Charlottesville Homeowners with 2nd Mortgages

Charlottesville Homeowners with 2nd Mortgages and the options they have.

You probably know that Charlottesville bankruptcy judges do NOT have the
power to reduce the principal of a first mortgage in the event you file for bankruptcy personally.

There was a move to change this. But the powerful lobby for the big elite banks defeated it in congress.

But are there cases where filing a Charlottesville bankruptcy can wipe out a mortgage?

Regarding 2nd Charlottesville mortgages...I have read that the US bankruptcy code section 6 allows for wiping out a second mortgage in a situation where the 1st mortgage loan amount is greater than the current value of the home.

Such that the second mortgage becomes an unsecured debt and subject to the bankruptcy provisions.

Is this true or even possible in your experience?

In a personal Charlottesville bankruptcy, if the second mortgage has no
equity coverage, the judge can turn the second mortgage into a personal loan and you can discharge it in bankruptcy.

Let's look at an example.

Say you owe $200,000 on a first and $100,000 on a second.

And say your Charlottesville house is worth $150,000.

The second has no equity at all.

The judge can turn the second into an unsecured loan, upon a motion that you bring in Charlottesville bankruptcy court.

The loan is then handled like a credit card or medical bill.

It is unsecured and can be discharged.

But don't think you have to file for bankruptcy in order to handle a second mortgage this way.

You can do a short sale, and often pay the second a few thousand dollars and get a release of liability.

But what if the second won't give that release to you?

You may be able to negotiate a small note for the second.

Or just let it go and hope they don't come after you.

If they do come after you, you can always file for bankruptcy later.

Oftentimes, a second mortgage can be handled by paying them a small amount and doing the Charlottesville short sale, and then just putting things off.

What you can put off until later will often be much easier to handle.

You probably can settle these left-over second mortages for a fraction of what you originally owe, quite often.

Without a Charlottesville bankruptcy.

And while improving your FICO score.

Rob Alley, Realtor at Keller Williams Charlottesville
540-250-3275 (cell)
roballeyrealtor@gmail.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.charlottesvillevarealestate.blogspot.com
http://www.charlottesvilleshortsale.com
http://www.theaverygroup.com