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2nd Mortgage Objection d/ t disability insurance coverage

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    #1

    2nd Mortgage Objection d/ t disability insurance coverage

    We have just received a notice from our attorney that the 2nd mortgage (4 of 10 years paid to date) Lein strip is being challenged by our bank d/t having disability insurance coverage on just that loan. While that means we won't have to pay either way, we will be left with the loan on our record and 6 years of having to provide "physician letters" of proof for my husbands disability. Not so much a problem as a "pain" to complete lengthy paperwork. Any thoughts either way?
    Note: Primary mortgage is at 6.25% and the value of our house was just appraised at about 3/4 of that mortgage which makes us eligible for the lien strip. Yes, we want to stay in our home anyway.
    Any thoughts are appreciated!
    Filed 13 on 11.23.10:blink
    Tags: None
    #2
    What exactly are they objecting too and what are they asking to happen?

    It's not clear from your post what the issue is?

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      #3
      It sound to me like the husband is disabled and they have insurance to pay the loan in case of disability and the holder of the 2nd is claiming that should prevent stripping the 2nd.

      Cappucccino1, have you talked to your attorney about this and whether he thinks the lender will be successful with this objection? As far as I know, the only requirements to strip a second are (1) the 2nd is completely unsecured and (2) you finish your plan. The fact that you have insurance coverage to pay the loan in the case of disability shouldn't make any difference. I don't think the court can force you to rely on the insurance coverage instead of getting the protection you are allowed under the bankruptcy code. But, this is just a layperson's thoughts.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!

      Comment

        #4
        I think the disability insurance proceeds should be paid into the chapter 13 estate and distributed pro rata to claimants including the 2nd mortgage.
        Either that or the bank's objection against you should be dismissed and they should file a cross claim against the insurance company. (and good luck to them on that one!)

        Just one man's twisted view of the legal processs.
        filed chapter 13..confirmed...converted to chapter 7...DISCHARGED!

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