Second Mortgage

Normally when you file your bankruptcy, you put our house on it as well a second mortgage too.

Suppose the first mortgage talked you into taking the house back, but after the bankruptcy was discharged and your second mortgage is with the same lender. So what do you do?

You sell your house but try get a hold of the second mortgage lien holders to get the pay off. But your lender may not let go off you that easy as they can try to squeeze out your rest of the equity. So how should you deal with this situation?

Always remember that if your house is worth more than what you owe, your lender should allow you time to sell the house and keep any profit after what is owed. You can try and sell the house to a friend as liens follow the property not the original holder and the lender will most likely offer a lesser amount to the new lien holder. (prob. amount owed minus interest.)

Moreover, what you should have done was have the house appraised back when you filed for bankruptcy. If your first mortgage was higher than the amount the house was worth, you could have filed a POND motion to have the second mortgage wiped out.

DId you sign any reaffirmation agreements with either of your mortgages? If not, and there isn’t enough value in the house to pay off both mortgages, they get all the money you get from the house, and you walk away with nothing.

Also, if you didn’t sign reaffirmation agreements, you can just walk away from the house and lose whatever equity you have in the house. If you did sign reaffirmation agreements, if your house doesn’t sell for enough to pay off both mortgages, you’ll still owe the amount over the value that the house sells for. Hopefully, you didn’t sign reaffirmation agreements.