For homeowners facing the double-whammy of reduced household income and the real estate crash, there’s a wrinkle in bankruptcy law that might make it worthwhile to hold onto the house.
Chapter 13 bankruptcy allows people to reorganize their finances and pay back certain creditors. Part of that reorganization could mean “stripping” away all real estate-related debt except for the first mortgage, says Vancouver bankruptcy attorney Don Thacker. Those seeking Chapter 13 bankruptcy protection from creditors may still have household income but can no longer handle their debt load because of a job loss or unexpected high-cost medical expense.
However, if the house you own is worth less than the first mortgage loan, Thacker explains, those who seek Chapter 13 can ask the court to “strip” away liens related to second mortgages and judgment liens.
“If you’ve been staying current on your primary mortgage payments and you have negative equity in the house, then you stand a chance of getting secondary debt discharged,” Thacker said. “It gives people a real chance to end up with some equity in their homes in three or five years, if they can continue to make the first monthly mortgage payment.”
The court typically requires documentation in the form of the most recent property value statement from the Clark County assessor, a Realtor’s market value assessment and possibly an actual appraisal.
Note: Chapter 7 bankruptcy does not allow for lien stripping, Thacker said.
“Right now, we’ve got this unusual planetary alignment with property values down so far that this feature of Chapter 13 bankruptcy applies,” he said. “In many instances, second mortgage holders won’t contest the move.”
Top local employers
A Columbian survey this month shows that Southwest Washington Medical Center remains the largest employer in Clark County with 3,444 full- and part-time workers. At No. 2 is Vancouver Public Schools with 3,343 employees and No.3 Evergreen schools, 3,151.
County government was No. 4 with 1,618 workers, with the Battle Ground Public Schools (1,441 employees) at No. 5.
Grocery store-retail chains Fred Meyer and Safeway are next with 1,360 and 1,270 workers, respectively. The federal Bonneville Power Administration is among the top 10 with 1,161 workers on the job at its Ross Complex in Hazel Dell and in offices elsewhere in the county. Rounding out the top 10 are the city of Vancouver (1,110) and WaferTech (937).
Of interest, only three of the top 10 are for-profit, tax-paying businesses.
Have a new job? Tell us about it
Have you recently been unemployed but have found new work? The Columbian business news team would like to interview you for a series of stories on job transitions.
We’re looking for people who have left behind one kind of work and have taken up something new. Please contact me at julia.anderson@columbian.com or call 360-735-4509.
Julia Anderson is The Columbian’s business editor. Reach her at 360-735-4509 or julia.anderson@columbian.com.
