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Since the housing market tanked in the mid 2000s, many American homeowners have been scrambling to make ends meet while keeping their homes and mortgages intact. For some individuals that meant taking on a second mortgage, that many couldn’t afford. While it was an absolute necessity for some to file Chapter 7 bankruptcy, recent Supreme Court rulings have now made the second mortgage a sticky situation.

In past years, the debt of a second mortgage has been dischargeable in Chapter 7 bankruptcies. Now, in reaction to second mortgage lien holders being left with nothing after the crash, that rule has changed. For homeowners bearing a second mortgage, when they owe more than their home is worth on their first mortgage, even a Chapter 7 filing can’t discharge the debt.

Although this change comes as no surprise to many, it is likely going to have a noticeable effect on Chapter 7 and Chapter 13 filings. For individuals that may need to strip off their second mortgage debt that would otherwise file Chapter 7 bankruptcy, it might be good to know that the debt of a second mortgage can still be discharged through Chapter 13 bankruptcy. While the rules and requirements are different between the two plans, their mission is the same, to give people a fresh start by relieving them of debt.

For individuals considering bankruptcy and wanting to know more about the changes made to bankruptcy laws, contacting a trusted and experienced bankruptcy attorney may help. With their knowledge, you can make a secure decision that is right for your family and your situation.