Remove Your Second Mortgage
Would You Like to Pay Off Your Second Mortgage for Only Pennies on the Dollar, Even If You Can’t Refinance?
With the recent decline in home values here in Southern California, many homeowners find themselves in a situation where the payoff for the loan they have on their home is more than the home is worth. It is frustrating thing to keep making payments on loans when the value of your home keeps declining. This seems like you are throwing your money in a hole.
What makes this problem worse is if your loan is an adjustable type and your payment amount can continue to go up. Paying more for something than it is worth is not something anyone would choose. But you don’t have a choice. You can’t control property values or the upward adjustments on your loan. Further, because it will take more money to pay off the loan than your home is worth, you also cannot refinance! Now you are stuck.
There is a Positive Side in This
Let Me Ask You Three Questions:
- Do you have two or more loans on your home?
- Is your home worth substantially less than your loan?
- Would your monthly budget get much better if you didn’t have a second mortgage?
If you answered yes to the above questions, you could be a candidate for the installment repayment restructuring plan that is available under the federal bankruptcy laws. We will prepare the installment repayment and restructuring plan based on your income and expenses. You will pay only as much as your budget allows, and all of the payments will go to principal. That’s right – ZERO percent interest.
Here is an example:
- You have one mortgage for $400,000 and a second mortgage for $100,000. Your house used to be worth more than $500,000, but now its worth about $375,000. If you use the installment restructuring plan you will make regular payments on the first mortgage and on all of your regular living expenses each month (car payments, food, insurance, clothing, phone bills and utilities, etc). After you pay the regular expenses, you will pay an additional amount to a Government appointed ‘trustee.’ The amount that you will have to pay to the Trustee is based on how much money is left over from your income after you pay your monthly bills. The money that the Trustee gets from you is then paid out by the Trustee towards the $100,00 second loan (and any other credit cards, medical bills etc) for a period of time, which is typically 36-60 months.
After you are finished paying the Trustee, if there is a balance left unpaid on the second mortgage and the credit cards, that balance goes away. That’s right, it goes away. All you have to do is pay what you can afford for the period of your ‘plan’. Installment reorganization bankruptcy allows you to convert that second mortgage into an ‘unsecured’ debt and pay it only if you can afford it – at ZERO percent interest.
What’s the Catch? The catch is that you will have to live on a budget that is reasonable. It will take some discipline, but you can do it. All you have to do is pay what you are reasonably able for the term of your plan.
The best news of all is your bank has to accept the terms of your installment plan. Once the court confirms the dollar amounts of your plan, it is 100% guaranteed.
This is why the Chapter 13 Installment Payment Plan is different from what the loan modification companies are offering. A modification is a great result when you can get one, but many people don’t know that the bank does not HAVE TO change anything just because you want to pay less. Let’s face it, everyone wants to pay less. The Chapter 13 Installment Payment Plan is a part of federal law and the bank HAS TO accept it, and cannot change their minds later. The bankruptcy court has the power to make the bank accept your plan. Even if that means the bank will only get pennies on the dollar. Not a bad deal, right?
Some people think that bankruptcy is what you do when you are broke. However, the installment repayment plan is not for people without income. You do have to be able to afford your first loan and your monthly budget to make this work. If this is your situation, you may be able to use this reorganization plan to remove your second loan at pennies on the dollar!
To find out if this will work for you, call my office at (949) 480-9639 and tell the receptionist that you want to schedule a free, no-obligation, Chapter 13 bankruptcy consultation. We will email or mail you directions and information on what you need to bring.
I am Ryan Davies and I provide bankruptcy services for the southern California communities of Lake Forest, Rancho Santa Margarita, Laguna Niguel, Laguna Beach, Laguna Woods, Aliso Viejo, Mission Viejo, San Clemente, Irvine, Costa Mesa, Newport Beach, Tustin and Santa Ana.
If you need bankruptcy information, or you are facing mortgage loan foreclosure, I have answers for you.
