Can I get out from under a negative equity situation on my house if I file bankruptcy?
Question Details:
My house is 30 days into foreclosure. I owe about 40k more than its worth. I've tried loan modification to help me through financial hardship. I got my bills lowered but I'm still about $1,700 short per month and my wife’s unemployment is about to run out. I'm way behind on just about everything but my truck and insurance. I'm ready to file bankruptcy and I'm really not trying to save my house. It's too expensive now. Can bankruptcy eliminate my negative equity or cn I just get out?
That depends on a number of factors, including whether the courts in your State follow particular case law allowing for lien strips of wholly unsecured junior mortgages on principal residences.
You may be able to eliminate a 2nd (or junior) mortgage lien in a Chapter 13 bankruptcy case if, and only if, the appraised value of your home is less than the total amount owed to the first mortgage.
Mark J. Markus, Attorney at Law
http://www.bklaw.com/
