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drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

I am looking into filing for bankruptcy, chapter 7. I have small business LOC debt that i am personally liable for with payments i can't keep up with along with some personal CC debt. Along with that i own one property. My property is pretty far underwater. I live in California. I have a first and second mortgage. I want to keep my house. I am in the trial process for a modification on my first mortgage that should go through. My house is appraised at a value that is worth less then what my first mortgage amount is, so my second is way out of position and i assume is not secured by the property.

What i would like to do is file Chapter 7 to absolve me of all my LOC and CC debt, which i can't afford to pay. I don't want to list my mortgages as part of my Chapter 7 because i would like to stay in my home. Once my modification goes through, i should be fine in paying my first mortgage so that is not the problem.

My question is, if i file for Chapter 7, can i list my second mortgage as something i am looking for protection from but leave the first alone since i'm able to make the payments? Will the second be able to force my hand with my first mortgage. This is my primary residence, i don't own any other property.

Thank you all for your help.

raymond · Posted: Tue Nov 24, 2009 4:21 pm Post subject:

Contact "www.legalhelpers.com" and they'll schedule a 30 minute free consultation with a local bankruptcy attorney for you. You have too much to lose and need to do it right.

[External link deactivated as per forum rules]

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

I'm not sure why i can't receive some type of answer online here? I don't believe my question is any more complicated then many of the other questions i've seen online here. Can anyone else help me out?

savior70 · Posted: Fri Nov 27, 2009 4:16 am Post subject:

Hi drisee,

You will have to include all your assets and debts in chapter 7 bankruptcy. If you want to keep paying towards your first mortgage, all you need to do is reaffirm the mortgage with your first lender. Once you enter into a reaffirmation agreement with the first lender, he will not foreclose on your house until you default on the loan.

But the second mortgage lender also has a lien on your property. The property value may have gone down, but the lien still remains on your property. The second lender has the right to foreclose. If the second loan is discharged, you will no longer be responsible for the mortgage. But this will not remove the lien from your property. Your second lender can foreclose even after you get discharged from the loan debt. However, given the low value of the property, it seems unlikely that the second mortgage holder will pursue foreclosure to satisfy their lien. You need to consult a bankruptcy lawyer as he is the best person to suggest you a solution in this situation.

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

thanks savior 70. one quick follow up question that came up. let's say what you described in your scenario does happen. the second mortgage is discharged but the second mortgage holder still has a lien on my property. they choose to not foreclose because it's underwater, but what happens from there? does the lien stay on my property indefinitely? i assume if it does then if i sell the property down the line the lien must be satisfied in order to close escrow.

anyways, curious about that part of the equation and would love your feedback. thanks so much.

savior70 · Posted: Sat Dec 19, 2009 4:18 am Post subject:

Hi,

You're most welcome.

The mortgage lien remains on your property even though you're personally discharged from bankruptcy. The second lender may not foreclose if your property is underwater. But it does not remove the lien from the property. It stays there till the time you pay it off in full. Thus, if you do not pay off the second mortgage and you intend to sell off the property, you will have to satisfy the lien before selling the house.

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

Thanks again savior70. That's what i was assuming but it's nice to confirm it. One more question that has come up relating to liens.

If a CC company receives a judgment on me prior to going into bankruptcy to discharge a debt owed to them, can they take a lien out on my property? It's my primary property, i only own one.

Also, if i claim bankruptcy and get a discharge of my CC debt prior to the CC company being able to receive a judgment on me, can they still take out a lien on my property after bankruptcy?

I guess my basic question is, does chapter 7 protect me against a CC company taking out a lien on my property? That's what they are threatening to do.

Thanks so much.

jameshogg · Posted: Tue Dec 22, 2009 12:33 am Post subject:

Hi drisee,

Once you file Chapter 7, the court will issue an automatic stay against all your lenders and they will not be able to sue you for the debts. If your debts are discharged by the bankruptcy court, then the credit card company will not be able to place a lien on your property.

Thanks

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

Thank you JamesHogg. There is one more part of my question that i am curious about.

If a CC company receives a judgment on me Prior to my filing for bankruptcy protection to discharge a debt owed to them, can they take a lien out on my property? If they can, will filing bankruptcy allow me to discharge that lien?

I'm trying to figure out the timing for my filing? I'm also not sure they would even be able to get a lien on my property if my CC was unsecured, is that possible for them to do?

Thank you so much.

smithsussane · Posted: Tue Jan 05, 2010 10:31 pm Post subject:

Hi drisee!

Welcome back to forums!

Though the credit card debts are unsecured, the creditor will be able to place a lien on the property by filing a lawsuit against you. It is always better to file bankruptcy before the creditor has placed a lien on the property. A bankruptcy discharge cancels the underlying judgment, but it doesn't remove a lien from your property. You'll have to file a motion to avoid or cancel the lien.

Feel free to ask if you've further queries.

Sussane

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

Thank you Sussane. This is good to know. I guess my next question would be how to know when the timing is right to file bankruptcy? I know i need to file, but i was hoping to buy a little more time. I don't want to wait too long and have no idea how long it will be until one of the CC companies files a lawsuit against me to recoup the CC debt owed to them.

Do you know what signs to look for from your creditors in regards to how far along in the process they are towards suing? Or how to determine the best timing for filing bankruptcy?

My concern is that if i'm going to file i want to do it before they are able to come after me and i want to protect myself against any lien they might be able to get on my property.

Thanks again. This is all very complicated for someone that hasn't gone through this process but this has been very helpful.

jameshogg · Posted: Wed Jan 06, 2010 11:12 pm Post subject:

Hi drisee,

There is nothing as such called the best time to file bankruptcy. You can contact a bankruptcy attorney and he will let you know whether or not you should file it or what chapter you should go for. He/she will discuss your case in length with you. Thus, you'll be able to know the pros and cons of bankruptcy filing. However, if you can afford, it would be better to negotiate with your credit card company and pay off the dues.

Thanks

drisee · Joined: 24 Nov 2009 Posts: 9 3.66 Dollars($)

Hi guys. Just wanted to follow up with you guys on my situation and i also had another question. Hoping for your great guidance once again.

I'm still in a similar situation as before. I'm waiting on my modification to be approved for my first mortgage. It's with Aurora and i'm about 6 months into trial payments so it's beyond the point they estimated being able to give me an answer by. I was told to wait for this to go through before filing for chapter 7 BK so i'm trying to wait it out before moving forward on that.

In the meantime i haven't been paying my second mortgage. They are now telling me that it's been too long and they are going to discharge the debt and pass it off to a third party. Originally i wanted to settle on the second, but was waiting to see what happened to the first before making that move.

My question is this. If my second discharges the debt and passes it off to a third party, can that party still get a judgment against me and take a lien out on my property? I know i can discharge the HELOC on my second through BK but i understand they (citibank) can still get a lien on my property. If Citibank discharges it can the third party they pass it off to get a lien on my property. Just wondering what my best move is here.

Thank you again for your thoughts.

smithsussane · Posted: Fri May 14, 2010 1:04 am Post subject:

Hi drisee!

Welcome to forums!

The second mortgage lender can sell off your account to a collection agency who will contact you for the dues. If you do not pay them off, then they can file a lawsuit against you and place a lien on your property.

Feel free to ask if you've further queries.

Sussane

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