How to Wipe Out Second Mortgages, Avoid Foreclosure and Stay in Your Home

erase-mortgage-300x199By Omar J. Arcia, Esq.
Foreclosure Defense and Consumer Bankruptcy Protection Attorney

Thousands of homeowners in our community are 20-50% upside-down on their home mortgages and are looking for a way out. Some are frustrated in their attempts to modify their home loans, and others simply choose to give up their home because they don’t know their rights. Wouldn’t it be much easier to save your home if you only had a first mortgage to worry about? Also, since the real estate market is improving, think of all the equity you could build up years from now if you could wipe out your second mortgage or credit line today?

For homeowners who have taken out a second mortgage on their home and lines of credit, facing our current economic climate can be challenging. This is especially true if the second mortgage or credit line has converted from an interest only to a principal plus interest payment. Additional liens on your home beyond your initial mortgage, however, can be wiped out through a Chapter 13 personal bankruptcy. When mortgage liens are removed from a property during bankruptcy proceedings it is referred to as “stripping” the lien. Bankruptcy courts permit a second mortgage or line of credit to be eliminated if the total amount owed on the first mortgage exceeds the market value of the home. For example, if you owe $200,000 on the first mortgage of your principal residence, and $150,000 on your second mortgage of that same residence, BUT your principal residence is only worth $195,000, the $150,000 second mortgage is wiped out in a Chapter 13 bankruptcy, tax free. In a Chapter 13 bankruptcy, you can also reduce the total amount owed down to the appraised value on investment properties.

Tax liens and association liens can also be stripped off in Chapter 13 proceedings. More importantly, you will be able to catch up on any past due mortgage payments through affordable installments spread out over 3-5 years, or even modify your mortgage through a loss mitigation program offered in South Florida bankruptcy courts. This allows you and your family to stay in your home, and none of your creditors will be able to contact you with annoying phone calls, or proceed with a foreclosure.

            The attorneys at the Arcia Law Firm have more than 40 years of combined legal experience, and we are privileged to successfully represent hundreds of homeowners in our community. We have foreclosure defense, loan modification and bankruptcy departments all in one office. If you are struggling to make your monthly mortgage payments, if you are in the middle of a frustrating loan modification process, or if you just received a foreclosure summons, contact the Arcia Law Firm today at 954-437-9066 to schedule a free personal consultation with an attorney, or visit www.arcialawfirm.com to schedule your appointment.

            Detailed explanations of different options available to homeowners are also discussed in a one-of-a-kind DVD developed by the Arcia Law Firm entitled “Fight For Your Home.” If you mention that you heard about the DVD through this blog post, you will receive a complimentary copy during your free consultation to discuss your case in detail with a member of our highly experienced legal team.

 

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