Can You Eliminate An Underwater 2nd Mortgage In A Chapter 7?

Sadly the Supreme Court of the United States in a unanimous decision  held that a Chapter 7 Debtor cannot wipe out an underwater second  mortgage. The case is Bank of America, N.A. v Caulkett, 575 U.S. _ (2015)(June 1, 2015)

An example of an underwater 2nd mortgage would be as follows:

  1. Value of property: $200,000
  2. 1st mortgage balance: $220,000
  3. 2nd mortgage balance: $50,000

This  case did not change anything in Illinois as only one court in the  Northwest part of the US had allowed underwater junior mortgages to be  eliminated in a Chapter 7.

Consumer and Homeowner advocates such as us (Robert J. Adams & Associates) had hoped for a different decision.

What  is the benefit to the junior mortgagee? Underwater junior mortgages can  neither foreclosure (as it would be subject to the senior liens) nor  can they sue on the note as the debt was discharged. Their aim is either  to squeeze some money out of the homeowners or to just wait and hope  that eventually the property will increase in value.

WHAT IS THE BEST SOLUTION FOR A HOMEOWNER WHEN THE 2ND MORTGAGE IS UNDERWATER? CHAPTER 13!

Our  law firm as well many experienced Consumer lawyers has eliminated  2nd mortgages through Chapter 13. We helped so many and it has literally  changed their lives for the better.

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