Turning over house in Chapter 13 with second mortgage

[chriskfromsc]

I currently own 2 houses, one being used as a rental house out of state. I am upside down on that house about 25k with the first mortage and I have a 75k second mortgage. I will be filing Ch-13 in about 4-5 months. Is the process for turning over a house the same as for turning over a car or boat? Will the second mortgage be turned into an unsecured loan that I have to pay off through my repayment plan or will it just be eliminated with the first mortgage?
Thanks

[justbroke]

I currently own 2 houses, one being used as a rental house out of state. I am upside down on that house about 25k with the first mortage and I have a 75k second mortgage. I will be filing Ch-13 in about 4-5 months. Is the process for turning over a house the same as for turning over a car or boat? Will the second mortgage be turned into an unsecured loan that I have to pay off through my repayment plan or will it just be eliminated with the first mortgage?

If you are surrendering the second home, then you just, literally, indicate as such on your Plan of Reorganization, and then abandon it. Whether the bank(s) would move to foreclose immediately, drag it's feet, or do nothing, is entirely within the realm of probable outcomes.

Until the bank actually sells the home and that creates a "deficiency" (or balance due), the bank would have no claim in your bankruptcy. In other words, if they have not taken the steps to foreclose and then determine the difference between the balance and what the property sold for, then they are out of luck. In many cases, they simply don't care. However, if they do it properly, then they could make an "unsecured" claim in the bankruptcy. You are guessing that it's $25K and $75K (first and second, respectively).

[159515951]

justbroke is spot on, but please keep in mind that you're liable for HOA dues, etc. until such time that the bank decides to actually foreclose, which can be years (or never, in rare cases).