Short Sale or Walk Away

[tazzy20176]

I filed a chapter 7 10 years ago and included my current home (I had a 1st and 2nd mortgage) . I've been staying in the house but have recently fallen behind on my mortgage payments. My questions are: should I do a short sale or just walk away? My current home value is $325k, I owe $298k on my 1st, which I was paying, my 2nd was $75k, which I stopped paying 10 years ago. If I did a short sale, will the 2nd come into play or is will they just say forget it?

[justbroke]

Yes, the second will come into play unless they filed a satisfaction of mortgage. Many of the mortgagees back in the 2008-2011 time frame did just let the liens go and file a satisfaction. That doesn't mean that is the case for your second.

In order to do a short sale, you would need the second lienholder to accept less money. Sometimes the first, second, and you can come up with something whereby the second lienholder gets some token amount. But you'll still need to deal with that second.

A short sale will likely be better overall than a foreclosure when it comes to any future home purchase. Some programs treat foreclosures and short sales differently.

I would first try to determine if the second is still active. Then you'll need to contact the first and second to see what you can do about a short sale.