding based on "underwater" mortgages. You say that you don't want to mess your credit up. A foreclosure or bankruptcy, however, will definitely do that. You need to sit down with an attorney and decide which is the best way to proceed.
Answered on Jan 13th, 2014 at 5:04 PM
Bankruptcy Attorney serving Santa Rosa, CA
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Law Offices of Craig Burnett
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It is possible to "strip" your second mortgage by filing Chapter 13. To do so, the property must be worth less than the amount you currently owe on your first mortgage. It is not relevant whether the value of the property is less than the amount you purchased it for. The issue is whether the value is less than the current balance on your first mortgage.
Answered on Jan 13th, 2014 at 5:03 PM
You need to consult a bankruptcy attorney. There are a lot of factors that weigh in on the decision to file. If you want to keep the home and the second trust deed is entirely unsecured, it can be wiped out, which might be a key factor in filing for Chapter 13.
Answered on Jan 13th, 2014 at 5:03 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Really depends on your goals....I recommend consulting with the best bankruptcy counsel in your jurisdiction...remember that to strip off the second mtg, the value of your house must be less than the amount due and owing on the first...can't do that in a chapter 7, only in a chapter 13.
Answered on Jan 13th, 2014 at 5:01 PM