Posted on: 03rd Jun, 2011 04:09 pm
First of all, I know the best advice is going to be to contact our BK attorney and our bank, but I am also very interested in what this community has to offer.
Here's the dismal situation-
We have 3 more weeks until Chapter 7 discharge. We have have a 1st and a heavy 2nd with the same mortgage company.
The 2nd was not used for home purchase money. Our 1st is in foreclosure and foreclosure date is a few days prior to Chapter 7 discharge. We did not re-affirm either loan. The foreclosure attorney said if we brought the loan current, we could then re-affirm the loan. In the meantime, we have applied for a loan modification on the first and are gathering funds to bring the loan current if we are turned down on the 1st mortgage mod and our 2nd is in now "charge off" status.
If we do get the loan mod (low percentage of applicants do, so not real optimistic on that) or bring our loan current and re-affirm the 1st. What is going to happen on the "charge-off" AKA second? If it is sold to a collection agency and I assume that it will, can they foreclose on us? The house is worth more than our 1st mortgage amount. If the first did foreclose it could get the original loan amount and there would be a small amount left for the second.
Is it possible to get a loan mod AFTER we have brought the loan current? Can we reaffirm the 1st and file for a chapter 13 if the 2nd mortgage debt is in charge off status? If the 2nd was not used for home purchase money, is that a factor in any way?
Well, any insight or suggestions are most appreciated.
Here's the dismal situation-
We have 3 more weeks until Chapter 7 discharge. We have have a 1st and a heavy 2nd with the same mortgage company.
The 2nd was not used for home purchase money. Our 1st is in foreclosure and foreclosure date is a few days prior to Chapter 7 discharge. We did not re-affirm either loan. The foreclosure attorney said if we brought the loan current, we could then re-affirm the loan. In the meantime, we have applied for a loan modification on the first and are gathering funds to bring the loan current if we are turned down on the 1st mortgage mod and our 2nd is in now "charge off" status.
If we do get the loan mod (low percentage of applicants do, so not real optimistic on that) or bring our loan current and re-affirm the 1st. What is going to happen on the "charge-off" AKA second? If it is sold to a collection agency and I assume that it will, can they foreclose on us? The house is worth more than our 1st mortgage amount. If the first did foreclose it could get the original loan amount and there would be a small amount left for the second.
Is it possible to get a loan mod AFTER we have brought the loan current? Can we reaffirm the 1st and file for a chapter 13 if the 2nd mortgage debt is in charge off status? If the 2nd was not used for home purchase money, is that a factor in any way?
Well, any insight or suggestions are most appreciated.
Hi tradernicknet,
As you haven't reaffirmed the mortgages, you won't be able to qualify for a loan modification. If both the loans get discharged in your bankruptcy filing, you won't have to worry about the charged off status. The collection agency won't be able to come after you in order to recover the debts. The lender will have the rights to foreclose the property in order to recover the debts but he won't come after you for any deficient balance after your bankruptcy discharge. It is better to reaffirm the loan when you're in bankruptcy filing.
Thanks
As you haven't reaffirmed the mortgages, you won't be able to qualify for a loan modification. If both the loans get discharged in your bankruptcy filing, you won't have to worry about the charged off status. The collection agency won't be able to come after you in order to recover the debts. The lender will have the rights to foreclose the property in order to recover the debts but he won't come after you for any deficient balance after your bankruptcy discharge. It is better to reaffirm the loan when you're in bankruptcy filing.
Thanks
It's a Chapter 7, so our secured loans will not be discharged. And it is my understanding that charge offs are sold to collection agencies and include a property lien and the right to foreclose. This scares us because if we were able to bring the 1st current and re-affirm the loan, that collection agency would be looming. And that additional debt would break us. Thank for your input.
Sorry I didn't realize that I was not logged in.
Hi tradernicknet,
It is true that if you reopen your bankruptcy and reaffirm the mortgage, you will be liable for paying the mortgage in full as you'll become personally liable for the debt. At that time, if the lender charges off the debt, the collection agency will be able to come after you in order to recover the debts.
Thanks,
Jerry
It is true that if you reopen your bankruptcy and reaffirm the mortgage, you will be liable for paying the mortgage in full as you'll become personally liable for the debt. At that time, if the lender charges off the debt, the collection agency will be able to come after you in order to recover the debts.
Thanks,
Jerry
So, aren't I responsible for the debt either way? Since they are secured loans? If I don't reaffirm, the bank sells house and that may or may not take care of the 1st, and then there's that 2nd mortgage charge off.
hi tradernicknet,
the first mortgage lender will foreclose the property in order to recover as much debts as possible. however, as far as i know, as the second mortgage has been charged off, it has now become an unsecured loan and you have received a discharge from it. thus, you're not liable to pay it.
thanks
the first mortgage lender will foreclose the property in order to recover as much debts as possible. however, as far as i know, as the second mortgage has been charged off, it has now become an unsecured loan and you have received a discharge from it. thus, you're not liable to pay it.
thanks
Thanks for your input. We are waiting to speaking to our BK attorney and will find out for sure. I never imagined that it could be included in our overall discharge. It would save us though. I will post what the outcome is. Our discharge is at the end of the month and foreclosure is even sooner. What a lousy place to be.
Wishing you good luck in your endeavors! Do keep the forum posted about the outcome.