Can I Get Rid of an Underwater Mortgage If I Don’t Qualify for Chapter 7?

Nancy and Mike Smith: Chapter 13 Severance

Nancy and Mike are a married couple with a household income of $100,000 a year. Their income exceeds the median income for their area, so they are unlikely to pass the means test, even after deducting their expenses. They purchased a home in Naperville, Illinois at the height of the real estate boom. Nancy and Mike love that they are within walking distance of the Riverwalk and Downtown Naperville. However, their home is now underwater by $200,000. They have two car loans, each with a balance of $15,000. The couple also has several credit cards carrying a total balance of $30,000. Nancy and Mike feel that their mortgage is an unsustainable investments. They are two months behind on their mortgage payments.

A Chapter 13 bankruptcy provides powerful remedies for Nancy and Mike. If Nancy and Mike are willing to cut their losses and surrender their home to the lender, they can surrender the home in full satisfaction of the secured portion of their mortgage. While many lenders do not file a proof of claim for the unsecured portion (roughly $200,000 in this fact pattern), this is not a guarantee. If their mortgage lender manages to prove how much unsecured debt that Nancy and Mike owe, it can file a proof of claim, which means that Nancy and Mike would have to repay the unsecured portion as part of their Chapter 13 plan.

A successful Chapter 13 Severance will result in the individual typically remaining in possession of the property for 12 - 14 months with no negative reporting on the credit report as all liability has been severed. This individual can never be sued for the deficiency judgment as it can never again attach to that individual or that individual's assets as the note which made that individual personally liable is forever eviscerated. All the assets of this individual are forever protected regardless of the amount of income this individual earns or the amount of assets in that individuals control. This is an extremely attractive option for the informed and tool of choice for those looking to move on from an Underwater Mortgage.

Contact Us Today!

Talk to the leading law firm in the country about your rights for free! Fill out the form below or give us a call at (312) 313-1613 and we would be happy to give you the answers you need to make informed decisions for yourself and your family.

*First Name
Please enter your first name.
*Last Name
Please enter your last name.
*Phone
Please enter your phone number.

This isn't a valid phone number.
*Email
Please enter your email address.

This isn't a valid email address.
*I am...
Please make a selection.
*Are you a new client?
Please make a selection.
*How can we help you?
Please enter a message.
- By submitting your information or contacting Sulaiman Law Group, Ltd., and/or Atlas Consumer Law ("the firms"), you consent to receive automated communications, including autodialed calls, pre-recorded messages, texts, and emails from the firms, their agents, assignees, affiliates, or any affiliated parties. This consent applies to all contact details you provide, as well as to future communication technologies. Using the internet or other methods to communicate with the firms does not establish an attorney-client relationship; therefore, avoid sharing confidential information through these channels. Please note that all calls may be recorded for quality assurance and training purposes. To opt-out of communications, reply with "STOP" to any text message, click the "unsubscribe" link in any email, or send a written request to the firm's mailing address. Your continued interaction with the firms signifies your acceptance of these terms. You agree to indemnify the firms against any claims arising from the use of these communication methods. The firms are not liable for any communication failures. Disputes arising under this agreement are governed by Illinois law, with jurisdiction exclusively in the courts of DuPage County, Illinois, or the nearest federal district court. These terms are subject to change, and your continued communication with the firms implies your agreement to any such changes. If any part of this agreement is found invalid, the remaining sections will remain effective. This agreement is in compliance with the Telephone Consumer Protection Act (TCPA) and applicable state laws.
  Please read and agree to disclaimer.