Posted: Tue Mar 16, 2010 9:12 pm Post subject: What will happen with my second mortgage after forclosure an
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I am getting ready to file a chapter 7 bankruptcy. My house is not in forclosure yet but i am behind on my 80/20 mortgages. If the house goes into forclosure after my bankruptcy, what will happen to the second mortgage? If I hold off on the bacnkruptcy until after the forclosure, will the second mortgage be considered unsecured debt?
As far as I know, if your property is foreclosed upon and then you file bankruptcy, your second mortgage would be considered as unsecured and it will get discharged in your filing. However, you can file Chapter 13 and get your second lien stripped off if your property does not have any equity. _________________ Procrastination is the enemy of your financial success
The second mortgage is secured by the value of the property. If you default on it, the lender will have the right to foreclose your property. However, if you file bankruptcy and the loan gets discharged, you will not be personally liable to repay it. If you surrender your home in bankruptcy, the property would be sold off to repay the first mortgage. If there remains any excess money, it will be paid to the second mortgage lender. The second lender will not be able to come after you for any deficiency remaining after the foreclosure.
So if I am reading into this correctly, if we do not re affirm the first mortgage or second then the NOTE for both are discharged but they both keep the LIEN on the property. So if we surrender the house in the bankruptcy the second can't come after us (we are upside down). If we stay in the house and continue to pay despite them being discharged, then walk away later they still can't come after us because it was discharged. Is this accurate?
If we decided to stay in the house after the bankruptcy but didn't re affirm, does anyone know what happens if we want to leave the house say in 5 years? Can we legally sell it or do we have to walk away?
If you did not reaffirm your property but keep on paying the dues, then you would be able to stay in the property. However, after 5 years if you stop payments and walkaway from the property, then the lender would be able to foreclose the property and recover his rest of the dues.
Thanks
tobee43 Guest
Posted: Sat Aug 14, 2010 6:24 am Post subject: what happens to property surrendered AFTER a chaper 7?
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have NO financial obligation, however, suggest we could still be liable
we have rec'd our joint debtors discharge and also the order approving trustees report of no distribution for our chapter 7.
the problem is we surrendered our house and upon attorney's advise, left it over 9 months ago after being served foreclosure papers and our attempt for a loan modification failed. we lived there for over 33 years, but with job lost and illness, we had no choice.
now that we THOUGHT it was over the bank holding the mortgage will NOT take it out of our names...however, continues to maintain the property and has agreed we have NO financial obligation, however, suggest we could still be liable if anything happens on the property. furthermore, the bank, is racking up charges AFTER our surrendering claiming until they foreclose, we would be assuming post bankruptcy charges which they suggest they will come after us for???
my response to them was to immediately LEAVE the premises and have no one step foot further onto the property until this matter is resolved. i suggested a deed in lieu as this is a different circumstance that one that has a 750k mortgage with a house now worth 200k and we are asking the bank to write off the difference....THIS situation differs.....the mortgage debt was discharged...i told the bank you can't have it two ways......
this is a government back loan...i have gone to HUD, i have gone to FHA...i have gone to the bank.....what next??? we only now have a small pension and ss to live on....and the bank says until foreclosure...which they said could take another 3 years...the house stays in our names.
As you reaffirmed the second mortgage, you will be liable to pay it off even after the property is foreclosed. By reaffirming the loan, you've become personally liable for paying off the loan.
Thanks
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