What about the second loan?

[tknj99]

Hi,
If you dont reaffirm your primary residence and continue paying on the first mortgage, I understand that you can still stay in the property.
But what happens if you have a second mortgage that you stopped paying for and has been charged off?
What would be the consequences later down the line with the charged off loan - could they sue me still post-BK? or would it just be that they could only wait until the property sells or forcloses in the future to try and get a slice?

[neorecon]

Did you include them in your BK? They still have a lien on your residence, so they could foreclose on you if they wanted to. Being a 2ndary lean holder, they have the huge obstacle of dealing with our down housing industry. Since if they did foreclose, they would have to give any proceeds to the first mortgage, only getting what would be left after the first is completely satisfied.

So to answer your question, if you did include it in your BK, they cannot sue, but they can foreclose.

[tknj99]

Gotcha.. so if i include the house in the BK:
1. can the mortgage payment be used in calculations for passing the means test?
2. Would that mean i would get the additional wildcard exemption for including the proerty in BK?

Thanks for the help.

[neorecon]

Depends on your state and if you have the option to take your state or federal exemptions. Those questions are best for a bk lawyer. I'd suggest getting a few free consults if you haven't yet. They should be able to answer most of your questions.