What happens to 2nd if we file 7 instead of 13

[cjsgac]

Hi all-

We are planning on filing our 13 in June. We have stopped paying everything including the 2nd mortgage because we thought we'd be filing a 13 and it would be stripped. Just spoke with my attorney and now she is trying to get us into a 7 due to the fact I lost my job last month. What happens with the 2nd? Do I start paying it again if we file a 7 or will it be stripped anyway?


Thanks!

[LadyInTheRed]

No, you can't strip the 2nd in a 7.

Depending on how far underwater you are, you may want to continue not paying and hope the bank (or a company they sell the debt to) will eventually settle for a smaller amount. Start saving cash after your discharge so you will have some cash with which to settle. But, you will be taking a risk. The bank can still foreclose on the 2nd, but they aren't likely to until there is enough equity to make it worth it. If the same bank holds the 1st and 2nd, they are much more likely to foreclose on the 2nd. The 2nd mortgage will be discharged in the 7, so you won't have to pay any deficiency if they do foreclose.

If you decide to start paying the 2nd again, contact them first to see if they will work with you to cure the late payments. Also, consider wether you can keep paying both mortgages. If you can't do that, you should seriously consider not paying either mortgage and living in the house for free as long as you can before foreclosure.

Talk to your attorney about your options.