Second mortgages are secured liens on real estate. Filing bankruptcy does not get rid of secured liens. However, you might qualify to eliminate your second mortgage under Chapter 13 bankruptcy. You will need an experienced Massachusetts bankruptcy attorney to help you file the necessary motions.

At Logan A. Weinkauf, PC, our bankruptcy lawyer has over 15 years of legal experience. We have a thorough understanding of bankruptcy law and how Chapter 13 can be used to help homeowners keep their homes.

Contact Logan A. Weinkauf, PC, to schedule a free consultation with our Massachusetts bankruptcy attorney. Learn how a Chapter 13 bankruptcy can save your home from foreclosure.

How Logan A. Weinkauf, PC Can Help You Eliminate Second Mortgages in Massachusetts

Many homeowners have second mortgages or equity lines. A common reason for obtaining an equity line is to consolidate debts or pay for an unexpected expense. Unfortunately, an injury, family death, illness, or other crisis can cause a financial problem that can be too big to overcome without help.

Filing for bankruptcy relief can give you the help you need to overcome financial problems and get back on your feet. The first step is hiring an experienced bankruptcy lawyer.

When you hire our top-rated Massachusetts bankruptcy attorneys, you can expect us to:

  • Thoroughly analyze your financial situation to determine your debt relief options
  • Explain how bankruptcy can help you resolve debt problems, including the pros and cons of filing a Chapter 13 bankruptcy case
  • Draft a Chapter 13 plan with an affordable payment based on your financial circumstances and bankruptcy law
  • Assist you in gathering the information necessary to complete the bankruptcy forms
  • Complete and file all documents and forms necessary to file for bankruptcy
  • Prepare you for court and appear with you at all hearings
  • Walk you through each step of the bankruptcy process from beginning to end

Attorney Logan Weinkauf is a member of numerous prestigious legal organizations, including the American Bankruptcy Institute and the National Association of Consumer Bankruptcy Attorneys. We have top ratings and recognition from clients and the legal community. We are committed to assisting our clients in achieving the fresh start they need to achieve the financial well-being they deserve.

Call Logan A. Weinkauf, PC, to schedule a free consultation with an experienced Massachusetts bankruptcy attorney. We help clients develop an affordable plan to deal with the debts they cannot pay.

What Is a Chapter 13 Bankruptcy Case?

A Chapter 13 bankruptcy is a wage-earner plan. It is a court-supervised reorganization of your debts. The plan payment is based on your income, expenses, debts, and other factors. Most Chapter 13 plans are between 36 and 60 months.

All debts must be included in a bankruptcy filing. However, the debts are treated differently in a Chapter 13 plan. Unsecured debts, such as credit cards and medical bills, usually receive a percentage of what is owed. When you complete the plan, the remaining amounts are discharged (i.e., eliminated).

Some unsecured debts must be paid in full through your Chapter 13 plan, including past due alimony and child support, most tax debts, and administrative costs. Secured debts may or may not be included in the plan. It depends on the debt.

Mortgages Are Secured Debts in a Bankruptcy Case

Secured creditors have liens on collateral that secure the debt you owe. For example, a car loan is an example of a secured debt. Mortgages are another common example of a secured debt.

Most car loans are included in Chapter 13 plans. The loan is paid in full through the plan. A debtor may qualify to reduce the secured portion of a car loan to lower the amount they are required to pay in full through the Chapter 13 plan.

Mortgage payments are usually paid outside of the Chapter 13 plan. However, you can include past-due mortgage payments (i.e., arrearage) in the plan. Therefore, instead of paying the entire past due amount in full in one payment, you spread out the payments over 60 months.

Filing a Chapter 13 bankruptcy stops foreclosure actions. If you make your mortgage and plan payments, the mortgage company cannot take your home.

What Happens to a Second Mortgage in a Chapter 13 Bankruptcy?

A second mortgage is also a secured debt. Smaller second mortgages could be paid in full through a Chapter 13 plan. However, that is usually not possible because of the balance owed on the second mortgage. Instead, the second mortgage is treated in the same way as the first mortgage. You must pay the second mortgage payment to the lender, and the past-due payments are included in your plan payment.

An exception to this general rule occurs when you owe your first mortgage company more than your home is worth. In this situation, you may be able to eliminate your second mortgage.

For example, suppose your home has lost value since you obtained your second mortgage. Your home is now worth $300,000, and you owe $321,000 to your first mortgage company. Your second mortgage has a balance of $50,000.

In this situation, you could file a motion with the bankruptcy court to value the second mortgage at zero. The argument is that the second mortgage company would not receive any money if the home were sold. Therefore, the secured lien is worth nothing.

If the bankruptcy court grants your motion, the second mortgage becomes an unsecured debt. If your plan calls for 15% to unsecured creditors, your second mortgage company receives 15 cents on the dollar for its debt. When you complete the Chapter 13 plan, your second mortgage is discharged. In other words, you eliminate your second mortgage.

Your mortgage lender may object to the motion to value their mortgage. If so, you may be required to obtain an appraisal proving the home is worth less than you owe to the first mortgage company. An experienced bankruptcy attorney can help you with the necessary documentation.

Call Now for a Free Consultation With a Massachusetts Bankruptcy Attorney

Chapter 13 bankruptcy can help you keep your home by reorganizing your debts. Contact Logan A. Weinkauf, PC, to discuss your options for filing bankruptcy with our Massachusetts bankruptcy attorney.