Avoiding Liens and Wholly Unsecured Mortgages
Many people file under Chapter 13 bankruptcy because of mortgage debt and falling home values. In Chapter 13 you have the ability to avoid liens and wholly unsecured mortgages. This ability in Chapter 13 bankruptcy is very powerful and can provide you with tremendous financial relief.
So, what is a wholly unsecured mortgage? It usually occurs when there are 2 or more mortgages on the home. If the amount owed on the first mortgage is greater than the value of the property (as determined by a professional appraisal) then all other junior liens on the home are wholly unsecured.
If a lien is considered to be wholly unsecured, then in Chapter 13 bankruptcy your bankruptcy attorney will list the lien to be avoided in your Chapter 13 plan. That second or third mortgage will be treated more like a credit card debt. You will have to pay some or very little back to that creditor. When your bankruptcy is discharged, you will no longer be legally responsible to pay the junior mortgages. In addition, the junior mortgage companies can no longer legally collect on your mortgage.
As you can see, this can be a very powerful tool in bankruptcy. We have seen many of our clients get relief from second and third mortgages by avoiding the wholly unsecured mortgages.
If you are struggling to pay for your mortgages and you believe that your home value has declined, this might be an option for you. Because Chapter 13 bankruptcy is very complex, it is a good idea to hire an Indiana Bankruptcy Attorney like John Bymaster. Many times by hiring an attorney in this type of situation, it will save you more money in the long run.
IF YOU ARE LOOKING FOR AN INDIANA OR INDIANAPOLIS CHAPTER 13 BANKRUPTCY ATTORNEY, CALL US FOR A FREE CONSULTATION: 317-769-2244