Can a 2nd Mortgage be discharged in a Chapter 13 Florida Bankruptcy?
With the recent housing market crisis, many homeowners are finding themselves "underwater" on their homes. Underwater means the homeowner owes more than the house is worth. However, many homeowners had equity in their homes before the values began to plummet.
Many homeowners have taken out 2nd mortgages on their homes. In a chapter 13 bankruptcy, it is possible to have the 2nd mortgage discharged (after a debtor's final plan payment) if the total debt on the home (between 1st and 2nd mortgage) is more than the value of the home.
If the 1st mortgage is more than the home itself, then there is no collateral for the 2nd mortgage to claim. The 2nd mortgage becomes unsecured and is treated just like the rest of the unsecured debt. After the final plan payment in a chapter 13 bankruptcy, the balance owed on unsecured debt is discharged. If the value of the home is worth more than the primary mortgage, then the 2nd mortgage lender would have secured status up to the value of the home. Any remaining balance would most likely be unsecured. You should consult with an experienced bankruptcy attorney if you have additional questions.
If you have questions about bankruptcy or debt relief, please contact Jacksonville Bankruptcy Attorney.
Greg Gilbert
Keith Maynard
