Two Mortgages Under Water? Hope May Be on the Horizon

The 2008 housing crisis created an enormous increase in toxic mortgage-related debt. In fact, in over their heads, many homeowners took out second mortgages in an effort to make ends meet. Then, during the following year, nearly 1.5 million people filed for personal bankruptcy, representing a 32 percent increase from the previous year.

This week, the United States Supreme Court considered two cases that could be game-changers for bankrupt homeowners with two mortgages.  The issues at hand amount to this: do courts have the authority to void the second mortgages of bankrupt debtors if the first mortgage is more than the home value. In other words, if a homeowner’s first mortgage is already under water (they owe more than the house is worth), can the second mortgage be set aside?

While the top court works out these issues, there are a few things we know to be true. The most obvious is that bankruptcy laws are extremely complex. When you add in a foreclosure, it’s even more critical that you make sure a seasoned bankruptcy lawyer is involved as soon as possible. If you or someone you know has two mortgages on a property that is worth less than you owe, start asking questions.

No matter how the Supreme Court will rule on this issue, an experienced lawyer can help you navigate the often-confusing bankruptcy code so you fully understand your rights and responsibilities. Facing these obligations without qualified representation can be overwhelming, and can wind up costing you more than you actually need to lose.

Foreclosure or even a short sale may be an option for you. If so, experienced real estate and bankruptcy lawyer Joel R. Spivack Esq. would be a great resource for your family.

If it turns out bankruptcy is in your best interests, be aware that it doesn’t have to be the end of anything but your life it debt. For many, it means the chance to start over, restructure existing debt, rebuild credit and, yes, stay in their homes. Filing Chapter 13 or Chapter 7 provides an extra window of time and a reprieve from creditors. This will give you time to figure out your options and speak with an experienced bankruptcy attorney.

Don’t get taken advantage of during the bankruptcy process. If you are thinking about filing for bankruptcy, contact Mr. Spivack today. He will guide you through the steps and advise you regarding what actions you can take to expedite the process and start rebuilding your life.



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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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