Legal Question in Bankruptcy in Virginia

Re: second mortages

If you want to keep your home in a Chapter 7, first, you must not have any equity in the home over the amount that you can exempt (which depends on the other property that you exempt, but is generally limited to $5000 per adult debtor plus $500 per dependent). Equity is value minus liens (mortgages and other liens). You must also be current on your mortgage payments (or work out a deal with the lender). If not, you will have to file Chapter 13.

With regard to second mortgages, unless the first is over the value of the house, you have to pay the second as well -- you cannot avoid the lien. In Virginia, if the first does exceed the value, you may be able to avoid the second, but this is a hotly contested area of the law. In any event, you must schedule all of your debts. You should not try to file bankruptcy yourself. You should consult with an experienced bankruptcy attorney.

Feel free to call or e-mail me if you have further questions. We practice bankruptcy law throughout much of Virginia.