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    2nd Mortgage question

    Hello,

    I am in the 2nd year of a Ch13 and considering converting to a Ch 7. Originally wanted to do a lien strip, but can not keep up with plan payments ($800/month). I have already modified my 1st mortgage (and I am current) and want to keep my home. I am hoping I can work something out with the 2nd mortgage once I convert.

    My questions is, what rights will my 2nd mortgage have once I convert to a 7? Or what actions are the likely to take?

    Thank you in advance!

    #2
    Originally posted by Phx View Post
    My questions is, what rights will my 2nd mortgage have once I convert to a 7? Or what actions are the likely to take?
    All rights they had before you filed. That means that they can foreclose should they choose to. Whether it's in their best interest is another story and is usually what they factor when making the decision. Also, if your 2nd and 1st are with the same lender, it could make the decision easier. The Chapter 13 protected you since you were going to strip the second. A Chapter 7 discharge would remove your liability but not the lien.

    Have you spoken with your attorney about this? Perhaps s/he can tell you what to expect. I'm expecting that you'll receive a Motion for Relief From Stay (MRFS) from the 2nd lender almost immediately after converting. While they may not actually foreclose, that certainly puts you on notice. You may be able to settle the second if you have the money to do so. That's also something you can discuss. People -- on this forum -- have settled discharged 2nd mortgages from 5% to 15%.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    Any advice provided is not legal advice, but simply the musings of a fellow bankrupt.

    Comment


      #3
      Just Broke- thank you!! That was the general info I was looking for. I will be talking with my atty next week.

      Can the 2nd foreclose if the 1st is still current? They are different lenders.

      Comment


        #4
        Originally posted by Phx View Post
        Can the 2nd foreclose if the 1st is still current?
        Yes it can. The 2nd will have to service the 1st or, eventually the 1st will foreclose. This is why it is unlikely that the 2nd will foreclose: 1) at the T/S an investor is not going to pay enough to clear the 1st let alone pay something to the 2nd therefore - 2) the 2nd will end up with title and the bill to the 1st.

        Des.

        Comment


          #5
          Des

          Ok, that make sense; Thank you for clearing that up!

          It sounds like the 2nd mortgage would have more to gain by settling with me, rather than foreclosing, especially since the house is up-side down.

          Thank you all, for your informative responses!

          Comment

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