{"id":421,"date":"2012-02-14T01:38:24","date_gmt":"2012-02-14T01:38:24","guid":{"rendered":"http:\/\/www.westcoastbk.com\/blog\/?p=421"},"modified":"2012-09-12T06:30:07","modified_gmt":"2012-09-12T06:30:07","slug":"underwater-second-mortgages-third-mortgages-or-equity-lines-of-credit-and-bankruptcy","status":"publish","type":"post","link":"https:\/\/www.westcoastbk.com\/blog\/2012\/02\/underwater-second-mortgages-third-mortgages-or-equity-lines-of-credit-and-bankruptcy\/","title":{"rendered":"Underwater Second Mortgages, Third Mortgages or Equity Lines of Credit and Bankruptcy"},"content":{"rendered":"

By Ryan C. Wood<\/a><\/p>\n

Are you struggling with paying your first mortgage, second mortgage or even third mortgage each month?\u00a0 Is your house worth thousands less than what you owe?\u00a0 You are not alone.\u00a0 Millions of Americans have watched the value of their homes decrease month after month the last four or five years.<\/p>\n

Many homebuyers purchased their homes with an 80% first mortgage and 20% second mortgage.\u00a0 This allowed the homebuyer to avoid private mortgage insurance and put 20% down on the home.\u00a0 To make matters worse either one or both loans could have been interest only loans.\u00a0 Interest only loans allow the home buyer to only pay the interest for a period of time.<\/p>\n

So you have a home that is worth less than what you owe and you are only making the minimum interest only payment each month on the first and second mortgage.\u00a0 Any little financial problem will send you into a financial tailspin.\u00a0 The good news is that bankruptcy can help.<\/p>\n

In Chapter 13 and Chapter 11 unsecured liens or loans can be stripped off the property in the plan of reorganization.\u00a0 How can you get rid of a mortgage in bankruptcy?\u00a0 Well, if the value of your house is less than what is owed on the first mortgage, then the second mortgage is completely unsecured or underwater.\u00a0 If the house was sold or foreclosed on the second mortgage company would get nothing, and that is how they are treated when reorganizing your debts in a Chapter 13 or Chapter 11 bankruptcy case.<\/p>\n

The key is the value of the house.\u00a0 The first thing that needs to be completed is a valuation of the house by the bankruptcy court.\u00a0 A motion is filed with the bankruptcy court asking the bankruptcy court to value your home based upon comparable sales in your neighborhood.\u00a0 If the second mortgage company accepts the value you believe to be true there will be very little more to do.\u00a0 If the second mortgage company objects to the valuation an evidentiary hearing or mini-trial as to the value of the house will be scheduled.\u00a0 Of course the second mortgage company is trying to prove that your house is worth more than is owed on the first mortgage.\u00a0 If they are successful then the second mortgage is not completely underwater and not removable.\u00a0 If it is held that your house is in fact worth less than the first mortgage you will be able to strip off the underwater second mortgage or equity line of credit.\u00a0 You will only have to pay the first mortgage and the lien securing the second mortgage will be reconveyed once the Chapter 13 plan or reorganization is completed.<\/p>\n

For more information about underwater mortgages from our bankruptcy lawyers<\/a> or how bankruptcy can help you, please call our experienced bankruptcy attorneys<\/a> at 1-877-963-9543.<\/p>\n","protected":false},"excerpt":{"rendered":"

Are you struggling with paying your first mortgage, second mortgage or even third mortgage each month? Is your house worth thousands less than what you owe? You are not alone. Millions of Americans have watched the value of their homes decrease month after month the last four or five years.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/421"}],"collection":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/comments?post=421"}],"version-history":[{"count":5,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/421\/revisions"}],"predecessor-version":[{"id":709,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/posts\/421\/revisions\/709"}],"wp:attachment":[{"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/media?parent=421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/categories?post=421"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westcoastbk.com\/blog\/wp-json\/wp\/v2\/tags?post=421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}