Saving Your Investment Property During A Foreclosure Crisis
American homeowners who have had no choice but to let their mortgages go into default are not only on the brink of losing their homes; they might also lose their investment properties in the process. The foreclosure crisis has caused many businesses to close down and sadly, this further worsens the U.S. economy. Fortunately, there is a solution to this problem. Debtors can now save their office buildings, apartments and other commercial real estate properties by filing for bankruptcy.
Not many people know this but bankruptcy can actually allow an individual to modify his or her non-residential mortgages. Filing for Chapter 13 bankruptcy will give you time to modify your non-residential loans but it prohibits modification on residential mortgages. Although it cannot solve all your mortgage problems, at least you will get to save your investment properties. When struck by foreclosure crisis, the most important thing you must do is find a stable source of income in order to pay off your debts. Saving your investment properties first will let you do just that.
Let us learn more on how Chapter 13 bankruptcy can save your investment properties. For example, a debtor owns an apartment which costs $100,000. He has two mortgages, one costs $140,000 on the property and the other loan costs $50,000. The economic crisis adversely affected his business which prompted him to file for Chapter 13 bankruptcy. The debtor then discovered that he can afford to pay off the 1st mortgage ($140,000) but cannot pay the second mortgage ($50,000). How can this mortgage problem be treated in a Chapter 13 bankruptcy?
1. The second mortgage will be treated as an unsecured debt because remember that there is no value left to secure the said loan after the first mortgage has been applied.
2. Furthermore, the $40,000 of the 1st mortgage is also treated as unsecured. The investment property only costs $100,000 hence; it will not cover all your debt. The $100,000 on the first mortgage is then your only secured debt.
3. Fortunately, the mortgage can be modified when the debtor has filed for Chapter 13 bankruptcy since it is a non-residential property.
This arrangement will allow the debtor to pay off the first mortgage under a modified term and also repay the now unsecured debts thus; saving the investment property from the foreclosure crisis. This is the beauty of filing for Chapter 13 bankruptcy when in the verge of foreclosure.
Not many people know this but bankruptcy can actually allow an individual to modify his or her non-residential mortgages. Filing for Chapter 13 bankruptcy will give you time to modify your non-residential loans but it prohibits modification on residential mortgages. Although it cannot solve all your mortgage problems, at least you will get to save your investment properties. When struck by foreclosure crisis, the most important thing you must do is find a stable source of income in order to pay off your debts. Saving your investment properties first will let you do just that.
Let us learn more on how Chapter 13 bankruptcy can save your investment properties. For example, a debtor owns an apartment which costs $100,000. He has two mortgages, one costs $140,000 on the property and the other loan costs $50,000. The economic crisis adversely affected his business which prompted him to file for Chapter 13 bankruptcy. The debtor then discovered that he can afford to pay off the 1st mortgage ($140,000) but cannot pay the second mortgage ($50,000). How can this mortgage problem be treated in a Chapter 13 bankruptcy?
1. The second mortgage will be treated as an unsecured debt because remember that there is no value left to secure the said loan after the first mortgage has been applied.
2. Furthermore, the $40,000 of the 1st mortgage is also treated as unsecured. The investment property only costs $100,000 hence; it will not cover all your debt. The $100,000 on the first mortgage is then your only secured debt.
3. Fortunately, the mortgage can be modified when the debtor has filed for Chapter 13 bankruptcy since it is a non-residential property.
This arrangement will allow the debtor to pay off the first mortgage under a modified term and also repay the now unsecured debts thus; saving the investment property from the foreclosure crisis. This is the beauty of filing for Chapter 13 bankruptcy when in the verge of foreclosure.
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