2nd Mortgage Charged Off,secured or unsecured?
I just read somewhere that if the second mortgage is charged off it becomes unsecured debt. Is this true? How do you find out if it is charged off for sure? Would you receive paper work from the bank or would it be on a credit report? If you file a Chapter 7 bk, could you then list it as an unsecured debt and have it discharged?
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IT would only become truly unsecured if the 2nd mortgage co releases their lien on the property. It is theoretically unsecured if the house is worth more than the first - because the 2nd mortgage co would get nothing if they foreclosed to force a sale. (Since 1st mortgage co would have to be paid first.)
Filing ch. 7 does discharge your obligation to pay any mortgage debt, but it does not void the lien holder's security interest. So it results in pay (to keep the property) or move on. Ch. 13 can actually strip the 2nd mortgage lien - when the first mortgage exceeds the home's value - and then treat the 2nd in the same category as other unsecured debt.Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
(In the 'planning' stage, to file ch. 13 if/when we have to.) -
Ditto what SMinGA said.
They still have the lien against your property, regardless of whether it's charged off or not. In a chapter 7, your obligation to them is discharged, but the lien remains. What this means for you is that if property values ever go back up, or if you pay your mortgage down enough, then your 2nd mortgage can then foreclose on you. Or, if/when you sell your home, if there are any proceeds, the 2nd mortgage will receive them rather than you.
The only true way to get rid of the lien is to pay off the loan in full, reach a settlement agreement with them, or to file chapter 13 and have the lien stripped.Filed Chapter 13 on 2-28-10. 341 completed 4/14/10. Confirmed 5/14/10. Lien strip granted 2/2/11
0% payback to unsecured creditors, 56 payments down, 4 to go....Comment
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I have a question to piggyback on this....
Before filing 13 with a POND motion, we received notice from our homeowner's insurance that they removed the 2nd mortgage security at their request. This was after receiving a payment offer of about 5% from the 2nd mortgage company. We have not received anything from the 2nd mortgage compnay directly, but does this mean they have released their lien?Comment
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