Going for Ch. 13 with 2nd mortgage lien strip

[UpsideDown]

Hi all,
Newbie here, checking in. I've been lurking here for a couple of weeks, trying to educate myself. I have about $49K in CC debt and have been considering a no asset Ch. 7, but since I'm upside down in my house with a $65K 2nd mortgage, I've decided to go Ch. 13 and strip that 2nd mortgage too. Went for my 2nd free consult today and the lawyer says it's do-able.

I'm now officially not paying my CCs and 2nd mortgage anymore and it seems like a big weight off already. Monthly min. on CCs is $900 and 2nd mortgage is $700. The hardest thing was just making the decision and finding the right lawyer. Hopefully, I'll have everything together and be able to file in a couple of weeks.

[justbroke]

You should have no issues with your lien strip. They are actually becoming easier as many of the District Courts of Appeal have reviewed some high profile cases and it's now caselaw. For example, in the 11th Circuit Court, covering Florida, Georgia, and Arkansas, this is well accepted practice.

I wish you luck with your Bankruptcy filing and smooth sailing in your Chapter 13.

[UpsideDown]

Thanks, justbroke...

I actually gave my lawyer a CD copy of the judge's decision from the Frederickson case in Arkansas where the debtor had negative disposable monthly income and still got his Ch. 13 confirmed despite the trustee's objection.

I'm not one to just let the lawyer handle everything and not worry about it.
I feel like I have to be pro-active and gather as much information and knowledge as I can to help my case. After all, I'm the one who has something at stake here, not the lawyer. They get paid regardless of the outcome. This site (and your posts) have been a wealth of information.

I'll post updates as I go along.

[BrokeinGa]

You should have no issues with your lien strip. They are actually becoming easier as many of the District Courts of Appeal have reviewed some high profile cases and it's now caselaw. For example, in the 11th Circuit Court, covering Florida, Georgia, and Arkansas, this is well accepted practice.

I wish you luck with your Bankruptcy filing and smooth sailing in your Chapter 13.

I was told by my attorney I could not have my 2nd mortgage stripped. I told him I owed more with the second,than the house was worth, but he told me no way.

[BigJohn]

Maybe your lawter did not understand you very good.

1st mortgage is:
2nd mortgage is:

value of house is less then 1st mortgage:

[UpsideDown]

I was told by my attorney I could not have my 2nd mortgage stripped. I told him I owed more with the second,than the house was worth, but he told me no way.

If your 1st mortgage balance is more than the home is worth, then the 2nd is wholly unsecured and can be discharged as unsecured debt, however if the home's value is anything above what you owe on the first mortgage, then no.
That's my understanding.

Example: Home's value=$199,000
1st=$200,000
2nd=$ 50,000

2nd mortgage is wholly unsecured and can be discharged (depending on your BK district)

[justbroke]

I was told by my attorney I could not have my 2nd mortgage stripped. I told him I owed more with the second,than the house was worth, but he told me no way.

I assume you're in Georgia? Your lawyer may be wrong, but it may be your information that is wrong.. The key landmark case was In Re Tanner, 11th Circuit (Georgia) in 2000.

I'm guessing that your first mortgage is less than the value of the home. This means that your second mortgage is secured by at least $1.00 (yes, one dollar). In this case, you wouldn't be able to lien strip.

The second mortgage must be wholly unsecured.

[Brokeinohio]

Chapter 13 Update - Ohio

Filing a Chapter 13 next week. Home is worth $481k owe $488k on the first mortgage and $140k on a 2nd. Have $30k in CC debt. I just paid $250.00 for a current appraisal - came back @ $481k - so the 2nd mortgage is fully unsecured. Home values have tanked here - especially for nicer, custom homes - we are essentially a suburb of Detroit, MI - y'all know what's happened there right? So, what I'm worried about is that there's only about $8k difference between value and 1st mortgage balance (although negative). Is there a statute of how much between value and what's owed? I'm hoping NOT! By the way I DID get a Loan modification - if anyone needs help on that, I am officially an expert - experientially. Chase Bank....

[Brokeinohio]

Any status update?

[LadyInTheRed]

Filing a Chapter 13 next week. Home is worth $481k owe $488k on the first mortgage and $140k on a 2nd. Have $30k in CC debt. I just paid $250.00 for a current appraisal - came back @ $481k - so the 2nd mortgage is fully unsecured. Home values have tanked here - especially for nicer, custom homes - we are essentially a suburb of Detroit, MI - y'all know what's happened there right? So, what I'm worried about is that there's only about $8k difference between value and 1st mortgage balance (although negative). Is there a statute of how much between value and what's owed? I'm hoping NOT! By the way I DID get a Loan modification - if anyone needs help on that, I am officially an expert - experientially. Chase Bank....

You could strip even if the apraisal was $487,999. With the appraisal that close, it is more likely that the creditor will object to the strip and claim the house is worth more. So you (your attorney) may have to fight a bit.

[NoTomatoCan]

I am in SE Michigan and filed in early March.

Appraisal was about $6k under what we owe on our first, then got lucky in late February as SEV came in at $10k under what we owe on the first.
We included the SEV form with our motion and as of day 33 of being served, the holder of the 2nd has not responded!

Our attorney said that wasn't unusual, particularly in MI. Not sure what Northern Ohio is like though...

[boochase]

Read something the other day and need confirmation. In order to propose stripping the second mortgage/HELOC, the court will require an appraisal. IF this is true, what kind of appraisal? Can one use a realtor to do a comparative analysis? Or does one have to use a specialist (one that only does appraisals)? Thanks for the anticipated clarification.

[Nanzee]

We did a CMA. The trustee objected and asked for an appraisal. Our attorney fought it because our CMA was very thorough, and we did not tell the realtor what it was for. So we did not have to get the appraisal, which would have cost us about $300-$400 dollars I think.

[NoTomatoCan]

We got an appraisal simply because it was stronger evidence than a CMA.

Whichever route you go, just make sure you get the appraisal or CMA done as close to your filing date as possible. The value of your home on your filing date is what matters.

[Skipper]

Not to appear ignorant, but what is a "CMA"? Is it similar to a BPO (broker's price opinion)?

TIA,

Skipper

...Never mind, I found the answer...