Saw another attorney today

[HOMEBODY]

2nd attorney I saw with regard to my situation. I am upside down on all my properties and want to keep them.

My plan was to file for Chapter 7 and continue to pay on the 1st on each one them and negotiate the 2nds...but she said I will become liable for all the 2nds and that is is EXTREMELY HARD to negotiate to 10-20% on the 2nd.. That I am ruining my credit on this gamble as I will be stuck with the mortgages.

Now I am confused and have this huge headache. I have only been sleeping about 3 hours a night for the last week. Very stressful to make this decision.

The mortgages are paying themselves with probably about $300 negative if we were to count for the property taxes at the end of the year.

Anyway had luck negotiating the 2nd. Does the 2nd become unsecure after you file? I know that they cannot foreclose on you, so what happens if you dont pay? She said that the house would be taken away if I dont pay the
2nd.

[DebtEnder]

If you are discharged in a ch7 you are discharged of the debt. The lien would live on but if you could get them to remove the lien for a portion fo what is owed I don't see how that is "ruining" your credit anymore then BK already would.

If you never reaffirmed the debt then there is nothing they can do to you, just the house. If the house is so low value and they are 2nd postion there not even really anything they can do to the house.

Should the house value go up then yes later on they could see fit to enforce thier right of foreclosure but that's down the road.

[StartingOver08]

Debtender is right.

Once you file and receive your discharge YOU are the one that is in control! Your credit begins to rebound the minute you receive the discharge. If the 2nd won't remove their lien in exchange for 10% (or whatever you negotiate), then just walk away if it makes economic sense. The lien is NOT automatically removed once you are discharged from a Ch 7. That is a whole separate step. That is why, once you get your discharge, you negotiate an exchange of payment for a release of lien (Satisfaction of Mortgage) that needs to be recorded once you get it.

You should hope that they come after you for the second after your discharge! They would be in violation of the discharge injunction and subject to sanctions by the BK court. I'm not talking about initiating the foreclosure action against their lien, but if they come after you personally for discharged debt.

Now, if you do not get the lien removed, then yes the 2nd can foreclose if you don't pay them. That is their only relief. But then again, they will have to 'buy out' the first mortgage in order to protect their interests. So a lot depends upon the numbers: how large is the second, how large is the first, what is the actual market value of the property.

[HOMEBODY]

So lets say I file and dont affirm the 2nd....if I stop paying them, will they report late to the credit bureaus?

[HHM]

So lets say I file and dont affirm the 2nd....if I stop paying them, will they report late to the credit bureaus?

No, because you have discharged your personal guarantee of the debt. Your credit report is a report of YOUR credit history, not a report of the various security interests against your house. Once you discharge the debt as to "you", then the debt should be reported on your credit report as included in bankruptcy, with zero balance owed. That is the end of it.

Now, you will, at some point, need to deal with the security interest (the lien). The lien will survive BK, your ability to settle these debts will depend on just how upside-down your homes are. If the properties are all worth less than what is owed on the 1st mortgage, the 2nd's will typically settle for 5-15%.