Supreme Court to Review Second-Mortgage Bankruptcy Liens The country’s top court Monday agreed to hear arguments on whether homeowners can cancel their second mortgages in bankruptcy when their properties aren’t even worth the value of the first mortgage. The Supreme Court said it would review two appeals filed by Bank of America against bankrupt homeowners who are trying to remove the bank’s liens on their property. The two Florida homeowners say that filing for Chapter 7 bankruptcy protection with a first mortgage that is worth more than their property’s value allows them to strip off the lien from the second mortgage. When both loans are underwater, the second lien is essentially valueless, the homeowners’ lawyers argue. Lenders, however, have fought to keep the second mortgage liens, arguing that the debt could someday be fully paid, especially as property values rise. The 11th U.S. Circuit Court of Appeals upheld bankruptcy court decisions that stripped Bank of America of its liens. The bank appealed. About 2.1 million borrowers had partly or wholly underwater junior mortgages at the end of the second quarter of 2014. The Supreme Court can now clarify the rules for bankruptcy judges who have disagreed on this issue. A ruling in favor of homeowners could make it easier for people who file Chapter 7 bankruptcy to keep their homes. Last year, more than 700,000 individuals and couples filed for Chapter 7 bankruptcy, the most popular type of consumer bankruptcy, which enables a court-appointed trustee to sell a person’s property to repay debts and then cancel the rest. WHAT ARE THE DIFFERENT KINDS OF BANKRUPTCY? An individual filing for bankruptcy generally must decide whether to file for protection under Chapter 7, 11 or 13. Once a petition is filed, an estate is opened and a Trustee is appointed to oversee the administration of the case. Chapter 7 is the liquidation chapter, also known as a straight bankruptcy. Chapter 11 is commonly referred to as business reorganization. Although individuals can file a Chapter 11, most filings are for businesses. Chapter 13 is another type of reorganization, commonly referred to as a wage earners plan. This chapter is primarily filed by someone whose house is in foreclosure, has substantial non exempt assets or whose income is above the median average. IF I FILE FOR BANKRUPTCY, WILL I LOSE EVERYTHING? No. Exemptions exist and an experienced bankruptcy attorney can explain how to list your assets properly and maximize your exemptions. HOW MUCH DOES IT COST TO FILE FOR BANKRUPTCY? Filing fees vary, but our initial consultations are always free - so dont delay. We offer payment plans, accept credit cards, and can make ourselves available for evening appointments. We help clients solve their bankruptcy problems...call for a free consultation today. Call our office 24/7: 407-644-9500 DP Johnson LAW Helping Good People Get Through Bad Times
Posted on: Wed, 19 Nov 2014 02:45:53 +0000