Pennsylvania Bankruptcy & Second Mortgages
A recent bankruptcy case from New York State, In re Addams, 564 B.R. 458 (Bankr. E.D. N.Y 2017), confirmed that it is not possible to utilize a bankruptcy case to bifurcate a home mortgage – divide it between a partially secured and partially unsecured claim. In other words, a mortgage balance cannot ordinarily be reduced just because the home is worth less than the mortgage balance. However, it still remains possible to remove a second mortgage lien in a Chapter 13 bankruptcy if it can be proven that the value of the house is lower than the balance owed on the first mortgage.
A third mortgage can also be eliminated if the house value is less than the combined balances of the first and second mortgages. An appraisal is required to show the value of the home, and it helps if the income and assets of the debtor are low enough to allow them to discharge unsecured debts. An experienced attorney can explain the rules. Here at Newman, Williams we have helped hundreds of clients with the elimination of second and/or third mortgages.
Poconos Bankruptcy Lawyer
712 Monroe Street
Stroudsburg, PA 18360