Removing a Second Mortgage in Bankruptcy

In BANK OF AMERICA, N. A. v. CAULKETT the Supreme Court of the United States recently issued an opinion in a case regarding the removal of a second mortgage through Chapter 7 Bankruptcy.  In that case the Bankruptcy Debtors were ultimately unable to completely or partially reduce their second mortgage.

The rule the Court sited to in its decision stated “A debtor in a Chapter 7 bankruptcy proceeding may not void a junior mortgage lien under §506(d) when the debt owed on a senior mortgage lien exceeds the current value of the collateral if the creditor’s claim is both secured by a lien and allowed under §502 of the Bankruptcy Code. Pp. 2–7.”

However, in this Jurisdiction, the residents of Philadelphia and its surrounding counties can and should consider Chapter 13 Bankruptcy as an effective tool to remove a second mortgage, or a home equity line of credit.  This can add equity to your home, and make keeping your home a financially sound decision.  Our attorneys have successfully filed Adversary Proceedings inside of Chapter 13 Bankruptcy cases in order to demonstrate that second mortgages and lines of credit should be removed pursuant to §506(d) of the Bankruptcy code.

Chapter 13 Bankruptcy has the power under the correct circumstances to avoid your second and third mortgage liens, and relieve the financial burden on you and your family.  Contact our Attorneys today for a free legal consultation.

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