Chapter 13 Mortgage Lien Strips.

[zeezee]

*that should have said: I can't even just pay the 2nd from what I owe to the value of home*

[zeezee]

The home MUST be worth less than what is owed on the first. In chapter 13, it's an all or nothing deal with a lien strip on a primary residence.

Thus, your home must appraise for less than $332,000 (the balance of your first mortgage). If the home won't appraise for less than the amount owed on the first mortgage, the 2nd mortgage stays...in full.

Got it!! Thanks. So is this cram down not an option either? I'm in VA. I can't even just the 2nd from what I owe to value of the home? (Meaning the 365 minus the 332 leaving 33k) Isn't that what the cram down is?

[HHM]

The home MUST be worth less than what is owed on the first. In chapter 13, it's an all or nothing deal with a lien strip on a primary residence.

Thus, your home must appraise for less than $332,000 (the balance of your first mortgage). If the home won't appraise for less than the amount owed on the first mortgage, the 2nd mortgage stays...in full.

[zeezee]

Okay. Bear with me I'm a little thick. I did read all of the thread too!

My primary residence lets say is worth $365k (I'm still waiting on my actual appraisal).

The original first was $350k (now owe $332), the 2nd is $98k.

From reading, I won't be able to strip the second right?

Will I be able to strip it from what the value is? Meaning, since the first is secure by $350k and the house is worth $365, that only leaves $15 to secure the second.

So would I be able to strip $83k from the 2nd and just pay the 15k in my plan?

Confused? Me too!

[TooMuchCredit]

I just got informed that lien stripping is not done in my district - Northern Georgia. Has anyone here actually stripped a lien in N. Georgia so I can prove the contrary? I thought the rulings had said they were allowable throughout the 11th circuit, but maybe it still varies by district?

Edit: turns out it can be done in my district. It has to go before a judge however and costs above and beyond the flat Ch. 13 fee.

[CH33 Paralegal]

yes, the law is meant for homeowners, not for-profit landlords.

[CH33 Paralegal]

in a 13, you don't get credit for mortgages that you are surrendering or stipping.

[worldBfree]

Correct, for the most part.

If an inferior lien has ZERO value you can still strip it. Also, if you can afford to pay the value of a crammed down inferior lien, you can still cram it down. What you would not be able to do is cram down the first on a home you owned for which the loan was stated as primary residence even if you later moved from the property and rented it. The rule for primary residence is the "intent of the loan".

Hi, forgive me as I'm new here but to be clear- I can strip the 2nd mortgage on my condo because;

1. My condo used to be my primary residence but now I am renting out.
2. The value is now worth less than the 1st mortgage.
3. I will be filing chpt13.

I am confused because 1 attorney has told me that I could strip the 2nd on rental property while another has told me I could not. I'm not after a cram down, only the lien strip on the 2nd. Could you clarify? Thank You!

[lrprn]

Wouldn't that also make a hardship discharge possible?

A Ch 13 hardship discharge is possible under very specific circumstances:

** The inability to complete payments has to be due to circumstances tha the filer can't be held accountable for - death of the filer, accident, job loss, etc.

** The filer is unable to modify the plan to fix the problem.

** The general unsecured creditors have to receive at least as much in Chapter 13 distributions as they would have received in a Chapter 7 liquidation.

The hardship discharge is more limited than the normal Ch 13 discharge and does not apply to any debts that are nondischargeable in a chapter 7 case.

Since there’s a hearing required before the bk court before a hardship discharge can be granted, it's not a do-it-yourself project.

See http://www.uscourts.gov/bankruptcyco....html#hardship and http://www.************************/...-discharge/for more detailed information.

[IBroke]

...serious medical problems...

Wouldn't that also make a hardship discharge possible?

[lrprn]

HHM, what exactly do you mean by this?

Actually studies done for many decades by consistently show that only around a third of Ch 13 cases actually make it successfully to discharge - see http://www.bankruptcylawinformation....event=dspStats

The other two thirds of the chapter 13 bankruptcy cases are either dismissed or converted to a chapter 7 bankruptcy.

The primary reasons for this are that many things can happen to filers over 3-5 years - divorce, job loss, serious medical problems, etc. Ch 13 requires sufficient disposable income to support a plan. Anything that significantly reduces disposable income makes completing a Ch 13 successfully very difficult.

[HHM]

HHM, what exactly do you mean by this?

That means that 60% of chapter 13's end up dismissed at some point or converted. Usually, the debtor's circumstances change such they can no longer make the payment and the case ends up getting dismissed.

[steak]

After all, only about 40% of chapter 13's actually make it to discharge.

HHM, what exactly do you mean by this?

[samson420]

How area specific is all of this information?

I live in AZ and I went to one of those big time on TV BK Lawyers. They stated that we do not qualify for a 7 and only qualify for a 13, since we make way too much money.

I am fine with a 13 since I want to keep our house. I asked if there is anything I can do with our second mortgage and they said absolutely not.


Then I started researching on how I can get rid of the 2nd mortgage, and all of this should work in my situation.

I owe:

205k on the 1st
51k on the 2nd

The house has been apraised at 153k

My only question is. Can get rid of the 2nd and file a chapter 13 in AZ?


Sorry for a very long winded 1st post. . . . . .

[bkause]

For example, if you have a rental property that is worth $150K but you owe $200K, you "can" cram down that mortgage, but the CATCH is, you must pay the cramed down amount ($150K) within the chapter 13 plan, i.e. within 60 months. And no, you cannot modify interest rate.[/QUOTE]

HHM... does this cram down rule apply to all states? I haven't had one attorney mention that to me when I spoke to them about my Investment property. We would owe about $300,000 which would make it impossible for us to afford the BK.