Imagine being a homeowner with a first and second mortgage on a property and having the ability to cancel out the second mortgage. Literally stop making payments and keep the property! That is exactly what is available to debtors who file for Chapter 13 bankruptcy (it can also be used in a Chapter 7). As was written about yesterday in The Mercury News of San Jose, it is becoming an increasingly common occurrence. I am finding it increasingly of use for my clients in both Missouri and Kansas. The situations in which this can work are as follows: A debtor must own a piece of real estate, regardless of whether it is a home or investment property, with more than one mortgage in place; The value of the property in today’s market must be less than the amount needed to pay off just the first mortgage; Either a motion or…
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Earlier this month, Democratic Senator Sheldon Whitehouse introduced a bill that would allow mortgages to be modified during bankruptcy proceedings at a local level. Currently, programs such as this exist in several states, including New York and Florida, but the proposed bill would expand the mediation programs to all U.S. jurisdictions. Following the introduction of the Limiting Investor and Homeowner Loss in Foreclosure Act, US Bankruptcy Court Judge Arthur N. Votolato upheld the Court’s right to pre-trial foreclosure meditations in the state of Rhode Island. Whitehouse stated that he hoped the decision “will encourage other districts…to adopt similar programs.” However, three House Republicans have already introduced legislation that, if adopted, would immediately eliminate the program. The Sader Law Firm has more than 30 years of combined experience in Chapter 7 bankruptcy, Chapter 11 bankruptcy and Chapter 13 bankruptcy cases. Contact an attorney at The Sader Law Firm today for a…
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