Posted on: 03rd Dec, 2009 03:49 pm
I have a first mortgage that I am current on ($148K) and have stopped paying the second ($38K). The house is only worth about 130K. Both loans were included in a chapter 7 bk and not re-affirmed. From what I have read it is doughtful that the 2nd mortgage holder would forclose because they would lose more money than doing nothing, as they would have to pay off the first mortgage first. My question is, what will happen if they charge it off? Will they sell the secured debt to a collection agency, and if so, what will they do since the debt was included in BK and they cannot legally pursue it? Will the collection agency just hold onto it for years in the hopes the home is sold some day? Will they try to give me a good deal such as paying 10cents on the dollar to lift the lien?
Welcome Rob,
You've mentioned that you've not reaffirmed your debts with the lender while in Chapter 7. Thus, you are not personally liable for the debts any more. If you're unable to pay off the dues, the lender will only be able to foreclose the property. He will not be able to sue you for the deficient amount. You can negotiate with your lender and check out if you can get a payment plan which will help you pay off the dues.
You've mentioned that you've not reaffirmed your debts with the lender while in Chapter 7. Thus, you are not personally liable for the debts any more. If you're unable to pay off the dues, the lender will only be able to foreclose the property. He will not be able to sue you for the deficient amount. You can negotiate with your lender and check out if you can get a payment plan which will help you pay off the dues.