Catherine Curan from The New York Post reports, “Underwater homeowners are jumping onto an unexpected financial life raft that lets them escape crippling second mortgage debts and keep their homes — Chapter 13 bankruptcy.”

Curan writes that, if the home worth is estimated at less than the first mortgage, then the owner can go to bankruptcy court and ask to reclassify their debt from the second mortgage. It would then transform from a secured debt to an unsecured debt. A secured debt has to be paid whereas an unsecured debt does not have to be paid in full.

This economy provides the perfect breeding ground for these situations. Curan consulted with a New York City bankruptcy attorney who said that about 20 percent of his Chapter 13 bankruptcy clients, that are homeowners, qualified for this circumstance.

This offers a new alternative to borrowers who are unable to reach a loan modification agreement with their bank.

If you need help with a Chapter 13 Bankruptcy, contact an experienced and trustworthy New Orleans Chapter 13 bankruptcy lawyer at Kervin and Young, LLC, by dialing 504-599-5906.