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If My Second Mortgage Is Really High, Can I Get Rid Of It When I File For Bankruptcy?

Yes, you can. So long as you file a Missouri Chapter 13. In a St. Louis Chapter 7 bankruptcy, you are not able to get rid of a second (or junior) mortgage. But even if you qualify for a Missouri Chapter 7, it is still a good idea to look into a 13 for this very reason.

In a St. Louis Chapter 13 bankruptcy, one of the major benefits is the option of stripping off a second mortgage against your home. In many instances, this can eliminate up to tens of thousands of dollars off what you owe on the house. But there are of course a few rules that apply that must be satisfied in order to qualify.

So let’s say for instance that you own a home in which you owe a principal balances of $100,000 on a first mortgage. And you owe a balance of an additional $30,000 on a second mortgage. Let us also assume that the fair market value of your home is $90,000. In this scenario, the value of your home is actually less than the amount you owe on your first mortgage. But if the value of your home (in other words, the amount of money that you realistically think you could sell your house for in the current economic conditions) were more than one hundred thousand, then you would have a situation in which the value was more than the amount owed on the first mortgage.

Why are these particular numbers important? Because if in fact the value of your home is less than the first (or primary) mortgage, and you file a Chapter 13, it is possible to strip off the second mortgage altogether. Why? Because in such a situation, there is nothing really supporting the second mortgage if the house were to sell (or go into foreclosure). In other words, there would be no money to give to the junior lien holder to satisfy the debt. But that really isn’t your fault, since you don’t control the overall real estate market. If the value of homes drops, it’s not because of anything that you did directly; that’s just the nature of the markets. But that doesn’t mean that you should have to continue to pay for something that has no worth.

The affordable St. Louis bankruptcy attorneys at Brinkman & Alter, LLC have been making sure that our client’s get the best financial outcome possible. The bankruptcy legal services we provide are not only top notch, but also are in place to ensure that you get rid of every penny of debt you may currently owe. We specialize in getting rid of this debt, making sure that you keep all the assets you want to retain, and get you the fresh start / clean slate that you deserve. Our initial consultation is free of charge, and our staff is ready to help you achieve your goals. Call today!