Category Archives: Bankruptcy Information

Wholly Unsecured Second Mortgages in Chapter 13 Bankruptcies

BREAKING NEWS: You may not be able to strip-off Wholly Unsecured Second Mortgages in Chapter 13 Bankruptcies for much longer..
by: Jonathan Goldsmith Cohen
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Presently, if you owe more on your first mortgage than your home is worth, you can strip-off your second mortgage in a Chapter 13 bankruptcy. The Bank’s junior mortgage liens are thus wholly underwater: because the home is worth less than the amount owed on the senior mortgage, the Bank would receive nothing. When the Chapter 13 is discharged, your second mortgage is treated like general unsecured debt such as credit card debt or medical debt and forgiven. When you go to sell your home, you are now only responsible for paying off the first mortgage. Strip-offs, or cramdowns as they are also known, are a terrific tool to deal with a wholly unsecured second mortgage. Continue reading

Bankruptcy Discharge Credit Report

What does your credit report look like now that your bankruptcy has been discharged?
by: Jonathan Goldsmith Cohen
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A discharge of bankruptcy, at the conclusion of your Chapter 7 or Chapter 13 case means that you are no longer responsible for the debts you included in your bankruptcy. As a result, your creditors are obligated to report debt forgiveness accurately to the credit reporting bureaus. Under federal law, once a borrower has erased debt in bankruptcy, banks are required to update your credit reports to indicate that the debt is no longer owed, and remove any notation of “past due” or “charged off”.

This week, Bank of America and JPMorgan Chase agreed to erase debts from credit reports after a bankruptcy filing within the next three months to reflect that the debts have been extinguished.

What does your credit report look like post-bankruptcy? For my clients, part of my bankruptcy services include coming back to the office post-discharge to see if there are any errors on their credit reports. Then we work on correcting those errors.

The New York Times (www.NYTimes.com) says two of the nation’s biggest banks will finally put to rest the zombies of consumer debt — bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans. Read Bank of America and JPMorgan Chase Agree to Erase Debts From Credit Reports After Bankruptcies Here.