Tax Lien In Foreclosure

[car67]

My scenario

First Mortgage $2100 paid monthly never late past 60 days
Second Mortgage $700 Not Paid since Dec 09 Discharged Chapt 7
Neither Mortgage reaffirmed nor did they ask.....

Zillow has my house value range $295 to $350
First is $291 second is 60k I understand a lien strip is possible
in a follow up 13

I tried to apply for Hamp with AHMSI got denied today term used was excessive forbearance,

The second applied for relief of stay to start foreclosure

I think there is a tax lien from IRS on my home for 15k or so tooo carry over from bankruptcy time period......

Do I file 13 and fight for strip and who determines final value since its so borderline accrding to Zillow?

Do I sit and wait and keep paying the first and force the second to make a move and then stop em dead with a Chapt 13

PS still trying for conventional mod as today since hamp was just denied verbally today... Not sure best angle to take here.... thanks

[car67]

If second were to foreclose they would have to pay the first off and and also the tax lien right so they can get clear title to property?

[justbroke]

A lien strip is not possible in a follow up Chapter 13. In order to get the lien strip, you need to be able to receive a discharge. Since you can't receive a Chapter 13 discharge within 4 years of a Chapter 7 discharge... you can't get the lien strip.

Also, your second mortgage is "partially" secured. You can't lien strip in that situation... even if you could. However, I'll stick to my original thought and that is... you can't lien strip unless you can receive a discharge in your Chapter 13.

In which State is this property?

[car67]

Hey JustBroke its in Oregon...... Not sure what other crafty ways to proceed other then let them try and foreclose take it to deathbed 24 hoours before sale date then chapt 13 to catch full arrears? Any other crafy plans out there I could consider

[car67]

Well Justbroke here is thought, the Chapter 7 was discharged and the mortgages didnt reaffirm therefore not a liable debt but when for a follow up 13 since this debt was technically discharged cant it now be fully washed? I know we would have fight on the value of the house but who makes final value ruling. I am sure I can get it appraised below the level of the first but at same time the mortgage could get appraisal higher then first... Whats your take on the tax lien? Would the second have to pay the first and the tax lien to get a clear title at foreclosure?

[justbroke]

... mortgages didnt reaffirm therefore not a liable debt but when for a follow up 13 since this debt was technically discharged cant it now be fully washed?

Bankruptcy never disrupts liens so you'd still need to avoid the lien in order to get it fully "washed".

I know we would have fight on the value of the house but who makes final value ruling.

The Judge is the finder of fact in this case. The Judge will determine the value through an evidentiary hearing. Whoever has the best evidence and/or "experts", usually wins.

I am sure I can get it appraised below the level of the first but at same time the mortgage could get appraisal higher then first... Whats your take on the tax lien?

Tax liens, if they are levied by the IRS and recorded, attach to ALL YOUR property, not just your home.

Would the second have to pay the first and the tax lien to get a clear title at foreclosure?

The second -- in most cases -- would just allow it to be sold at auction and take what scraps they can. They would be in no worse shape than they are now since you don't legally owe anything on it. Whether the second would foreclose or not is pure speculation. If the home is worth $350K then it is more likely for them to foreclose, even if they don't get "everything".

BTW, yes, you could wait until hours before the sale and file a Chapter 13 to cure the arrears.

[car67]

Checked with attorney he says that he can strip the second since the 7 discharged the liability. In his experience the second mortgage holders almost never fight the strip down since they know if you lose the house the first will foreclose on them anyway.... Thats the answer I got from attorney this afternoon...........

[newbie2]

Checked with attorney he says that he can strip the second since the 7 discharged the liability. In his experience the second mortgage holders almost never fight the strip down since they know if you lose the house the first will foreclose on them anyway.... Thats the answer I got from attorney this afternoon...........

Please post back and let us know how he does this. My understanding is that the 2nd can only be "stripped" upon successful completion of a Chapter 13. Since you can't be discharged from a Chapter 13, this is interesting to me (and I'm sure to others)

[justbroke]

This entirely depends on your District and how they treat it. No Judge in the 11th Circuit would sign the Order stripping without the language that you must receive a discharge. In a Chapter 20, you don't receive a second discharge, so the lien strip would never stick.

Ask the attorney for some cases or caselaw where it worked.

[pcn]

BTW, yes, you could wait until hours before the sale and file a Chapter 13 to cure the arrears.

So what is the advantage to doing this? To save the home? But if the home is underwater, as it looks in this case, how is this any better than if they had just paid all along?

[justbroke]

So what is the advantage to doing this? To save the home? But if the home is underwater, as it looks in this case, how is this any better than if they had just paid all along?

I don't condone this, but some people will file Bankruptcy just to stall a foreclosure. It can forestall a foreclosure by as little as 30 days or months, depending on the situation. I personally don't recommend it and I don't like it.

[pcn]

Still a little unclear. Maybe an advantage is if the ch13 costs, say, $1500 and the monthly payment is 1500+? So they save money compared to paying the mortgage for those few months? But isn't the result the same? Or does the ch13 actually go into effect and they have 5 yrs (or 3 ys) until foreclosure starts again? I thought that if it was within 4 yrs of a previous ch7, one could not get a discharge in a ch13. If so, what happens with the ch13? Does it just become a pause in the foreclosure process for 5 yrs (or 3 yrs) and then since it cant be discharged, the foreclosure resumes 5 years later? Sorry for the questions, but this is really confusing me for some reason.

[justbroke]

You're right on all points pcn.

A Chapter 20, which is defined as a Chapter 7 followed immediately by a Chapter 13, is only good to discharge all unsecured debt, and then to deal with "non-dischargeable" debt and arrears. People use a Chapter 20 specifically to deal with non-dischargeable taxes and any arrears that they have on a home (or other personal/real property).

Since there is no discharge in the Chapter 13 that followed (because of the new laws (BAPCPA 2005)), this makes a Chapter 20 only useful for those things I listed.

I know that there are lawyers in some Districts that claim that they can lien strip in a Chapter 20, but it will not work in the 11th Circuit (Alabama, Georgia and Florida) based on precedence. That's why I always ask for some cases where a debtor was told that the attorney could do such. I'd like to see it myself and it would be cool! I could actually benefit from such a thing!

[jarguello]

I filed chapter 7 second mortgage was discharged lien was never recorded! would they be able to record lien now or are they out of luck?

[iv65536]

I filed chapter 7 second mortgage was discharged lien was never recorded! would they be able to record lien now or are they out of luck?

If you are currently not paying the 2nd I would consider simply letting sleeping dogs lie until they try to foreclose, then go after them.