Is The Homeowner's Bankruptcy Attorney Giving Bad Advice?
We are in contact with a homeowner who filed Chap. 13 the day before his home was to be auctioned off. He has 2 mortgages and is way upside down. His attorney told him that if he gets an appraisal and the appraisal comes in $1 short of the value of the first mortgage, that the bankruptcy court "wipes out" his second. We had never heard this. Is there any truth to it? Any comments would be greatly appreciated. Thanks!
The process is called "Lien Stripping" and it is controvesial. Yes, there is some truth to this. The value of one's secured claim is based on the value of the collateral securing the claim.. The debtor has to provide the proof (i.e. accurate appraisal) then the court can order the Lien to be permanently stripped off the property
Remember, tho, that the 2nd is allowed to file a general unsecured claim against the debtor which must still be treated in the debtor's chapter 13 plan.
oh, and be careful when you make statements about "Bk attorney giving homeowners bad advice"...
look like decent advise to me.
Just to chime in here.
Blamcat simply asked if it was bad advice, no where did I see a statement that is WAS bad advice.
Utah_Bkatty, be careful when quoting other people's posts.
Roger
Thanks for responding to my post...we're constantly learning new things that affect our strategies with homeowners.