Exploring Options!

[Fred10]

Hi Everyone - I have a question and I'm not sure this is the right area to post it, but since we are consideirng a CH. 13 I thought I would post it here.

Our house is worth $350K, we owe $510K on 1st & $117K on the 2nd. Techincally because the house is no longer worth what we paid for, the 2nd mortgage is now unsecured. If I stopped paying the 2nd mortgage and just paif the Interest Only on the 1st can the bank/lender foreclose on me?

What are the ramifications of doign something like this?

Thanks!

[lrprn]

Our house is worth $350K, we owe $510K on 1st & $117K on the 2nd. Techincally because the house is no longer worth what we paid for, the 2nd mortgage is now unsecured. If I stopped paying the 2nd mortgage and just paif the Interest Only on the 1st can the bank/lender foreclose on me? What are the ramifications of doign something like this?

First, I'm sorry to hear that your home has lost so much value.

If you stop paying your second mortgage, that lender is going to start harrassing you for payment. This is going to escalate for months. Some mortgage lenders have been known to call every few hours all day long, weekends included. If you don't answer and indicate they are actually reaching you, they can start calling your workplace, your relatives, and your neighbors.

The next step your second lender is likely to take is to either move the debt to their collection agency or sell the debt to a third party collection agency who will continue to harrass you for payment.

Given that the second mortgage won't be paid at all if they foreclose, that's unlikely to happen. Still they have plenty of time to harrass you to distraction hoping the irritation and alone will force you to pay them.

If you file Ch 13, then you will be able to strip the second mortgage legally so you owe that lender nothing once you complete your 13 successfully.

Have you met with any experienced Ch 13 lawyers in your area yet? If not, then it's time to set up free initial consultations with 3-4 of them. You need to know if it's going to be possible to file Ch 13 (in other words, it appears you'll have sufficient disposable income on your Means Test and Schedules to file a viable Ch 13 plan). That's the next step to take on your journey deciding what your best options are in this situation.

Hang in there. This is just the first step to decide what's going to work out best for your family in the long run.