I live in Orange County CA. Is it possible to file Ch.13 after a discharged Ch.7 in order to strip down a second mortgage?

Asked about 5 years ago - Anaheim, CA

Is it possible to strip down a second mortgage not covered by the value of the home (primary residence)? Is it possible to strip-down the loan on a rental property to the market value of the rental home? Let us assume that the 2nd mortgage on the rental property is $90,000. The market value of the home is 280,000, while the 1st mortgage is $320,000. Would the first mortgage be striped-down to $280,000? As I understand the $280,000 should be paid within 3 to 5 years of Ch.13 plan. Should I pay an interest on the amount owed during this period? What happens to my rental income during this period? Do I receive them personally? Can I refinance or sell the property within the 5 year period of the plan to pay back the $280,000, the striped down value of the property? Thank you for your attention.

Attorney answers (1)

  1. Kristine Caroline Kyllander

    Contributor Level 9

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    Answered . Yes it is possible to cramdown loans and/or strip liens in a Chapter 13 case immediately following a Chapter 7 discharge. This is commonly referred to as a "Chapter 20."

    You may not need to pay full value of the secured debt over the 3- 5 year plan period and you do get to keep the rental income during the the plan (presumably to use it to service the debt).

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