In the recent opinion of Bank of America v. Caulket, the Supreme Court overruled the 11th Circuit’s practice of permitting debtors in chapter 7 bankruptcies to eliminate underwater second mortgages. The 11th circuit includes Georgia, Florida, and Alabama.

While this is certainly a let down for our hard-hit Northwest Georgia residents suffering from a steep decline in housing prices, especially in Dalton and Chatsworth, the opportunity still exists for eliminating second mortgages in a chapter 13 reorganization.  The bright-line rule is that if your home is worth less than what you owe on your first mortgage, then you can undo (“strip”) the second mortgage making in an unsecured debt, like a credit card.

If you are struggling with maintaining multiple mortgage payments or simply want to review your options, please call us today for a free and confidential consultation.