Can a 2nd mortgage be discharged on a Chapter 7 bankruptcy?
I plan on keeping my house but behind in my mortgage. Thankfully I have a family member that will help me out financially to get caught up until I get back on my unemployed feet.
My mortgage is an 80/20 loan with 2 different lenders -
Loan 1 is $133,000, loan 2 is$17,500. I am 6 months behind on both mortgage payments.
I called Loan 1 and got the reafirmation amount (they have been threatening foreclosure). When I called Loan 2 they told me that the debt has been "written off and reported on my credit rating" (big whoop, my credit is already shot and dead for now). The rep told me I could make payments to get it caught up but she really wasnt your "typical" a-hole collector. I reviewed my my original closing docs and both loans were secured.
The BIG question... if Loan #2 has written off the debt and I file CH7, will the debt be discharged??? Any help is appreciated.
Answer:
Sadly, no, it's not going to be discharged.
Just before Hurricane Katrina, new laws went into place that restricted what could and could not be discharged as part of a bankruptcy. One reason the Katrina victims are still financially dead is that they can't discharge loans on houses that were washed away in the storm.
Yes-they have already confirmed that they have no intention of collecting it... so include it in your bankruptcy and have your attorney request a mortgage release from them..
I fyou don't include it in the bankruptcy, more than likely they will sell the debt to a collectoin agency.. SOOOO be sure to list it as a creditor.
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