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Your Second Mortgage in Chapter 13 Bankruptcy

Your Second Mortgage in Chapter 13 Bankruptcy
"Let's face it, this economy stinks. Since the 2008 financial collapse, life has been extremely difficult for a large number of individuals. For many, unemployment is the greatest problem. As we require income to survive, the majority of individuals are 90 days away from declaring bankruptcy. Many individuals, the majority of whom never even contemplated bankruptcy, must now make a difficult decision.

If bankruptcy makes sense, then significant relief is possible. The majority of credit card and medical obligations will be discharged in full. Some debts, including taxes, child support, and student loans, remain. However, buried deep within the bankruptcy code is another significant advantage.

Let's assume you have a home loan. And suppose the mortgage is approximately $150,000. Let's also assume there is a second mortgage for $75,000. You obtained this second mortgage in order to pay off debt, make home improvements, and take a vacation. Why then? It was 2005. Your home was valued at $225k. You held a well-paying position. The times were favorable, and payments were simple. Enter 2008.

You still have a career. Perhaps a 20% pay reduction was implemented. And your home's value has plummeted to $120,000. Suddenly, that home becomes a major issue. It is not the only issue, as you are also behind on credit card and utility payments. But you are in a poor financial situation and believe you are trapped because you are still employed.

So many individuals believe that you must be absolutely broke to file for bankruptcy. You can find a large number of high-earning individuals who require the relief bankruptcy provides. If their attorney chooses to place them under the protection of Chapter 13, a person in the aforementioned situation who files for bankruptcy is eligible for a significant advantage.

In this case, the second mortgage can be removed from the residence. The crucial factor is that the home's value has dropped to the point where the second mortgage would receive nothing in a foreclosure sale. In terms of bankruptcy, the second mortgage is entirely unsecured.

For many individuals, the monthly payment on their second mortgage may be sufficient to cover all of their obligations under a Chapter 13 bankruptcy plan. The situation would dramatically improve almost immediately.

Suddenly, the property would be $30,000 under the mortgage rather than over $100,000. All of their other monthly expenses would be bundled into a single monthly payment. The anxiety and heartache induced by this financial catastrophe could be alleviated. Instead of paying late fees to Visa and Mastercard, individuals can begin to have a bit of additional spending money that can be reinvested in the local economy.

Insolvency is not appropriate for everyone. If you are juggling expenses from paycheck to paycheck, it may provide tremendous relief.""

" - https://www.affordablecebu.com/
 

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"Your Second Mortgage in Chapter 13 Bankruptcy" was written by Mary under the Finance / Wealth category. It has been read 171 times and generated 0 comments. The article was created on and updated on 31 May 2023.
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