Discuss Your Case with a St. Petersburg Foreclosure Attorney

If you are facing a potential foreclosure because you owe more on your Florida home than it’s worth, you may be able to get the debt relief you need through a stripping of your second mortgage by a bankruptcy judge. Under the U.S. Bankruptcy Code, a lien is secured by the value of the asset to which it is attached. When that asset or collateral’s value is less than the attached lien, such as a second mortgage, the lien may become an unsecured debt. In such cases, the second mortgage lien holder then becomes an unsecured creditor in a Chapter 13 bankruptcy case filed by the homeowner. As an unsecured debt, it may be wiped out by the bankruptcy court.

If your home mortgages exceed the value of your Florida home and have subjected you to a potential foreclosure, you should discuss your situation with a Florida foreclosure defense lawyer at LeavenLaw. Our firm focuses exclusively on foreclosure defense and bankruptcy. Because of this, we have a strong command of these practice areas and keep current with changing laws. We handle foreclosure and bankruptcy cases on a daily basis and have the knowledge, skills, and legal tools to ensure that your case is resolved as efficiently as possible. We can investigate your mortgage situation to determine if you may be eligible to have a second mortgage or lien legally stripped through a Chapter 13 bankruptcy petition.

Contact us today for a free case evaluation!

Stripping Your Second Mortgage through Chapter 13

Many bankruptcy courts follow a rule set forth in the U.S. Bankruptcy Code which turns a lien which exceeds the value of the collateral to which it is attached into an unsecured debt. According to Section 506 of the Bankruptcy Code, any lien can only be deemed a secured claim if the asset on which it is based has a value sufficient to satisfy that lien. If your property has been devalued to a level less than what is owed on your second mortgage, through a Chapter 13 personal bankruptcy filing you may be able to legally have that lien stripped as a debt. In this scenario, the second mortgage lien holder becomes an unsecured creditor who can only seek payment of the debt through the bankruptcy court.

Filing a Chapter 13 personal bankruptcy petition can be a powerful tool in helping you avoid a foreclosure. Second mortgage stripping makes it even more effective for those whose homes have been seriously devalued in the recent economic downturn. Certain exceptions may apply to second mortgage stripping. Most, but not all, bankruptcy courts allow a second mortgage to be declared unsecured if the home’s value equals or is less than the first mortgage.

To find out if you qualify for a second mortgage stripping and to get the legal counsel you need in the face of a foreclosure, it is highly recommended that you consult with a Florida foreclosure defense lawyer at the firm as soon as possible.