In California many homeowners are stuck in upside down mortgages and want to know how to get a principal reduction with a bankruptcy attorney if they have a failed loan modification. While many seek principal reductions through loan modifications the truth is they’re few and far between. In Riverside, San Bernardino, San Diego, Los Angeles and Orange counties many home owners took out 2nd mortgages just to buy their home, let alone taking out HELOC’s to do home improvements and pay off credit card debt. Most of these 2nd mortgages are upside down, making them a perfect candidate for lien stripping through chapter 13 bankruptcy.A bankruptcy attorney can file a chapter 13 bankruptcy with a motion to avoid the lien and eliminate the 2nd or 3rd mortgage completely. Bankruptcy is a federal program and law unlike, loan modifications that may or not work. The majority of homeowners seeing a principal reduction through a loan modification are denied and many of them may eventually face foreclosure and fear losing their home. Bankruptcy chapter 13 can stop the foreclosure process and get someone a true principal reduction if they have a 2nd mortgage that’s upside down, making it unsecured. Most bankruptcy attorneys focus mainly on chapter 7 bankruptcy, leaving chapter 13 bankruptcies for the bankruptcy experts. “If you really want a true principal reduction then stripping the lien will do just that” says bankruptcy attorney James D. Zhou, managing partner at Zhou & Chini. We see many homeowners in California being able to take advantage of bankruptcy chapter 13 with a motion to avoid the lien because so many people have under water 2nd mortgages. If a bankruptcy attorney really knows what he or she is doing then they can save someone allot of money with this type of principal reduction. Throughout California many homeowners were attracted to 80/20 mortgages where they could purchase a home for little to no money down. Unfortunately, most of the homes purchased during the real estate boom were 30% to 40% over valued. Government backed loan modifications just aren’t cutting it in California where the debt to income ratio doesn’t support the property values. Unless homeowners see principal reductions they might as well just walk away, and that’s what they’re doing! Typically, bankruptcy is the last resort for most people trying to save their home. However, with the ability to get a real principal reduction, eliminate their unsecured debt and save their home from foreclosure many homeowners is seeking the help of a bankruptcy attorney. Many homeowners have attempted loan modifications that failed; they are now so far behind in their mortgage payments and so upside down with their property value that this may be the only thing that makes sense for them.
The California real estate market is the “perfect storm” for homeowners to receive a principal reduction through bankruptcy. A bankruptcy attorney can help people see if they qualify for a principal reduction through bankruptcy chapter 13 with motions like (11 U.S.C. ' 522(a)) to strip a lien. Making mistakes when it comes to filing bankruptcy can be very costly, so be careful when selecting a bankruptcy attorney for a chapter 13. For a free and confidential consultation with an experienced bankruptcy attorney go to; www.zhouchinilaw.com or call the law offices of Zhou & Chini; 1-888-207-9026.