Chapter 13 Lien Stripping Example:
- Home is appraised at $225,000.
- The 1st mortgage is for $245,000.
- A 2nd mortgage/Home Equity Line of Credit is for $150,000.
- The mortgage loans total $415,000 on a home currently valued at $225,000.
36 month Chapter 13 payment plan is set up paying original $1,500 for first mortgage payment every month.After filing a Motion to Strip Lien and completion of the 36 month plan, the new total owed is $191,000 thus; giving you positive equity in your home.
What I’m going to share with you now is POWERFUL INFORMATION for homeowners who have 2nd mortgages and are finding themselves ‘underwater’. This is vital information you need to protect yourself and make an informed decision about your future!
- Lenders are only secured up to the value of the property.
- The second lender has nothing securing their lien. Their lien is unsecured because currently the property has no value left over from the first lien. Therefore, they are treated as an unsecured creditor.
- Most likely the second lender will not be able to collect on the mortgage lien after the bankruptcy discharge, and the homeowners (debtors) still get to keep the house.
- After completing the Chapter 13 plan, the homeowners would not even have to pay the lien when they sell the house.
Keep in mind that Chapter 13 Bankruptcy in Orlando is not without its drawbacks. It is more cumbersome, and it does takes longer; however, filing Chapter 13 does have its benefits as well. One major benefit is valuing your car at fair market value rather than what you still owe on your loan. For example, if you purchased your car more than 910 days before you file your bankruptcy petition, you are only responsible for paying an amount equal to the present value of the car. Numerically, this means that if you still owed $18,000 on a car but its fair market value is only $8,000, you would only be required to pay the $8,000 in your repayment plan. This means you could potentially save $10,000.
Why File Chapter 13?
Clients that come to our offices in Orlando and Kissimmee sometimes are not eligible for a Chapter 7, so a Chapter 13 may be more beneficial. We go through all the options and talk about the pros and cons of both. Chapter 13 cases are a specialty of ours. We file them for a variety of clients for a variety of reasons. Many clients wonder what the advantages are of filing Chapter 13 bankruptcy if they will be required to repay their creditors? Here are some reasons why filing for Chapter 13 is an optimal choice for certain clients.
- Keep valuable property. If you are behind on your mortgage payments, Chapter 13 will allow you to gradually get caught up on your payments and save your home from foreclosure. We may also be able to obtain a loan modification for you.
- Interest rate. In the non-bankruptcy world, interest on credit cards can run as high as 23%! When creditors receive their interest on claims in bankruptcy, there is no accrual of interest! Everything stops in its tracks! For example, if you have close to $40,000 in credit card debt, paying off the debt in 5 years will allow the credit card issuer to get $28,000 in interest alone. Through a Chapter 13 bankruptcy, you may end up paying back zero to creditors if it is determined you do not have any disposable income to pay creditors.
- Some of your Creditors May Lose Out. Only the creditors who file a timely proof of claim will share in the Chapter 13 bankruptcy payments. Clients will receive a full discharge of debt owed to creditors who do file a proof of claim in a Chapter 13 bankruptcy case.
- No Debt Collector Calls. Say goodbye to creditor calls. During a bankruptcy, nobody is allowed to communicate with you or contact you in any way. They have to go through us before they can get to you.
- Ability to Strip Second Mortgages. If your first mortgage is more than your property is worth, we may be able to eliminate the second mortgage form your house. Now that is major. Ask us about it.
- We Can Modify Your Student Loans. June of 2019, our local federal district passed a new procedure named the new Student Loan Modification program for the Middle District of Orlando. Just think, finally, your student loan can be modified, and it is only available in a Chapter 13.
- Reduced Stress. Consolidating all creditors in a single proceeding and having the law protect you in a court ordered repayment plan will reduce any further stress involved with creditors and collection attempts. Chapter 13 will allow you to send one monthly check to the bankruptcy trustee. Depending on what is negotiated with creditors, these payments are oftentimes lower than the original debt.
Filing Chapter 13 in Orlando
Usually there are two options for consumers for an Orlando Personal Bankruptcy: Chapter 7 or Chapter 13. There are many differences between the two types of bankruptcies. If consumers have a consistent source of income, here are several reasons why filing Chapter 13 in Orlando may be beneficial:
- You can dismiss the case at any time or even convert it to a Chapter 7.
- You can refinance or sell a house during the plan.
- You can stretch out your payments for a car or other secured debt.
- You can modify a plan if income changes or you decide to give up a house or a car.
- There are more debts that can be discharged – including some divorce payments and damages for malicious and willful acts.
- You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
- A Chapter 13 will save a house from foreclosure as long as you can make the payments.
- You can challenge the costs added to your mortgage by the lender.
- You can strip a wholly unsecured 2nd mortgage.
- You won’t lose non-exempt property.
- Amount owed on your car can be devalued to current value if you’ve owned it for more that 910 days.
- Trustees want the plan to succeed and will work with you to get it confirmed.
- Depending upon your income, a Chapter 7 case can be challenged by the US Trustee, but a Chapter 13 cannot be challenged.
During your FREE CONSULTATION, an Orlando bankruptcy lawyer like me will help you breakdown all the misconceptions of filing Chapter 13 and Chapter 7 in Orlando and discuss the pros and cons of both bankruptcy options. We will then work together to determine which bankruptcy type may be most beneficial for you, taking into consideration your specific set of circumstances. This consultation is FREE. All I ask is that you allow me the opportunity to provide you with the information you need to make an informed decision.
My business is helping people just like you get a fresh start. I consider it a privilege to be of service and an honor to earn your trust. Call today at (407) BANKRUPT (407-777-7777) or complete our email form to schedule your FREE, NO OBLIGATION consultation appointment to discuss a Chapter 13 bankruptcy in Orlando. I have offices conveniently located in both Orlando and Kissimmee. Thank you for your consideration, and I look forward to meeting with you personally.
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“I was very hesitant to go through the procedure of bankruptcy, especially at this late age of my life of the close to retirement years. Going through difficult personal health and family events made this very hard, yet every person I came in contact at the Law offices of Attorney Walter Benenati made me feel at ease. They were always quick to answer any questions. Even one time I was shocked I emailed the office and not even a couple of minutes later the attorney called to answer my question. My 17 year old son, was next to me and he was “mom did that just happen”? Every step of the way they were with me. They always informed me of any changes etc. So appreciated communication and help from Olga, Maria, Zumary, Stephanie, Jennifer and Chris. I am extremely grateful to Denisse B. & Attorney Claribel Acosta for helping me so at ease with the transitions and process of it all till the end. These girls rock!!! Great communication, Great Service, forever grateful for the blessing of the Benenati Law Office for this Season of my Life. Trust me , Attorney Walter Benenati was the right choice for me and it will be for you too.”
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The Benenati Law Firm is the best. I can’t speak highly enough about their staff. Walter and their team were excellent helping me in my case. They answer all questions, answer the phone immediately every time, and they offer an awesome price. They are very knowledgeable with all laws. I’m amazed how fast my case was handled and done. I will continue to to use the Benenati Law Firm in the future. I would definitely recommend to my family and friends. Thank you Benenati Law Firm for helping me restart my life.
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