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Posts Tagged ‘Southern California Bankruptcy Attorney’

The best form of Loan Modification may not be a Loan Modification at all! Part 2 of 2: Eliminating Junior Liens

Friday, May 13th, 2011

Here is how it works: years ago, when home values were at their height, home owners used the equity in their home(s) to borrow against. They took out second mortgages, third mortgages, and even fourth mortgages. Those mortgages were secured by the equity in the home. But today, one in four California homeowners is upside down (where the liens against a property exceed the value of the property).  In many cases, debtors can completely eliminate junior liens either in a Chapter 13 or Chapter 11 Bankruptcy!

For most individuals and families, eliminating their junior mortgages and creating an affordable three to five year repayment plan on their debt is better than anything possibly achieved through a loan modification. Consumers are able to get caught up on delinquent mortgage payments and eliminate their junior mortgages upon the completion of their Chapter 11 or 13 plan. Consumers then walk away from their plan, free of all unsecured debts and their second mortgages in some cases. It truly represents a fresh start.

The great news is that by using this plan, it is possible to stay in your home while paying only a percentage of your unsecured debt even though you may be making less than you did several years ago.

The only shame is that most people who qualify for this type of bankruptcy don’t even know it exists!

To read the full story click here

Your Underwater Mortgage Doesn’t Have to be a Ball & Chain

Monday, August 2nd, 2010

California is a non-recourse state for the first mortgage on a home, meaning that the debt is tied up in the collateral, not the individual.   This means that when the bank forecloses on your home, once you turn over the collateral (your house), the bank cannot come after you for any outstanding debt.

Using an example, say you bought a house in 2003 for $800,000 by taking out a $600,000 mortgage.  You live in the house for a couple of years enjoying relative prosperity and pay off about $50,000 of the mortgage.  Then, tragedy: the real estate market crashes and the value of the home is now $250,000.  $300,000 of your mortgage is now unsecured, which means your house is now an under-secured debt.  Say you then lose your job and cannot make the mortgage payments.  After struggling to make ends meet and defaulting on your mortgage several months in a row, the bank starts foreclosure proceedings and sells your home for $250,000.  Because California is a non-recourse state, once you turned over the collateral (your house), your mortgage lender cannot collect from you.  Even if you had $200,000 in your bank account, the lender cannot touch it.  The lender assumed this risk when they approved your mortgage application, so after you hand over the house you can walk away and live happily ever after.

However, even in a non-recourse state, if you have a second mortgage that you took out after your first mortgage, you are still on the hook for that debt.  For example, say in 2003 you bought the house for $800,000 with a mortgage of $500,000.  You then enjoyed a year of prosperity followed by a few years of hardship.  After struggling to make ends meet, you decide to take out a second mortgage on your house worth $100,000.  Real estate market crashes and the house is now worth $200,000, leaving you upside-down on the house by $400,000.  If you turn over the house, you can walk away from the first $500,000 mortgage, but you’re still liable for the second $100,000 mortgage.  Since you no longer have the collateral, the second mortgage is now an unsecured debt, which you are still liable for.

Most people cannot afford to continue making payments on a mortgage for a house they no longer own.  If you default on your payments, the bad news is that the lender could get pretty aggressive about collecting on the outstanding balance.  The lender can go to court and get a judgment allowing them to collect from you through wage garnishments or a bank levy.  For someone who is struggling to make ends meet, these garnishments or levies can be brutal.

The good news is that unsecured debts can be discharged in bankruptcy.  If you simply cannot afford to continue making the mortgage payments for a house you no longer own—or if you are facing potential wage garnishments or bank levies—call the Doan Law Firm for a free, no obligation consultation to learn about how bankruptcy can alleviate this financial stress.

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    Laguna Hills Bankruptcy
    25401 Cabot Rd.
    Suite 113
    Laguna Hills, CA 92653
    Call 888-362-6529

    Santa Ana Bankruptcy
    930 West Seventeenth St.
    Suite C
    Santa Ana, CA 92706
    Call 714-795-3536

    Corona Bankruptcy
    1411 Rimpau Ave.
    Suite 108
    Corona, CA 92879
    Call 909-708-4597

    Moreno Valley Bankruptcy
    24490 Sunnymead Blvd.
    Suite 101
    Moreno Valley, CA 92553
    Call 951-579-4756

    Watsonville Bankruptcy
    444 Airport Blvd.
    Suite 109
    Watsonville, CA 95076
    Call 888-362-6529

    Oceanside Bankruptcy
    1930 S Coast Hwy
    Suite 206
    Oceanside, CA 92054
    Call 760-450-3333

    Chula Vista Bankruptcy
    333 H Street
    Suite 5000
    Chula Vista, CA 91910
    Call 619-500-6535

    Escondido Bankruptcy
    320 East 2nd Ave.
    Suite 108
    Escondido, CA 92025
    Call 760-746-4476

    La Mesa Bankruptcy
    4817 Palm Ave.
    Suite I
    La Mesa, CA 91942
    Call 619-462-362

    San Diego Bankruptcy
    185 West F St
    Suite 100
    San Diego, CA 92101
    Call 619-234-3626