Filing for Bankruptcy

[runner]

Good Morning:

Just lost my job after 5 months in which the company had 3 months of declining sales. Wife is unemployed also after 11 years with one company. Was in the midst of refinancing home and 2nd mortgage when my job was lost. 2nd mortgage holder appears to not want to subordinate to the primary and has increased the interest rate. Still have equity in the house after both mortgages. House will appreciate in the next five years. Debts are not huge as we have been paying it all back as quickly as possible.

I would like to kill the second mortgage if they are going to be unreasonable and just keep paying back everyone else once I am back to work (3-6 months). I am 65 and wife will be 63.

Looking for the how-to of this and need someone to talk to. We always did the right thing for years and I think we finally got to the end of our rope.

Regards,

runner

[LadyInTheRed]

Welcome to bkforum.

Because you have equity, there is no way to get rid of the second lien. You can strip a second lien in a Chap 13 only if the value of the home is less than the balance on the first mortgage. If you file a Chap 7 and don't reaffirm, your personal liability to pay the mortgages would be discharged, but if you don't keep making payments, one of the lenders will eventually foreclose. But, after a Chap 7 discharge, the lender can't get a deficiency judgment if the foreclosure sale does not cover the entire balance of the mortgages.

If you don't have a lot of secured debt, BK might not be your best option at this point. If you can't make all of your payments and you plan to keep the house, your best option is probably to keep paying both mortgages and stop paying on unsecured debt. Once you are back at work, you can decide whether you can catch up on your debt payments or if you need to file BK.

[runner]

Welcome to bkforum.

Because you have equity, there is no way to get rid of the second lien. You can strip a second lien in a Chap 13 only if the value of the home is less than the balance on the first mortgage. If you file a Chap 7 and don't reaffirm, your personal liability to pay the mortgages would be discharged, but if you don't keep making payments, one of the lenders will eventually foreclose. But, after a Chap 7 discharge, the lender can't get a deficiency judgment if the foreclosure sale does not cover the entire balance of the mortgages.

If you don't have a lot of secured debt, BK might not be your best option at this point. If you can't make all of your payments and you plan to keep the house, your best option is probably to keep paying both mortgages and stop paying on unsecured debt. Once you are back at work, you can decide whether you can catch up on your debt payments or if you need to file BK.

Lady in Red

"That does not sound good. So they pretty much have me where they want me. Thank you for your reply.

[runner]

Welcome to bkforum.

Because you have equity, there is no way to get rid of the second lien. You can strip a second lien in a Chap 13 only if the value of the home is less than the balance on the first mortgage. If you file a Chap 7 and don't reaffirm, your personal liability to pay the mortgages would be discharged, but if you don't keep making payments, one of the lenders will eventually foreclose. But, after a Chap 7 discharge, the lender can't get a deficiency judgment if the foreclosure sale does not cover the entire balance of the mortgages.

If you don't have a lot of secured debt, BK might not be your best option at this point. If you can't make all of your payments and you plan to keep the house, your best option is probably to keep paying both mortgages and stop paying on unsecured debt. Once you are back at work, you can decide whether you can catch up on your debt payments or if you need to file BK.

This is more like a line of credit and not truly a 2nd mortgage. It was taken out to fight a legal battle in court on behalf of a sibling. Besides mortgages, we owe roughly $20,000. I do not know what is enough in $. I do know without a job, things will get tough around here quickly. Normally I would go out and cut trees down or cut grass. Dec 2012 ended my physical labor with a triple bypass even though I still have my strength and I suffered no damage to my heart.

[runner]

Lady in Red:

Thanks for the reply. I have also been told there is an exemption for equity in a house and at my age it is ~$50,000. I guess I am have to hunt down an attorney.