Legal Question in Bankruptcy in Vermont

Reaffirmation of first mortgage when second exists

I am considering Chapter 7 bankruptcy. I have a first and second mortgage whose combined total exceeds the value of my home by about $25000. (I took out a 2nd to consolidate credit card debt.) Can I include both mortgages in my bankruptcy but reaffirm the first mortgage and keep my home without owing anything to the 2nd mortgage holder?


Asked on 2/25/99, 8:43 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: Reaff. of first mortgage when second exists

If the first itself exceeds the value of the property, you may be able to "strip off" the second and retain the house by reaffirming or continuing payments on only the first. However, if the second is secured by ANY equity in the property, you will not be able to do this. Have your lawyer review the case of Yi v. Citibank from the Eastern District of Va. Stripping off of liens is a new theory, and is not accepted by some bankruptcy courts. If you can't strip off the lien, you will still have to deal with the second to keep the property.

Daniel Press

Chung & Press, P.C.

6723 Whittier Ave., Suite 302


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Answered on 3/02/99, 1:16 am


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