What can 2nd lien holder do after Chapter 7?

[justalayman]

I thought the bankruptcy meant we could keep our home if we payed the mortgage.....if we stopped paying they could foreclose of course, but they couldn't turn around and sue us for extra money lost in the foreclosure process due to the bankruptcy.

that would be correct. If you are now bound to the contract though, you have effectively reaffirmed the loan albeit delayed. You would have no right to reaffirm the loan for your ex. Maybe that is why they believe it caused no harm to have him continued on the loan obligation since his liability was cancelled by the bk and by him not signing, he still is not obligated.

The only other possibility I can imagine would be that this modification, somehow, does not reaffirm the debt.


This has now gone beyond my knowledge on the issue. Maybe somebody else will catch onto this and clear it up for the both of us.

 

[tranquility]

We borrowed 25k on 2nd mortgage. The loan mod basically gave me a lower interest rate, added past due payments back in the principle due, and is for 30 years...the principle due is 90k. I'm not sure i understand your answer, but it sounds like you think I'm trying to lien strip the 1st mortgage.....I know I can't do that. I'm trying to figure out what the 2nd can do so I can be prepared and know what options I might have. In looking on the Internet I came across some information about lien stripping a 2nd mortgage after a bankruptcy.

It's not what you were "trying" to do, but what you did. By adding amounts to the principal, you have done an act that "substantially impairs or prejudices the junior lienor". That's not really fair to them, is it? If you did go to BK and tried to strip the "2nd" as there is not enough value in the house to be secured at all, they would argue they are now in the first position (Unless permission was granted from them for the modification.). There are other remedies available to them as well. So, if you tried to BK to strip and the formerly "2nd" is now in the primary position, there IS enough value to the house to have some of the modified loan with Wells secured. Thus preventing stripping.

BK is not going to get any lien stripped.

See also:
http://www.dlapiper.com/files/Publication/2df70bb9-a986-42c3-92b6-e4d91bc67225/Presentation/PublicationAttachment/42d3cd64-ac40-448c-85ce-e615c44fcc17/070011026DLA.pdf

 

[mquinnemmy]

Thanks for all the input everyone.

Can someone clarify for me what is the 2nd mortgage entitled to, if anything, at this point if I were to sell?

To recap we borrowed 25k around 1996, filed chapter 7 which I believe discharged the 2nd mortgage when finalized in 2000. Are they only entitled to the 25k borrowed, or can they demand All missed interest and late fees as well as the principle?

If they are only entitled to the principle I might be able to work with them to pay them off in a few months.

 

[tranquility]

Thanks for all the input everyone.

Can someone clarify for me what is the 2nd mortgage entitled to, if anything, at this point if I were to sell?

To recap we borrowed 25k around 1996, filed chapter 7 which I believe discharged the 2nd mortgage when finalized in 2000. Are they only entitled to the 25k borrowed, or can they demand All missed interest and late fees as well as the principle?

If they are only entitled to the principle I might be able to work with them to pay them off in a few months.

Because of the loan modification with Wells Fargo, it might be treated as the first in priority. As to if interest and late fees are added, I think that may have went away with the BK.

 

[Ohiogal]

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Do a google search on Mortgage debt forgiveness...you will find some interesting information.

Hey Ld,
How about you stop giving advice in an area that is way outside of your expertise ...
Stick to taxes.
And if anyone needs to know why this was said:
https://forum.freeadvice.com/juvenile-law-90/how-claim-child-custody-594756.html

 

[LdiJ]

Hey Ld,
How about you stop giving advice in an area that is way outside of your expertise ...
Stick to taxes.
And if anyone needs to know why this was said:
https://forum.freeadvice.com/juvenile-law-90/how-claim-child-custody-594756.html

Once again, being a big baby

 

[Ohiogal]

Once again, being a big baby

I know you are, but what am I? You are the one who said I shouldn't post outside of my area of expertise -- according to you of course. What? The same rules don't apply to you?

 

[mquinnemmy]

Hey Ld,
How about you stop giving advice in an area that is way outside of your expertise ...
Stick to taxes.
And if anyone needs to know why this was said:
https://forum.freeadvice.com/juvenile-law-90/how-claim-child-custody-594756.html

I found the information on mortgage debt forgiveness very helpful actually.

 

[tranquility]

I found the information on mortgage debt forgiveness very helpful actually.

Debt forgiveness has to do with taxes. That did not seem your question.

 

[mquinnemmy]

Debt forgiveness has to do with taxes. That did not seem your question.

My situation has nothing to do with taxes.

 

[mquinnemmy]

My situation has nothing to do with taxes.

Sorry...misread the comment. You are right about the debt forgiveness having to do with taxes, but it was interesting to read about 2nd mortgages being forgiven debts. I thought that's was the other person was trying to show me.