U.S. Supreme Court Will Decide If Bankrupt Homeowners Can Cancel Second Mortgage Debt

7214463188_0ecb8b475c_qMost federal appeals courts are refusing to allow homeowners to forfeit their second mortgage debt when they file for bankruptcy. But, the 11th U.S. Circuit Court of Appeals, which has jurisdiction in Alabama, Florida, and Georgia has allowed homeowners to eliminate their second mortgage in cases where the value of their home has fallen below what they owe on their first mortgage. Bank of America’s appeal to the Supreme Court seeks to overturn this practice. According to the Wall Street Journal, lawyers for Bank of America say this practice is “the single most unresolved issue in consumer bankruptcy.”

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