Tacoma Home Foreclosure Lawyers
(253) 444-5517
Serving all of Pierce County, WA
Attorney David M. Lux
Questions About Bankruptcy?
Many homeowners keep their homes in bankruptcy.
In Washington State, so long as you have no more than $125,000 of equity in your home (plus an about 8% for settlement costs of sale), you can keep your home in bankruptcy so long as you remain current on all of your mortgages associated with your home.
For example, in Chapter 7 Bankruptcy, you can discharge you unsecured debts (e.g., credit cards, medical bills) and keep your house so long as you not behind on your mortgage payments and have no more than $125,000 of equity.
If you are behind on your mortgage and wish to catch up, you can use Chapter 13 Bankruptcy to repay your mortgage arrearage (the amount you are behind on your mortgage) so long as you can also pay your regular mortgage payment. If you have more than one mortgage on your home, you most remain current on both mortgages and repay any arrerage on those mortgages in a Chapter 13 Bankruptcy.
You have up to 60 months (5 years) to catch up on your mortgages through Chapter 13 Bankruptcy.
Discharging a Second Mortgage
Under certain circumstances, you can discharge (wipe out) a second mortgage in bankruptcy and keep your home.
In this declining real estate market, if the value of your home is less than the amount of your first mortgage, filing for Chapter 13 bankruptcy can discharge your entire second and succeeding mortgages and allow you to keep your home so long as you remain current on your first mortgage or work out a repayment schedule to become current on your first mortgage if you are behind.
You will need to pay for a professional appraisal of your home (a Comparative Market Analysis from a real estate agent is not acceptable), proving there is not even one dollar of equity to cover your second mortgage in order to have a bankruptcy judge approve the discharge of your second mortgage in Chapter 13 Bankruptcy proceeding.
Second Mortgage as a Line Credit
Remember that a line of credit secured against your home is type of second mortgage. It can be discharged in a Chapter 7 Bankruptcy, but the payments must be maintained if you want to keep your home (unless it can be discharged in a Chapter 13 Bankruptcy as explained above).