Can My Mortgage Be Reduced During Bankruptcy?
In a Chapter 13 bankruptcy, it is not possible to reduce the principal balance on your first mortgage. However, there are situations when you have a home equity loan or a second mortgage, where the value of that mortgage and the first mortgage when put together exceeds the value of the property. In that situation, we can file what we call a pond motion. It’s a motion that brought before the court. It’s the obligation of the debtor to prove the value of the property and what’s outstanding on the mortgages and we can have the court reduce that second mortgage so that the amount that exceeds the value of the property is eliminated.
This informational blog post was brought to you by Randy H. Gugino, an experienced Buffalo NY Bankruptcy Attorney.
