Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comKey Contacts
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Underwater Homeowners Experience Setback
Owners of homes with underwater second mortgages recently suffered a large setback after the U.S. Supreme Court ruled that they cannot free themselves of their obligation to pay these debts by filing for Chapter 7 bankruptcy protection. The court’s decision on the case – Bank of America, N.A. v. Caulkett – was unanimous.
The Supreme Court provided the ruling in response to Chapter 7 bankruptcy cases that underwater homeowners filed in 2013. In writing the court’s opinion, Justice Clarence Thomas cited the ruling for a prior case, Dewsnup v. Timm, writing that lenders have a secured claim “regardless of whether the value of that property would be sufficient to cover the claim.”
The court ruling “is a clear victory for mortgage lenders,” Isaac Boltansky, an analyst at Compass Point Research & Trading, told MarketWatch. “It clarifies the path to recoveries for second lien holders in bankruptcy … This decision will undoubtedly make the bankruptcy process more difficult for impacted borrowers.”
More specifically, the ruling will deny financially troubled homeowners – those with high debt loads and or modest incomes – of one particular method for eliminating some of their debt burden, bankruptcy lawyers told The New York Times.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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