' Eliminating Second Mortgage with Ch. 13 - Robert M. Geller, P.A.
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Tampa Homeowners: Eliminate Second Mortgage in Chapter 13 Bankruptcy

Eliminate Second Mortgage in Chapter 13 Bankruptcy

The Tampa area was hit especially hard by the housing crisis. In early 2013, home prices are down by about 45 percent from their peak in 2006. Unfortunately, this means that many Tampa homeowners remain underwater on their mortgages, owing more than their home is currently worth.

Yet, there is a silver lining for underwater homeowners in the Chapter 13 bankruptcy process. When housing prices were high, many homeowners took out second mortgages or home equity lines of credit. Housing prices have fallen so dramatically. Many homeowners now qualify for a complete discharge of second mortgages and HELOCs in Chapter 13 bankruptcy proceedings.

Chapter 13 Overview

Not all consumers are familiar with the nuances of a Chapter 13 bankruptcy. Unlike its cousin Chapter 7, Chapter 13 never involves liquidation of nonexempt assets. Instead, Chapter 13 filers establish a court-approved repayment plan to fully or partially repay creditors over a three to five-year term.

Chapter 13 bankruptcy has many advantages. For instance, monthly payments on most types of debt are consolidated and often lowered. Homeowners are given the chance to stop foreclosure in its tracks and catch up on delinquent mortgage payments. At the end of the three to five-year repayment term, most types of remaining unsecured debt are completely wiped out.

How are second mortgages and home equity lines of credit discharged in Chapter 13?

For underwater homeowners, the elimination of second mortgages and HELOCs may be one of the most substantial values offered by a Chapter 13 bankruptcy. Under federal law, wholly unsecured mortgages can be removed in a Chapter 13 case. This means that if your home is worth less than you owe on your first mortgage, you can file a motion with the bankruptcy court asking for a discharge of your second mortgage upon the successful completion of your Chapter 13 bankruptcy. If the court agrees that your home is worth less than you owe on your primary mortgage, at the end of your Chapter 13 case, you will not be required to repay the second mortgage obligation. Also, if you choose to sell your home in the future, the discharged second mortgage will not encumber the transaction.

The tricky part of securing the discharge of a second or third mortgage or a HELOC is often proving that the market value of your home is less than what you owe on your first mortgage. Evidence offered to the court that can fix the value of your home may include appraisals, affidavits, and real estate tax statements.

Your bankruptcy attorney also may advise specifying the market value of your home as a provision in the Chapter 13 plan filed with the court. Such a provision should stipulate that the figure is binding on all creditors involved. It should also then name the creditors, including the holder of your second mortgage. If the holder of your second mortgage fails to object to the number put forth in your Chapter 13 plan, they may not be able to later re-open the question of your home’s market value, potentially saving you time and money.

Eliminating Second Mortgage: Ask a Tampa bankruptcy attorney if Chapter 13 is right for you

Many Tampa homeowners are struggling with home values that continue to lag. With a little help from a bankruptcy court, you could turn lemons into lemonade. You could eliminate second mortgages, HELOCs and many other types of debt. Contact a Tampa bankruptcy attorney to explore whether Chapter 13 bankruptcy is right for your individual circumstances.

Video Testimonials

Tampa Bankruptcy Law Blog

When Does Bankruptcy’s Automatic Stay Go Into Effect?

Filing for bankruptcy can be a daunting experience, but it also provides vital protection for those in financial distress. One...
Read More

Should I Close My Bank Account Before Filing for Bankruptcy?

Filing for bankruptcy is a significant decision that requires careful planning. One common question people have during this process is...
Read More

Can Filing Bankruptcy Stop Repossession?

Facing repossession of your car or other valuable assets can be incredibly stressful. When you’re struggling to make ends meet,...
Read More

Are Bankruptcies Public Record?

When individuals or businesses find themselves in financial distress, they may consider bankruptcy as a way to manage or discharge...
Read More

How Can I Protect My Assets During Bankruptcy?

Filing for bankruptcy can be a challenging decision. Many people worry about losing their assets during the process. In Florida,...
Read More

Will My Landlord Know If I Filed for Bankruptcy?

Filing for bankruptcy can be a daunting decision. If you’re a tenant, you may worry about how this decision affects...
Read More

Should I File Bankruptcy without a Lawyer?

Filing for bankruptcy can be a daunting process. Many people wonder if they should tackle it alone or hire a...
Read More

How Does Bankruptcy Affect My Credit Score?

Filing for bankruptcy is a significant decision. It can have a lasting impact on your financial future, especially your credit...
Read More

Can You File Bankruptcy on a Title Loan?

If you're struggling with debt and have a title loan, you may wonder if bankruptcy can help you escape that...
Read More

Will Bankruptcy Affect My Security Clearance?

When you're facing financial difficulties, the prospect of bankruptcy can be daunting. This concern is amplified if you hold or...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation

813.536.4468

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 328-6667
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 274-9155

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 492-2663

Map And Directions