2009 was a record year for bankruptcies, with a record high of 2,264 cases in Sonoma County alone. According to a Santa Rosa Press Democrat report from April, Chapter 13s are a growing part of bankruptcy here, as people look to save their homes.
Key reason: Homeowners can strip the second mortgages on their underwater homes, while entering a payment plan to cure arrears on the first mortgage, while staying current on the first. As a result, many homeowners are able to modify their loans on the first.
The story features a typical Chapter 13 story, Robert and Jennifer Campbell, who were able to strip their second mortgage in a 13 and drive their credit card debt to minimal amounts under their plan. Campbell,a photographer, couldn't do a Chapter 7 because he would lose his 1969 Helio Courier airplane -- the kind of personal property for which there is no exemption.
A Chapter 13 allows Campbell to keep his property, strip the second and save the house -- maybe. The article points out that just the $500,000 first mortgage is plenty to keep Campbell up at night
