Charged-off Second Loan

[Ashly]

We are going through a loan modification and are now three months late. We are also about to file for bankruptcy. It was looking like we were going to get the loan modification but then Chase has become really tough with them in the last couple of weeks. They said that they are about to charge off our second mortgage.

Some people have suggested that we do a Chapter 13 and the second could be part of the debt relief, others have said that we cannot do that. Our house is worth about 650,000, our loan is at 718,000, the house is worth more than the 1st mortgage but not worth the first and second together.

Others have said to let the second get charged-off and then it will be an unsecured debt which will mean that it can be part of the debt of a chapter 13 bankruptcy.

Here are our details:
The total on the First loan is 575,678
The total on the Second loan is 140,968
Total: 716,646

I just looked it up on Zillow and it is listed at $661,000

Thank you for your help.

[tjs1970]

that is a tough one........i know someone else in a very similar situation and they are proceeding with a short sale to try and get the first paid and a good portion of the second without a deficiency for the amount not paid to them.....if they have to sign a promissary note for the difference they may file BK then to get rid of that note once the house is sold.......but then again, he doesnt want to stay in the house.......and that may be different for you if you want to stay

[Ashly]

Thank you for your reply.

We do really want to stay in the house. What would you suggest if we do want to stay in the house?

Thank you for your help!

[UpsideDownMI]

If your house is worth more than what you owe on your 1st mortgage, you will not be able to get rid of your 2nd mortgage in chapter 13 regardless of whether or not it has been charged off.

I would have an appraisal done and see where you stand. It is possible that your house is worth less than you think. The appraisal for my house was almost 35% less than what I got from Zillow.