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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I just saw a TV Commercial by a local law firm stating that

Resolved Question:

I just saw a TV Commercial by a local law firm stating that a second mortgage can be eliminated via Chapter 7. Does this mean that the Home Equity Loan lender cannot place a lien on my residence? I thought only a Chapter 13 eliminates the second mortgage.
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
Until very recently, the lien for a second mortgage or HELOC could only be removed in a Chapter 13 Bankruptcy. As of a few weeks ago, this rule has changed for residents of the 11th District - which includes the state of Florida.
It is true that you can now have a mortgage or HELOC "stripped" from your residence in a Chapter 7 Bankruptcy - if you live in the 11th District, and if the balance of the first mortgage is more than the current market value of your home.

I think this is what you wanted to know. If not, please let me know.
Thank you.
Customer: replied 5 years ago.

Is the amount of the stripped HELOC considered a waive of deficiency subject to income tax? Does this change also apply to rental properties or only owner-occupied dwellings?

Customer: replied 5 years ago.
My principal mortgage balance is $140,000 and my HELOC balance is $70,000. However, the home market value is $300,000. Despite filing Chapter 7, I would be able to have the HELOC stripped. Correct?
Expert:  cfortunato replied 5 years ago.

No - because your home is worth more than the balance of both mortgages.

cfortunato and other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.
I made a typo mistake. I meant to say that I could not have the HELOC stripped. Thank you.