Bankrupt Bay Area Homeowners Shed Second Mortgages
Second mortgages can be declared unsecured debt if there is no equity to cover them.
Palm Coast, FL – May 12, 2011
Stung by the crash of the housing market, some struggling homeowners are using a little known but increasingly popular provision of the bankruptcy code to eliminate second mortgages and avoid foreclosure.
Statistics are hard to come by, but bankruptcy lawyers say the provision has been used effectively on hundreds, if not thousands, of cases in the Bay Area during the past two years.
Full Story >>>> MercuryNews.com [May 9]
Second Mortgage Lien Stripping
This might be the most powerful tool in bankruptcy, especially with the current economic and housing situations.
TGo be clear, this can only be done in a chapter 13 right now. But for people who want to save their homes, it is usually a very good option.
As to some of the articles comments about shifting the problem to taxpayers, that is somewhat true, but ridiculous.
As a taxpayer, wouldn’t you rather the person try and keep paying the first mortgage and maintain the home? Or would it be better to have to walk away from both mortgages and force the taxpayers to pony up for both mortgages, instead of only the second?
I would much prefer a neighbor in distress to stay in the home as best they can to stop the valuation decline and keep the property in good shape.
No one should want to live next door to a vacant and unmaintained property.
See my blog post regarding lien stripping.
https://www.lrlawoffice.com/florida-mortgages-bankruptcy-chapter-13-second-mortgage/