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Todd Murphy

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Second Mortgages

Second mortgages are treated differently than first mortgages in all circumstances.

In a sale or foreclosure, the first mortgage holder has priority, receiving proceeds of the sale up to the amount of the full remaining balance.

In a Chapter 13 bankruptcy, a second mortgage’s lien on the property can be stripped and the loan converted to unsecured debt, pooled together with other debts covered under the Chapter 13 payment plan. All of the debt in the pool is eliminated on completion of the plan, often with a small portion of the original balance having been paid.

In a Chapter 7 bankruptcy, if the home is kept via a homestead exemption, the lien remains on the property. This situation has been challenged, with a new precedent established in the 11th Circuit allowing a second mortgage to be stripped in a Chapter 7 filing. Judicial thinking seems to be moving in this direction – but in the meanwhile, if a house in New Jersey becomes unaffordable under current law, either filing Chapter 13 bankruptcy or selling it are the available options.

If the property is underwater and is sold or foreclosed upon, sale proceeds go to the first mortgage holder first and any outstanding tax liens second, making it unlikely that the second mortgage holder will recover any funds in the sale. The debt remains outstanding, and the holder of the second mortgage may sue. Since the second mortgage has become unsecured debt as a result of the foreclosure, deed in lieu or short sale, it can then be wiped in a Chapter 7 bankruptcy filing.

Hopefully precedent will soon be established in New Jersey affording Chapter 7 filers the same protections as Chapter 13 filers – but, until then, an unaffordable second mortgage can force a homeowner out of their home unless they can qualify for a Chapter 13 bankruptcy filing.

Todd Murphy Law has extensive experience dealing with Chapter 7 and Chapter 13 bankruptcies and extensive experience negotiating with creditors.

Call Todd Murphy Law today for a free consultation.

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Foreclosure Defense | New Jersey

A decade ago it was rare for foreclosure challenges to be heard by the courts. A few years back revelations about predatory lending practices and shoddy record keeping had brought the banks themselves under greater scrutiny. Studies had shown high error rates in bank paperwork and mounting evidence of lender misconduct. In this environment, the chances of getting a foreclosure defense heard  increased greatly, leading to the proliferation of Foreclosure Defense services and advertising.

The State of New Jersey mandates “judicial foreclosure,” meaning the action takes place before a judge, offering the borrower the opportunity to defend or challenge the foreclosure without needing to file a lawsuit against the lender.

Complexities created by the securitization of loans can cause lenders and mortgage servicers to misapply payments. The ownership of mortgage notes can often be obscure. Paperwork submitted by the bank frequently contained serious errors. These kinds of errors could cause a foreclosure to be stayed by the courts, buying time for the borrower to modify the loan, refinance or sell.

This situation has reverted to the status of a decade ago, when foreclosure defenses were rare. Unless there’s a clear case of unrecorded payments or abuse on the part of the lender, such an action is unlikely to succeed.

Review of documents by an experienced attorney is recommended in order to find errors, if they exist, and create advantage for the distressed borrower.

If a loan is found to be “unconscionable” by the court, a borrower may be able to obtain rescission (cancellation) of second and third mortgages under certain circumstances. This outcome has become increasingly rare in the past few years.

Before hiring a Foreclosure Defense firm, research them. Promises and large up-front fees are commonplace with unscrupulous operators preying on the hopes of homeowners. Consult an attorney you trust before you sign!

Call Todd Murphy Law today for a free consultation

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What is Loan Modification?

Loan Modification A loan modification is a change of the terms of a loan, allowing it to emerge from —or avoid—default with payments affordable to the borrower. Late fees are forgiven, but other collection fees are rolled into the principal and the loan is re-amortized. Payments are lowered by changing the interest rate, the term of the loan, or both.

It can be challenging for the consumer to see the process through the bureaucracy of their bank. Common reasons for difficulty in completing the process are omissions in the paperwork, failure to meet deadlines and follow up, and the elusive nature of bank personnel– all of which can make the process very frustrating. To find out why loan modifications can be such a hassle, read our post: Why Are Loan Modifications Frustrating?

Due to recent changes in the law, it is now possible to begin a modification process before the loan goes into default. Pursuing this option early on can prevent a cascade of other problems that can result from a loan going into default.

The paperwork requirements for doing a modification are similar to those required to close on the original mortgage. A modification is similar to a refinance. Proof of income, a letter of explanation regarding variations in income, and other items may be necessary. If you want to find out how to get a loan modification, read out post: How To Get A Loan Modification.

 

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Cost To File Chapter 13 Bankruptcy

Cost To File Chapter 13 Bankruptcy

 

 

 

 

 

 

 

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Submit Your Information Above And An eMail Will Be Sent To You Describing The Cost To File Chapter 13 Bankruptcy.

 

Thanks You For Visiting Todd Murphy Law.

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Can I Discharge Debt with Chapter 13?

You can discharge debt with Chapter 13 bankruptcy, and keep your assets.

Chapter 13 Bankruptcy is essentially a repayment program.  If you follow the repayment schedule that you and your attorney set up with the court, your unsecured debt is discharged at the end of the program.  That means that credit card debt, medical debt, and other unsecured debt (we’ll talk about secured v. unsecured in a moment) is considered no longer yours if you successfully complete the Chapter 13 plan.

Secured debt is debt that is backed by a physical object such as a home or a car.  These types of debt you must continue to pay on your Chapter 13 schedule.  Unsecured debt is the kind of debt that is NOT backed by a valuable physical object, such as credit cards, medical debt, store cards, furniture, etc.  During your Chapter 13 plan, you do not make payments toward your unsecured debt.

During your Chapter 13 plan, you MUST make 50 payments towards your SECURED debt ON TIME in order for you to complete the plan and get your unsecured debt discharged.  Todd Murphy, NJ Bankruptcy Lawyer, recommends that you set aside some emergency money so that you can ALWAYS make your SECURED debt payments ON TIME and complete your Chapter 13 plan, so that you can get your unsecured debt discharged.

Todd Murphy, NJ Bankruptcy Lawyer, will work with you to asses what is called your “disposable income”.  This is the income you have leftover at the end of the month after you pay your living expenses.  Your disposable income should be enough to pay your SECURED debt payments like your mortgage or car payment.  After you make 50 on-time payments, you will have successfully completed your Chapter 13 plan and you will be free of your unsecured debt!

Contact Todd Murphy to find out if you qualify for a Chapter 13 Bankruptcy plan.