Chapter 13 Bankruptcy and Second Mortgages

Lots of people in South Florida have more than one mortgage on their property and due to the economy they were unable to pay the second mortgage and fell significantly behind. One of the best features of filing for a Chapter 13 bankruptcy in Miami or Fort Lauderdale is that there may be an option for the debtor to wipe out the 2nd mortgage on their property.

If a debtor, who files for bankruptcy, can show that at the time of filing the 2nd mortgage is completely underwater then it can be stripped off in a Chapter 13. In order for the 2nd mortgage to be completely underwater a debtor must show that the value of the home is LESS than the first mortgage. Example:
Home Value: $100,000
First Mortgage: $200,000
Second Mortgage: $75,000
In this case the value of the home is Less than the first mortgage (100k < 200k) and thus the debtor will likely be able to strip a second mortgage in a chapter 13 bankruptcy. If the value of the home is greater than the first mortgage then the debtor will NOT be able to strip off a second mortgage in a Chapter 13. Example: Home Value: $125,000 First Mortgage: $100,000 Second Mortgage: $75,000 In this case the value of the home exceeds the first mortgage (125k > 100k) and thus the debtor will NOT be able to strip off the second mortgage in a Chapter 13 bankruptcy.

If you are thinking of filing bankruptcy and would like to speak with an experienced Miami Bankruptcy Lawyer then please contact Ofer Shmucher, of Shmucher Law, PL, by calling either 305.741.5553 or 954.309.5559. We offer free consultations and are available seven days a week.

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