If you are struggling to keep up with your monthly payments and have more than one mortgage on your home, Chapter 13 bankruptcy may provide the relief you need. Under Chapter 13 bankruptcy law, you may be able to remove a 2nd mortgage from your home and discharge the debt in bankruptcy. The discharge will release you from all personal liability on the mortgage and extinguish the lien placed on your property.
At Florida Law Advisers, P.A., our bankruptcy attorneys have helped many homeowners prevent a foreclosure and lower their monthly payment by filing for bankruptcy. Bankruptcy is a useful tool but it may not be the right solution for everyone. You should contact us to schedule a free consultation with a Tampa bankruptcy lawyer before taking any action. During the consultation we can explain exactly how the bankruptcy process works and what you can expect by filing for bankruptcy.
Removing A 2nd Mortgage in Florida:
A secured loan is a loan that has collateral, such as a car loan or home mortgage. In Chapter 13 bankruptcy secured creditors must be paid in full, however, unsecured creditors do not. Unsecured debts in Chapter 13 may be discharged without receiving any payment. Therefore, if a 2nd mortgage is treated as an unsecured loan it may be discharged without requiring the homeowner to pay any portion of the debt. Once the 2nd mortgage is discharged it will no longer be a lien on the property and the homeowner will be released of all liability.
In order to classify a 2nd mortgage as an unsecured debt, the market value of the home must be equal to or less than the balance of the first (primary) mortgage. Collateral will not be left for the second mortgage if the market value does not exceed the amount owed to the primary mortgage, and thus the loan will be treated as an unsecured loan in bankruptcy. The market value of the home will be determined by an independent home appraiser and reviewed by the court. Once the discharge is entered by the court, the mortgage lien will be deemed void and automatically extinguished without any further court action necessary.
Consult With a Tampa Foreclosure Defense Attorney Today
Homeowners have a lot of options when it comes to fighting foreclosure and we want to make sure our clients choose the best strategic plan for their family. Whether you want to keep your home and prevent foreclosure, or walk away from your home without being responsible for any of the debt, Florida Law Advisers, P.A., can help. Our Tampa foreclosure defense attorneys have years of experience helping homeowners in all types of foreclosure defense and bankruptcy matters. Our foreclosure defense lawyers will carefully evaluate your individual situation, advise you of your options, and develop a comprehensive legal strategy to help solve your mortgage problems. Contact us today to schedule your free consultation with a foreclosure defense lawyer at our law firm.
Frequently Asked Questions
Yes, a second mortgage holder can foreclose on the home, even if your 1st mortgage is paid on time each month. Both home equity lines of credit and traditional 2nd mortgages may foreclose on a property. However, applying for a loan modification or Chapter 13 bankruptcy may stop the foreclosure.
Yes, you can apply for a loan modification of the 2nd mortgage even if the bank already filed for foreclosure. However, a loan modification requires the bank’s approval. On the other hand, if you file a Chapter 13 case you can force the bank to give you 5 years to pay the past due amount.
If there is not enough equity in the home to secure the 2nd mortgage, the loan may be stripped and discharged in bankruptcy. This process is commonly referred to as lien stripping and may also be available for your car loan as well. If the lien is stripped, it will be treated as an unsecured debt in bankruptcy and be subject to discharge.
If a Chapter 7 or Chapter 13 case is filed an automatic stay will be put into effect. The automatic stay is a federal law that stops all collection activity, including foreclosure sales already scheduled to occur. Additionally, you can force the bank to give you 5 years to pay the past due amount with Chapter 13.