A recent decision from the Supreme Court is important for homeowners as it addresses second mortgages. The ruling specifically addresses concerns related to these second mortgages where homeowners find their homes underwater. According to the decision, homeowners should not be prepared to strip or otherwise anticipate wiping out their second mortgage completely in bankruptcy just because the debt is higher than the homeâ€™s value.
In Chapter 7 bankruptcy, an individual can eliminate unsecured debts like credit cards and personal loans. The recent case of Bank of America N.A. v. Caulkett argued that the ownerâ€™s second mortgage was technically unsecured because the security (also known as the home) was eliminated by dropping home prices.
Homeowners may be eligible to strip second mortgages by taking the Chapter 13 path instead, but choosing this course of action can be expensive and time-consuming. This ruling is expected to have a significant impact across the country due to the many homes that have second mortgages.
Getting your questions answered upfront is one big advantage to consulting with a bankruptcy attorney as soon as you believe that you may need the financial relief afforded by filing. It is imperative that you know what can be eliminated and what cannot so that you can move forward into an improved financial future without any further surprises or great frustrations.
If you believe that you will not be able to catch up with your payments and you are buried by a large amount of medical debt, then you should get help sooner, rather than later, so you can chart a course for your future. Make sure to discuss possible exemptions and how bankruptcy will impact your overall financial situation before moving forward. If you have tried to get on top of it but are still struggling, then you may be able to get relief by filing. Jayson Lutzky is an attorney offering personal bankruptcy services that provide a fresh start for debtors. Mr. Lutzky offers free in-person initial consultations. If you would like to set up an appointment to discuss your financial situation and bankruptcy, then call 718-514-6619. Visit www.MyNewYorkCityLawyer.com to learn more about Mr. Lutzky.