what about a 2nd mortgage "charge off"

[AfraidOfBK]

Chase is telling me that even if I am trying to work out a loan mod on my first, unless I pay anything by the end of this month (I am 45 days late, got NOD already) then the loan will probably be charged off in 60 days and then foreclosure speeds up?!?!?!

At the same time, however, they are telling me that Chase is in moratorium with foreclosures right now and I could have 6 months left rent free

VERY IMPORTANT: I do NOT want to keep house, I am planning on filing in July, just wanted to delay the f/c a bit so I could live here for free for a while, especially AFTER bk since they take all your money that you have before bk....

So what does the Charge-Off really mean? How does it affect foreclosure?

[beachymama]

Chase Charge-Off

My Chase HELOC was charged off after about 180 days of lates (last payment 12/07, charged off 5/08).

I just received foreclosure papers on the 1st mortgage this week. Chase sold the assets to NARS a collection agency. They call me once a month or so. I tried to do two short sales, but NARS wanted a full short sale package from me (all my paycheck stubs, tax returns, etc.). I refuse to give my information to a collection agency, plus Chase is still the lienholder on the county records, no assignment was done.

That is my story. They are owed $150K, my first is owed $215K now with fees. The Brokers Price Opinion was $200K, so they are not getting any money. The short sale would have gotten them $3000. In BK 7 they get nothing and hopefully I will not be liable for deficiencies.

[beachymama]

Chase Charge-Off

My Chase HELOC was charged off after about 180 days of lates (last payment 12/07, charged off 5/08).

I just received foreclosure papers on the 1st mortgage this week. Chase sold the assets to NARS a collection agency. They (NARS) call me once a month or so. I tried to do two short sales, but NARS wanted a full short sale package from me (all my paycheck stubs, tax returns, etc.). I refuse to give my information to a collection agency, plus Chase is still the lienholder on the county records, no assignment was done.

That is my story. They are owed $150K, my first is owed $215 now with fees. The Brokers Price Opinion was $200K, so they are not getting any money. The short sale would have gotten them $3000. In BK 7 they get nothing and hopefully I will not be liable for deficiencies.

[StartingOver08]

Charge off is an accounting term. The account gets charged off at 180 as a normal course of business.

The collections agent that you spoke to is full of hot air - the loans do not get charged off at 45 days or 60 days. They are saying whatever they can to scare you into a payment. From your post, you are surrendering the house in BK. Ignore the calls or pick up and hang up. But don't let them scare you into a payment. You need to do what is best for you now.

[AfraidOfBK]

THanks StartingOver and beachymama....

I guess my question now is - what happens with a charge off? How does that affect the foreclosure process on the first. The reason I ask is because i am one month further past due on my second than my first (2nd is not a HELOC)....

Will that speed up the foreclosure process, or does it not really have an effect on it? WHen its charged off, is it just kind of "written off" and then handed over to a collections agency? If that was the case, do i need to include them in my BK 7? What if I file and then they forward to collections after? Then I only have Chase listed as a creditor...will I be hounded after BK by another collections agency?

[StartingOver08]

You put everyone in your BK. All debt.
The petition is to accurately record your entire debt and assets and what you are planning to do with each one. Make sure your petition has all debt so that when you get your discharge it works like a checklist for you too! Once the debt is discharged no one can come after you for the $$$. If they do, it is a violation of the discharge injunction and you could bring the violator to court and collect $$$ (called sanctions) against the collector.

You are planning to give up the house - so it does not matter if the loan says charge off or foreclosure. The charge off does not speed up the foreclosure.

[AfraidOfBK]

let me ask somewhat of a dumb question -

when you say you inclde EVERYONE in bk, does that mean I have to list every creditor, even ones that I have paid off, or only the creditors that I woe money to. And what happens if I do not have the correct balance owed? Do i have to get the balance on the day of I file? What about fees, interest, etc?
sorry, but i havent got to the paperwork yet?!!!

[StartingOver08]

Everyone you owe money too. If you have a zero balance card, you do not put the debt in the petition.

As to exact amounts, put in the amount from the last billing statement - it should show the fees, interest, etc.

The paperwork takes quite a while, depending upon the size of your BK - you might want to approach it earlier rather than later.

[HHM]

http://askmethner.com/?p=197

This should explain it.

[Lajazz947]

This really is a lien strip question.

http://askmethner.com/?p=197

This should explain it.

Man oh man,

I keep getting thrown into "what if's"every time I read a lien strip post.

I know that a 7 would be great, no payments. Now, the TT has a few things that she may challenge:

1- For the past year I have been making minimum payments on the house until things get better thus negative amortization. On the means test I put the fully amortized amount since that is the contractual requirement. My attorney says she may attack that and say that only what I actually paid is allowed. We will see. If she disallows it then I am in a 13, not by much , but in a 13. At that point I could try a lein strip.

2- I owe back taxes for 2008 and I included them on the means test. I simply could not pay them so I will work it out with the IRS. If she disallows this then 13 is a possibility even with the higher house payment.

3- I bought a car from my business partner and I put it as a one time expense on my schedule C. No amortization. If she disallows this and makes me amortize that again could throw me into a 13 in conjunction with either of the first two.

My attorney says that if I don't pay the HELOC they can apply for a stay so
I am still making my HELOC payments.

My question: What is the danger in not paying the HELOC? How likely is it that the second would start to foreclose? If they do so can I just bring the loan current?

I am not sure what the house is worth but it may be what I owe.
The first is $729,000
The second is $50,000


I know what my attorney says but should I stop making HELOC payments and pay the fully amortized payment on the first against the advice of my attorney?

This lien strip issue is confusing to me.

I am definitely going to keep the house.

[ShouldWeFile]

My attorney says that if I don't pay the HELOC they can apply for a stay so
I am still making my HELOC payments.

How likely is it that the second would start to foreclose? If they do so can I just bring the loan current?

I am not sure what the house is worth but it may be what I owe.
The first is $729,000
The second is $50,000

should I stop making HELOC payments and pay the fully amortized payment on the first against the advice of my attorney?

This lien strip issue is confusing to me.

I am somewhat confused by your post also.

My perception is that you are current on both the first and second mortgage now. You would like to do a ch7, but are concerned that the trustee may challenge your ch7 and require you go ch13.

Your attorney's concern in regards to keeping your HELOC current is that they may ask the court to 'lift the stay,' if you are not current?

And finally, if you are required to go ch13, you do not wish to waste your money paying the HELOC (that you feel will likely be lien stripped). If I understand correctly, it has not been determined that you will need to go ch13, and that is why your attorney is recommending that you stay current on both your first and HELOC. You are also thinking that the extra expense by paying the fully amortized amount of the first will help your numbers. Makes sense to me.

Another question is, what is your level of confidence that the home is valued at less that $729,00 (the balance on your first)? If I am correct, what matters here is simply that the trustee agrees on the assessment of the property value (this could vary greatly from district to district).

I am thinking your attorney may know best in this case, and if you end up filing a ch13, and a few hundred (or even a couple thousand) extra goes to the HELOC over the course of a couple or three months, then so be it. Ask for additional clarification from your attorney if need be... perhaps there is more to it also. At the same time I can see where you are coming from, as soon as you are sure that you will need to go ch13, and intend to attempt a lien strip, I would immediately stop paying the HELOC.

[chad9162]

I'm not following your attorneys logic either. If you're under water and the 2nd has no equity, they have no power. Even if they get a relief of stay are they really going to foreclose. They'd have to pay the 1st $729K to lose their $50K, highly unlikely they'd do that.

Since there's a chance you'll get pushed into a Chap 13, the 2nd could be stripped so why continue to pay it now. Even if it wasn't stripped you could use Chap 13 to catch up on the rears.

My attorney gave me the opposite advice and said the 2nd with no equity is out in limbo land.

[Lajazz947]

I'm not following your attorneys logic either. If you're under water and the 2nd has no equity, they have no power. Even if they get a relief of stay are they really going to foreclose. They'd have to pay the 1st $729K to lose their $50K, highly unlikely they'd do that.

Since there's a chance you'll get pushed into a Chap 13, the 2nd could be stripped so why continue to pay it now. Even if it wasn't stripped you could use Chap 13 to catch up on the rears.

My attorney gave me the opposite advice and said the 2nd with no equity is out in limbo land.

Thank you, just as I thought. My attorney is really good but I think that he is missing something here.

I am going to stop the 2nd payments and see that happens.

[HHM]

Actually, there is some risk to having the HELOC lift stay. That frees them to collect the debt, and they can use whatever means is available to them, i.e. sue you, get a judgment, and go after other assets not protected by the BK estate. However, I think that is a very low risk.

[chad9162]

Actually, there is some risk to having the HELOC lift stay. That frees them to collect the debt, and they can use whatever means is available to them, i.e. sue you, get a judgment, and go after other assets not protected by the BK estate. However, I think that is a very low risk.

That's interesting, maybe that occurs in your state but in CA (a non-recourse state) they MUST go after the property first. Whether you are a 1st, 2nd, or 3rd lien holder you must take action against the property. If there is a deficiency they would have to eat it. Since going after the property was their ONE ACTION, they are not allowed a "2nd action" to seek a judgement against me for the deficiency. Again they must pay off all liens ahead of them.

The 2nd or 3rd could ONLY seek a judgement against me if they became unsecured assets. Meaning the 1st foreclosed making the other lien holders unsecured debt. Since the 2nd and 3rd haven't had their ONE ACTION yet, under CA law they can now seeking a judgement and wage garnishments. But this only applies to NON-purchase money. A 2nd used for to purchase the house cannot seek a judgement against you and goes away.

I don't know how it works in other states so its important to know your state laws.