Can I Remove My Second or Junior Mortgage Lien in A Chapter 13 Bankruptcy?

Written by Barbie Lieber

First, you must Qualify for Chapter 13

Yes, you may be able to remove your junior mortgage in a chapter 13 bankruptcy. This is different from a chapter 7 bankruptcy which does not allow for the removal of a junior mortgage lien. In order to take advantage of this lien removal, you must qualify for chapter 13. This means you must have a regular income as chapter 13 involves a payment plan. Regular income can even mean social security or disability payments. If you have insufficient income for a chapter 13, you may be able to have a friend or family member make contributions under the plan. Further, your unsecured debt, such as credit card debt, cannot exceed $383,175 and your secured debt, such as a mortgage, cannot exceed $1,149,525. You also must have been up to date on the filing of your tax returns.

Second, your home must be worth less or equal to your first mortgage

In order to successfully remove your junior mortgage, you will have to show that your home is worth less or is equal to the amount due and owing on your first mortgage. You should ascertain from your first mortgagee how much is owed on your first mortgage. You can request a payoff amount from the lender. You should then obtain an appraisal by a licensed appraisal. You can also retain a licensed real estate broker to physically inspect the premises and value the home based upon the inspection and comparable sales in the area. Also visit www.zillow.com

Contact an Experienced Bankruptcy Lawyer, Lieber & Lieber, LLP to File the Chapter 13 and Remove the 2nd Mortgage Lien

Barbie D. Lieber of Lieber & Lieber, LLP is a bankruptcy attorney who has practiced bankruptcy since 1987 when she clerked for the Honorable Cornelius Blackshear, United States Bankruptcy Judge. She is experienced in making motions or commencing litigations to remove the junior mortgage lien. She can be contacted at 646-480-1826 or Barbie@lieberlegal.com. Lieber & Lieber, LLP is centrally located in Manhattan, across from Grand Central Station at 60 East 42nd Street, New York, New York 10165.

Will I Lose or Be Able to Keep My Home in A Chapter 7 or Chapter 13 Bankruptcy?

Written by Barbie Lieber

Generally, you should not lose your home in a chapter 7 bankruptcy assuming that you have been making payments on your mortgage or will be able to have your debt modified and your equity does not exceed $150,000 or $300,000 if the property is jointly held. In late December 2010, New York State enacted legislation increasing the New York State homestead from $50,000 to $150,000. The $150,000 exemption is for New York City, Long Island, Westchester, Rockland and Putnam. The exemption is $125,000 for Dutchess and Orange Counties (or $250,000 for joint owners); and $75,000 (or $150,000 for joint owners) for Sullivan County.

If you are married and your home is held by each spouse, then the exemption doubles. So, for instance, if you live in Manhattan, Queens, Long Island, Westchester, the Bronx, Staten Island or Brooklyn and own a home with your spouse, you can protect up to $300,000 of equity. If you and your spouse own a house, condominium or cooperative apartment worth approximately $500,000 and have 2 mortgages totaling $250,000, then you would be able to exempt the $250,000 in equity in your home. So, your home should not be affected by the bankruptcy.

This assumes that you have kept current on payments on your mortgage or will be able to successfully modify your mortgage loan while in bankruptcy. Lieber & Lieber, LLP is often retained by its clients to modify home mortgages. This can be done through the Bankruptcy Court system whereby the Bankruptcy oversees the process.

In the event that you have more than $150,000 in equity or $300,000 in equity if you are married, then you can still protect your home by filing for chapter 13, which is a payment plan. So, for instance, perhaps you own 100% if your home and have equity (above the mortgages) of $200,000, which is $50,000 above the $150,000 exemption. In order to protect your home, you may be able to pay the $50,000 over a time in a 5 year chapter 13 plan, comprised of 60 payments. With the Chapter 13 Trustee's commission of 10%, the monthly payment plan may be as low as $916. Such repayment plan should serve to prevent the chapter the trustee from attempting to sell your property. There are other benefits to chapter 13 as well, such as the preservation of other assets, such as vehicles or investment or bank accounts that may be vulnerable in a chapter 7. Further, not only does chapter 13 serve to protect assets, but it is also allows individuals whose income exceed the thresholds of chapter 7 to be able to file for bankruptcy. Please contact Barbie D. Lieber, Esq. of Lieber & Lieber, LLP at 60 East 42nd Street, New York, New York 10165 at 646-480-1826 or Barbie@lieberlegal.com if you would like to learn more about Chapters 13 and 7, as well as how bankruptcy can protect your home and other assets.

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